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UNCLAS SECTION 01 OF 12 TOKYO 002946 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST 
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS 
OFFICE; SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY 
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
 
SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 05/30/06 
 
Index: 
 
1)   Top headlines 
2)   Editorials 
3)   Prime Minister's daily schedule 
 
4)   World Bank Wolfowitz in Tokyo speech calls for new 
  international conference on Iraq assistance 
 
Security front: 
5)   SDF to send medical team to assist victims of Java 
  earthquake 
6)   Cabinet decision on USFJ realignment today but Okinawa's 
requests for revisions ignored 
7)   Foreign Ministry objects to Futenma relocation site not 
being spelled out in JDA's final draft of cabinet decision on 
USFJ realignment 
8)   Security council sets basic policy toward USFJ realignment 
9)   LDP policy chief Nakagawa: Defense budget will be subject to 
cuts, too, s part of overall fiscal reform to avoid massive tax 
increase 
10)  Government set to present bill to current Diet session 
raising JDA to ministry status 
11)  JDA toughening policy of dealing with companies leaking 
classified information 
 
Regional issues: 
12)  China, South Korea suddenly pull out of multilateral coast 
  guard drill aimed at rooting out terrorists and WMD from high 
  seas 
13)  JCG readies new anti-piracy scheme 
14)  US to ask Japan at summit to support US-India nuclear pact 
 
Political agenda: 
15)  Minshuto head Ozawa reaching out to former LDP postal rebels 
  in order to form joint struggle against LDP 
16)  In speech, LDP presidential hopeful Yasuo Fukuda criticizes 
Prime Minister Koizumi for Yasukuni visits 
17)  Former Prime Minister Yoshiro Mori says next prime minister 
should not visit Yasukuni 
 
18)  Nikkei company survey of plans for investment in plant and 
  equipment shows double-digit growth for third year in a row 
 
(Corrected copy) Prime minister's US visit to start on June 27 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi, Mainichi, Yomiuri: 
Illegal exemptions of pension premium payments found in five more 
prefectures, totaling over 110,000 cases in 26 prefectures 
 
Nihon Keizai 
Social Insurance Agency (SIA) to frontload reforms, reflecting on 
illegal premium waivers 
 
Sankei: 
Hankyu decides to buy Hanshin shares for 930 yen per share 
 
Tokyo Shimbun: 
 
TOKYO 00002946  002 OF 012 
 
 
Government, ruling camp to give up submitting SIA reform bill to 
current Diet session due to issue of illegal premium waivers 
 
2) EDITORIALS 
 
Asahi: 
(1)  Correction of fixed number of seats might be Lower House's 
suicide 
(2)  Although attack on Pak remembered as nightmare, democracy 
now rooted in South Korea 
 
Mainichi: 
(1)  Visit to Japan by ROK abductees' kin: Group of Diet members 
dealing with abduction issue should be established in ROK 
(2)  Java quake: We want to extend wide-ranging assistance 
 
Yomiuri: 
(1)  Takeover bid only option for railway firms 
(2)  Japan must offer fiscal, personnel, technical help in 
aftermath of Java quake 
 
Nihon Keizai: 
(1)  More tasks left for Hankyu, Hanshin railway firms 
(2)  Pacific, Islands Summit: Power game unfolded in peaceful sea 
 
Sankei: 
(1)  Rescue of abductees left as key challenge for Koizumi 
successor 
(2)  Narita Airport: Fully make use of more advantages 
 
Tokyo Shimbun: 
(1)  Java quake: Japan must help remove uneasiness 
(2)  South Korean government must cooperate in resolving 
abduction issue 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, May 29 
 
NIHON KEIZAI (Page 2)  (Full) 
May 30, 2006 
 
10:03 
Met with JDA Director-General Nukaga at Kantei. Later, met with 
Chief Cabinet Secretary Abe, Deputy Chief Cabinet Secretary 
Futahashi, and others. Afterwards, met with Deputy Vice Foreign 
Minister Nishida. 
 
11:12 
Met with Philippine House Speaker Venecia. 
 
12:24 
Attended a memorial service at the Chidorigafuchi War Cemetery at 
Sanban-cho, Tokyo. 
 
14:13 
Met at Kantei with Foreign Minister Aso and MOFA Asian and 
Oceanian Affairs Bureau Director-General Sasae. Later, met with 
Agriculture Minister Nakagawa and METI Minister Nikai. 
 
15:04 
Met with MOFA Consular Affairs Bureau Director-General Tanizaki. 
 
TOKYO 00002946  003 OF 012 
 
 
 
17:02 
Attended an LDP executive meeting in Diet. 
 
17:40 
Attended a meeting of the Gender Equality Council at Kantei. 
 
18:02 
Attended a meeting of the Security Council and afterwards met 
with Minister of Internal Affairs and Communications/Minister in 
Charge of Postal Services Privatization Takenaka. 
 
18:42 
Arrived at residence. 
 
4) World Bank governor reiterates need for new international 
conference to discuss financial aid for Iraq 
 
NIHON KEIZAI (Page 1) (Full) 
May 30, 2006 
 
In an interview with a Nihon Keizai Shimbun reporter in Tokyo 
yesterday, visiting World Bank Governor Paul Wolfowitz reiterated 
the need for a new international conference to be held to discuss 
specific assistance measures, such as the transfer of funds and 
technology, for the self-sustainability of the newly established 
Iraqi government that is now operating full scale. Regarding 
North Korea, the governor said that if Kim Jong Il and other 
leaders made a bold policy switch, for instance, an 
implementation of economic reform, the World Bank would consider 
assistance to that nation. 
 
The governor also said that it would be desirable for the World 
Bank to play the role of providing the Iraqi government with 
expert advice on measures to prevent corruption and poverty, in 
addition to financial aid. 
 
On the proposed new international conference, Wolfowitz said: 
"The international community would be able to learn the present 
situation in Iraq through such a conference," adding that the 
Iraqi side had expressed an expectation for a new conference 
during periodic talks held between the World Bank and Iraq from 
before the inauguration of the new government in Iraq. 
 
5) Java earthquake: Japan to send SDF troops to quake-hit area 
for medical support 
 
YOMIURI (Page 1) (Full) 
May 30, 2006 
 
Defense Agency Director-General Nukaga late yesterday instructed 
the Self-Defense Forces (SDF) to ready themselves to engage in 
international emergency rescue activities in Java Island, 
Indonesia, which was earlier hit by an earthquake. A medical unit 
from the Ground Self-Defense Force (GSDF) and a transport unit 
from the Air Self-Defense Force (SDF) will be sent to the region. 
An advance team of 19 officials will depart for the region this 
morning. 
 
The medical unit will be composed mainly of personnel from the 
10th Chubu Ground Defense Force (based in Nagoya City). Personnel 
to be dispatched are expected to reach several hundreds. This 
 
TOKYO 00002946  004 OF 012 
 
 
dispatch was decided in response to the Indonesian government's 
request made yesterday to Japan. 
 
6) Gov't rejects Okinawa's call for changes to USFJ realignment 
plan; Cabinet decision today, with first consideration given to 
bilateral agreement 
 
ASAHI (Page 1) (Abridged) 
May 30, 2006 
 
The government yesterday held a meeting of the Security Council 
of Japan (SCJ), in which the government decided to implement a 
final agreement reached between Japan and the United States on 
the planned realignment of US forces in Japan. The SCJ decision 
will be adopted in a cabinet meeting to be held today. In this 
decision, the government only says the planned relocation of the 
US Marine Corps' Futenma Air Station in Okinawa Prefecture will 
be "based on a plan approved in the Japan-US Security 
Consultative Committee (two-plus-two ministerial)." The decision 
does not specify a bilateral agreement to relocate Futenma 
airfield to the cape of Henoko in the island prefecture's 
northern coastal city of Nago. In the meantime, Okinawa 
Prefecture has asked the government to disapprove the coastal 
relocation plan. With a Japan-US summit scheduled ahead, however, 
the government has rejected Okinawa's call for changes to the 
plan in order to give precedent to the bilateral agreement over 
local consent. There are concerns even from within the government 
about this course of action. 
 
The government is expected to make a cabinet decision today on 
the US force realignment, featuring Japan's cost sharing for the 
redeployment of US Marine Corps troops from Okinawa to Guam and 
the relocation of Futenma airfield. In the cabinet decision 
expected today, the government will also repeal its previous 1999 
cabinet decision, which adopted a now-revised "Henoko offshore 
plan" and incorporated a package of pump-priming measures for 
local communities. 
 
"We cannot accept the Japan-US agreement," said Yoritaka 
Hanashiro, chief of the Okinawa governor's office. "This point 
should be reflected (in the government's decision)," Hanashiro 
added. Okinawa is also opposed to repealing the 1999 cabinet 
decision. Hanashiro also said, "We don't know if the government 
will continue the economic package for local communities in the 
prefecture's northern districts." 
 
In yesterday's cabinet ministerial meeting, Minister of State for 
Okinawa Affairs Koike suggested the need to modify the cabinet 
decision. "I hope the cabinet decision will clarify economic 
packages for Okinawa," Koike said in the ministerial meeting. 
 
Even so, the government rejected Okinawa Prefecture's call for 
changes to the plan. For one thing, it has been a month since the 
final agreement was reached between the Japanese and US 
governments. For another, a Japan-US summit is scheduled for June 
¶29. The government has therefore given first consideration to its 
commitment there to implement the final agreement. Meanwhile, 
Okinawa Governor Keiichi Inamine will leave Japan on June 4 for 
the United States. This also prodded the government to expedite 
the decision. 
 
7) Foreign Ministry upset at Defense Agency's mention of nothing 
 
TOKYO 00002946  005 OF 012 
 
 
in final plan about Futenma relocation site 
 
SANKEI (Page 2) (Abridged) 
May 29, 2006 
 
The government will hold a cabinet meeting today to discuss its 
policy regarding the final agreement reached between Japan and 
the United States on the planned realignment of US forces in 
Japan. However, the Foreign Ministry is strongly upset with the 
Defense Agency, claiming that the agency's final draft specifies 
nothing about where to relocate the US Marine Corps' Futenma Air 
Station. "It fails to reflect the Japan-US agreement," a Foreign 
Ministry official said. Foreign Minister Taro Aso will call for 
the agency to retouch the draft in today's meeting of cabinet 
ministers. The Defense Agency has revealed a lack of 
interdepartmental coordination. 
 
Today's cabinet ministerial will be held with the participation 
of Aso, Chief Cabinet Secretary Shinzo Abe, Defense Agency 
Director General Fukushiro Nukaga, Finance Minister Sadakazu 
Tanigaki, and Minister of State for Okinawa Affairs Yuriko Koike. 
 
The Defense Agency's initial draft specified a plan to lay down 
two runways in a V-shape at a Futenma alternative facility to be 
built in a coastal area of Camp Schwab in the city of Nago, 
noting that Futenma airfield will be relocated to a coastal area 
across the cape of Henoko and contiguous waters in Oura Bay and 
Henoko Bay. However, Okinawa Prefecture has been opposed to the V- 
shaped plan for that coastal area. The Defense Agency therefore 
crossed out all these specific place names in its final draft. 
The final draft says the Futenma relocation will be implemented 
"on the basis of a plan approved in the Japan-US Security 
Consultative Committee (on May 1)." 
 
However, the Foreign Ministry claimed on May 26 that the Defense 
Agency's final draft fails to ensure the construction of the V- 
shaped airstrips. The Foreign Ministry, in its proposal to the 
Defense Agency, took the position that the final draft is 
inappropriate for a cabinet decision since it does not set forth 
the government's course of action to implement the Japan-US 
agreement. Koike also suggested the need to coordinate on the 
final draft, saying, "I hear Okinawa Prefecture and Nago City 
have yet to consent (to the coastal relocation plan)." In the 
meeting, Koike pointed out that the final draft fails to 
incorporate Okinawa Prefecture's position. She is expected to 
clarify her cautious view when the government makes a cabinet 
decision on May 30. 
 
Meanwhile, Okinawa Prefecture has also asked the government to 
change the final draft on economic stimulus packages. That is 
because the final draft is unclear on whether the government will 
continue its package of economic measures based on the 1999 
cabinet decision regarding Futenma relocation. Okinawa Governor 
Keiichi Inamine will come up to Tokyo today and will likely ask 
the government to retouch the final draft. 
 
8) Security Council of Japan approves US force realignment basic 
policy; Okinawa to announce disapproval of government policy 
 
YOMIURI (Page 4) (Full) 
May 30, 2006 
 
 
TOKYO 00002946  006 OF 012 
 
 
The government decided at a Security Council of Japan meeting 
yesterday on its basic policy concerning the implementation of US 
force realignment plans. The cabinet is scheduled to formally 
approve the government's basic policy this morning. Okinawa Gov. 
Keiichi Inamine is expected to announce his disapproval of the 
policy today, saying, "It does not reflect Okinawa's wishes." 
 
The basic policy will abolish the December 1999 cabinet decision 
incorporating economic stimulus measures for the northern part of 
Okinawa based on the original Henoko offshore plan for the 
relocation of Futenma Air Station. Okinawa is reacting strongly 
to the repeal of the 1999 cabinet decision for fear of losing 
economic stimulus measures for the northern part. On May 11, 
Defense Agency Director General Fukushiro Nukaga and Inamine 
signed a basic agreement signifying "continued talks based on the 
government's plan." Okinawa is unhappy with the draft cabinet 
decision devoid of "continued talks." 
 
9) Defense spending also subject to budget cut: LDP policy chief 
Nakagawa 
 
TOKYO SHIMBUN (Page 2) (Full) 
May 29, 2006 
 
Liberal Democratic Party (LDP) Policy Research Council Chairman 
Hidenao Nakagawa revealed in a speech delivered in Kagoshima City 
on May 28 that the LDP would make defense expenditures subject to 
budget cuts. He stated: "It's time to conduct a national debate 
on the cost for realigning US forces in Japan and a review of the 
Midterm Defense Buildup Program (Chukibo)." 
 
He pointed out the need for reducing defense budget, saying, "In 
order to avoid large-scale tax hikes, we must have great 
resolve." He indicated: If Japan demonstrates to the 
international community that it can participate by its action 
(rather than just by offering money) for international peace, its 
burden will be lessoned." 
 
10) Government, ruling coalition to submit bill to upgrade 
Defense Agency to ministry status to current Diet session 
 
SANKEI (Page 5) (Full) 
May 27, 2006 
 
The government and ruling parties decided on May 26 to submit a 
bill to raise the Defense Agency to ministry status to the 
ongoing session of the Diet. The Liberal Democratic Party's (LDP) 
Cabinet and Defense divisions formally approved the bill in a 
joint meeting the same say. The bill will be submitted to the 
Diet, waiting for a conclusion of the internal procedures of the 
LDP's junior coalition partner New Komeito. However, the outlook 
is that it will be difficult to get the bill through the Diet 
during the current session. The bill, therefore, will be a major 
issue of an extra Diet session slated for the fall. The bill 
stipulates that the Defense Facilities Administration Agency 
would be abolished and its operations transferred to the Defense 
Agency. It also stipulates that international peace cooperation 
activities would be raised to a primary duty for the Self-Defense 
Forces. 
 
11) JDA to penalize firms with maximum fine of 80% of contract 
money if they leak defense secrets 
 
TOKYO 00002946  007 OF 012 
 
 
 
NIHON KEIZAI (Page 1) (Excerpts) 
May 28, 2006 
 
The Defense Agency (JDA) decided to obligate firms contracted 
with it for production of defense-related equipment, such as 
missiles and radar, to pay a penalty if they leak defense 
secrets. The JDA will stipulate a penalty provision in a contract 
 
SIPDIS 
and thereby urge firms that leak information to pay a maximum 
penalty of 80% of the value of the contract. This policy is 
expected to apply to more than 100 firms, including Mitsubishi 
Electric Corp. and Mitsubishi Heavy Industries. The JDA, which 
aims to implement this policy in June, will hurriedly make 
coordination with firms on the policy. 
 
This move by the JDA came, primarily sparked by the revelation in 
January that data relating to the development stage of surface-to- 
air missiles had leaked to an organization affiliated with the 
pro-Pyongyang General Association of Korean Residents in Japan 
(Chongryon). The United States also has a strong interest in 
Japan's management of classified data, as the US is to jointly 
develop a missile defense system with Japan. 
 
12) China, ROK cancel just before start their participation in 
six-nation joint exercises to pursue suspicious vessels 
 
YOMIURI (Page 2) (Full) 
May 30, 2006 
 
Six countries - Japan, China, South Korea, Russia, the United 
States, and Canada -planned to carry out joint exercises to 
pursue suspicious boats in the East China Sea, the Sea of Japan, 
and other waters starting on May 27, but China and South Korea 
cancelled their participation just before the start of the 
drills, according to information obtained by the Yomiuri Shimbun. 
Both China and South Korea cited unexpected administrative 
affairs to explain their cancellation, but the speculation is 
that both countries did so out of consideration to North Korea. 
The joint exercises are going on among four nations without the 
participation of China and South Korea. 
 
The Japan Coast Guard (JCG) played a key role in planning the 
joint drills. The initial plan was to carry out relay pursuit by 
patrol boats from China, South Korea, Japan, and Russia in the 
sea areas covering about 2,000 kilometers ranging from Shanghai 
in China to Russia's coast facing the Sea of Japan. According to 
the JCG, China and South Korea informed the JCG of their 
cancellation in the joint exercises on the afternoon of May 26 
and early hours of May 27, respectively. 
 
In the initial plan, a suspicious vessel was defined as a ship of 
a country under suspicion of transporting weapons of mass 
destruction out of its boundaries. But on May 26, the JCG changed 
the status of this ship to a ship suspected of committing such 
illegal acts as smuggling, including people. Just before the 
change of the plan, South Korea again asked Japan about the 
purpose of the training and reportedly said: "It'll be difficult 
to take part in the training at this point in time." 
 
13) JCG to set up antipiracy office 
 
ASAHI (Page 1) (Abridged) 
 
TOKYO 00002946  008 OF 012 
 
 
May 29, 2006 
 
The Japan Coast Guard (JCG) will launch a special task force to 
cope with pirates in Southeast Asia, covering the Straits of 
Malacca, a vital point for international sea traffic. The JCG is 
mulling sending an official to an international information- 
gathering body to be newly established in Singapore, as Japanese 
ships have been attacked there by pirates. 
 
The task force, or the Office of Antipiracy Measures, will be set 
up at JCG headquarters in January next year. It will be staffed 
with five personnel for information gathering, analysis, and 
countermeasures. The office will forward local information to 
shipping firms. 
 
The JCG will also send an official to a piracy-related 
information center to be established this year in Singapore. The 
JCG expects to get information as soon as possible through its 
local staff and to issue warnings in cooperation with other 
countries. 
 
14) US urges Japan to support US-India nuke deal; Issue to be 
take up at Japan-US summit 
 
ASAHI (Page 1) (Excerpts) 
May 27, 2006 
 
The government of the United States has called on the Japanese 
government to support its decision to back India's nuclear energy 
development, several Japanese government officials revealed on 
May 26. President George W. Bush will likely bring the issue to 
his meeting with Prime Minister Junichiro Koizumi planned for 
June 29 in Washington. The Japanese government is now studying 
the issue in the direction of supporting the US decision. There 
is strong criticism in the Japanese government that the deal 
would further undermine the Nuclear Nonproliferation Treaty 
(NPT). The dominant view in the government is that "Japan as the 
only country to have suffered nuclear attacks should respond 
carefully." 
 
India is a nuclear power, but it has not signed the NPT. 
Washington has explained that if the International Atomic Energy 
Agency (IAEA) inspects India's civilian nuclear facilities, the 
nonproliferation structure will be strengthened. However, the US- 
India deal does not cover inspections of India's military 
facilities, leading to concerns that nuclear weapons would 
effectively be placed outside of the international arms control 
structure. 
 
Japanese government officials said US officials asked major 
countries, including Japan, for support soon after the deal was 
concluded with India. Tokyo has not stated its official position, 
but the government is now considering issuing a statement of 
basic understanding of the agreement for reasons: 1) the deal 
enables inspections of India's civilian nuclear facilities, 
strengthening the nonproliferation structure; 2) it would boost 
India's economic growth; and 3) Britain and France have already 
expressed their support. 
 
15) Minshuto head Ozawa may join hands with postal rebels in next 
summer's Upper House election 
 
 
TOKYO 00002946  009 OF 012 
 
 
TOKYO SHIMBUN (Page 2) (Full) 
May 29, 2006 
 
Asked about the possibility of his party joining hands with 
independents lawmakers, who left the Liberal Democratic Party 
(LDP) when they refused to vote for Prime Minister Junichiro 
Koizumi's postal-privatization bills, Ichiro Ozawa, president of 
the main opposition party Minshuto (Democratic Party of Japan), 
responded at a press conference in Tokushima Prefecture on May 
28: 
 
"It will be best if our party can join hands in the election with 
those who think the present LDP is not good. I hope we can 
cooperate for one purpose - driving the coalition of the LDP and 
New Komeito into a minority (in the House of Councillors)." 
 
Regarding specific cooperation with postal rebels who were 
defeated in last Septembers' House of Representatives election, 
he indicated that his party would back them as independent non- 
LDP candidates, saying, "It will be best that they will run on 
our party's ticket. But they are not necessarily required to be 
official Minshuto candidates if they don't want to do so." 
 
16) Fukuda criticizes Koizumi on Yasukuni" "Emotional response is 
the worst"; Consumption tax hike also suggested 
 
MAINICHI (Page 1) (Full) 
May 28, 2006 
 
Former Chief Cabinet Secretary Yasuo Fukuda of the Liberal 
Democratic Party delivered a speech at a New Komeito Upper House 
meeting in Nagoya yesterday. In it, touching on Japan's strained 
relations with China and South Korea due to Prime Minister 
Junichiro Koizumi's visits to Yasukuni Shrine, Fukuda said: 
 
"The situation is truly unfortunate. If one states, 'What's wrong 
with paying homage at Yasukuni Shrine?' the other side only 
becomes emotional. It's not good for top leaders and the general 
public to react emotionally." 
 
Fukuda's critical comment was apparently directed at the prime 
minister's attitude about his shrine visits. Fukuda also 
indicated that the consumption tax rate must be raised by about 
5%. 
 
Although he stopped short of announcing his candidacy for the LDP 
presidency, Fukuda noted regarding a tax hike: "Your cooperation 
is essential. I will come here again to ask for your cooperation 
when the time comes." 
 
He also criticized hard-line views on China in the LDP, stressing 
the need to improve relations between Japan and China: 
 
"This important bilateral relationship will be very difficult to 
maintain unless someone deals with them in a cool headed manner. 
Discussions in Japan have escalated too far. Voices raised here 
reach China and South Korea, creating a vicious cycle. A quarrel 
starts when bad words are used with no consideration to each 
other's position. There is no need to pick a fight." 
 
Fukuda also stated this about a possible consumption tax hike: 
"The topic is unpleasant to raise, but a 5% hike would generate 
 
TOKYO 00002946  010 OF 012 
 
 
12 trillion yen or so." 
 
17) Mori: Koizumi's successor must not visit Yasukuni Shrine 
 
ASAHI (Page 3) (Full) 
May 29, 2006 
 
Former Prime Minister Yoshiro Mori, appearing on a TV-Asahi 
program yesterday, clearly stated that whoever becomes Prime 
Minister Koizumi's successor, that person must not visit Yasukuni 
Shrine, saying: "If he thinks it's important to mend relations 
(between Japan and China), he must not pay homage at the shine." 
He also urged Yasukuni Shrine to take steps voluntarily in 
response to some LDP members' call for the separate enshrinement 
of Class-A war criminals, saying: 
 
"If national interests are being damaged severely by the 
collective enshrinement of Class-A war criminals at Yasukuni, the 
shrine must make an appropriate decision. Although the prime 
minister has repeatedly described the Yasukuni issue as a matter 
of the heart, it has escalated into a political issue. The matter 
does not work positively for Japan's national interests. It must 
be considered from a broad perspective." 
 
Mori also took a negative view about the idea of building a 
national war memorial, put forward by a panel when Yasuo Fukuda 
was serving as chief cabinet secretary, saying: "I don't think 
such is possible. Japanese people have special sentiments for 
Yasukuni Shrine." 
 
18) Poll: Private sector to boost capital investment by double 
digits for third consecutive year 
 
NIHON KEIZAI (Top Play) (Excerpts) 
May 29, 2006 
 
The private sector is expected to boost capital outlays in fiscal 
2006, according to a survey on capital investment conducted by 
the Nihon Keizai Shimbun. In their initial plans, companies in 
all industries (consolidated basis, total figures of capital 
spending inside and outside of Japan) will increase capital 
investment by more than 14.5% on average over fiscal 2005, 
marking a double-digit surge for the third consecutive year for 
the first time since the bubble period. Given the strong 
performance of the digital area, manufacturing industries, led by 
electrical machinery and materials, will boost investment by 
17.0% , while non-manufacturing industries will also log a 10.3% 
increase, the first double-digit surge in 15 years. If the 
current trends of a strong yen and falling stock prices persist, 
companies might lose momentum, but investment is likely to 
continue to serve as a locomotive for the nation's economy for a 
while. 
 
According to the plans of 1,498 companies that responded to the 
survey by May 16, the growth rates of all industries will expand 
for the third consecutive year. The yearly rate of increase in 
fiscal 2006 will also be the second highest, following the 15.4% 
recorded in fiscal 1989. 
 
(Corrected copy) Prime minister's US visit to start on June 27 
 
SANKEI (Page 3) (Full) 
 
TOKYO 00002946  011 OF 012 
 
 
May 26, 2006 
 
US aims to underscore difference in treatment to Japan, China 
 
Prime Minister Junichiro Koizumi will visit Canada and the US 
from June 27 through July 1, according to an official 
announcement by Chief Cabinet Secretary Shinzo Abe in a press 
conference yesterday. In his last tour of the US before leaving 
office in September, the prime minister wants to highlight the 
Japan-US alliance in a global context. 
 
President George W. Bush and Koizumi are expected to exchange 
views in their meeting on June 29 on reconstruction assistance 
for Iraq, where the security situation is still looking grim 
despite the inauguration of a full-scale government. The two 
leaders are also likely to discuss North Korea's nuclear and 
abduction issues. 
 
Prior to the US visit, the prime minister will also visit Canada 
to meet Prime Minister Stephen Harper - the first since Harper 
took office - in Ottawa on June 28. 
 
Ahead of the G-8 summit (Sankt Peterburg Summit) in Russia in mid- 
July, the prime minister will coordinate views with the US and 
Canadian leaders on various issues facing the international 
community. 
 
US likely to treat Koizumi as state guest 
 
Takashi Arimoto, Washington 
 
Prime Minister Junichiro Koizumi is not the chief of state, so 
the upcoming US tour is an "official visit," as said by 
Presidential spokesperson Snow. But the US is likely to treat 
Koizumi as a de facto state guest by arranging a banquet for him. 
When Chinese President Hu Jintao visited the US in April, the US 
held only a luncheon. According to a US government source, 
Washington's red-carpet treatment, unlike the one to the Chinese 
leader, "is also intended to demonstrate the close alliance 
between Japan and the US." 
 
Snow said: "The Japan-US alliance is based on common values and 
agenda items," adding that the two leaders are expected to 
discuss antiterrorism, the protection of freedom and democracy, 
the promotion of security and prosperity in Asia, and other 
issues. 
 
President Bush has rarely held a banquet since assuming the 
presidency, but he did hold one for Australian Prime Minister 
John Howard on May 16. Australia has also dispatched troops to 
Iraq, like Japan. 
 
Bush has highly appreciated Japan and Australia for the 
cooperation they have extended in fighting terrorism in 
Afghanistan and Iraq since the terrorist attacks on the US in 
September 2001. 
 
Washington's treatment of Prime Minister Koizumi also reflects 
the President's desire to "offer highest-level hospitality" 
before he leaves office in September, in order to convey his 
personal appreciation for his cooperation for Iraq 
reconstruction. 
 
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SCHIEFFER