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UNCLAS SECTION 01 OF 12 TOKYO 003012 
 
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:  DAILY SUMMARY OF JAPANESE PRESS 06/01/06 
 
INDEX: 
 
(1) Cabinet approval of next set of "big-boned" policy guidelines 
likely to slip to July due to difficulty coordinating spending 
cuts 
 
(2) Tokyo, as ally of US, now in a double bind in face of 
Washington's call on Japan to consider sanctions on Iran 
 
(3) USFJ realignment: Cabinet decision a far cry from ensuring 
implementation 
 
(4) Full text of gov't policy to implement US force realignment 
in Japan 
 
(5) Aircraft carrier deployment to Yokosuka: Persuasive US 
documentation of safety record 
 
(6) Editorial: Measures necessary to build compact cities to 
protect environment, stop population decrease 
 
(7) The challenges of a resources-poor country (Chapter 3)-Energy 
security (Part 1): No visible strategy for sea-lane security 
 
(8) Nine prefectures to introduce own suburban large store- 
opening restrictions 
 
(Corrected copy) Draft trade white paper for 2006 proposes making 
Japan an investment-oriented nation, boosting investment in Asia 
 
ARTICLES: 
 
(1) Cabinet approval of next set of "big-boned" policy guidelines 
likely to slip to July due to difficulty coordinating spending 
cuts 
 
NIHON KEIZAI (Page 2) (Abridged) 
June 1, 2006 
 
Cabinet approval of the government's set of "big-boned" economic 
and fiscal policy guidelines for fiscal 2006 that includes reform 
to bring together national revenues and expenditures is likely to 
slip from June to July. 
 
Liberal Democratic Party Policy Research Council Chairman Hidenao 
Nakagawa yesterday morning went before the fiscal and economic 
reform council, which is composed of working-level officials of 
the government and members of the ruling coalition, and said: "We 
have to monitor the situation, but we will produce plans before 
the G-8 Summit without fail." Nakagawa was talking about mapping 
out plans to cut spending that would be a key element in the 
guidelines. 
 
Timeline flexible 
 
Keenly aware of the LDP's mood, Economic and Fiscal Policy 
Minister Kaoru Yosano told the Council on Economic and Fiscal 
Policy last evening: "We will work hard for a cabinet decision in 
June. But if that's not possible, we will get the basic policies 
approved in early July before the Summit." The Council members 
endorsed Yosano's view. Prime Minister Junichiro Koizumi also 
told reporters last night: "A cabinet decision can wait. 
Discussions must be conducted thoroughly." 
 
TOKYO 00003012  002 OF 012 
 
 
 
The delay in cabinet approval is partly ascribable to deadlocked 
discussions in the LDP on spending cuts. Discussions are underway 
in five subcommittees under the LDP expenditure reform project 
team, chaired by Nakagawa. A study of social security has made no 
progress. Stalled Diet deliberations on important bills, 
including medical reform legislation, make it difficult to 
accelerate discussions in the LDP. 
 
"Things will remain difficult unless there are bright prospects 
for important bills to clear the Upper House," a Policy Research 
Council member said. 
 
With the Upper House election coming up next year, Mikio Aoki, 
chairman of the LDP caucus in the Upper House, is opposed to 
budget cuts that would draw strong backlashes from local areas 
and industries. With the ongoing Diet session scheduled to end on 
June 18, LDP lawmakers, especially Upper House members, are eager 
to eliminate as many destabilizing factors as possible. 
 
LDP as central player 
 
Usually, the Cabinet Office and the Finance Ministry make 
adjustments to basic budgetary policy. But since Koizumi ordered 
in late March the LDP to exhibit strong leadership in formulating 
plans to slash expenditures, the initiative has totally shifted 
to the party. 
 
Calls are growing louder in the ruling coalition for bold 
spending cuts, as chances are becoming stronger that the 
government will give up on raising the consumption tax. 
 
"We must not take half-baked steps, such as combining spending 
cuts and a tax hike," Nakagawa said in his speech last night at 
LDP headquarters. 
 
(2) Tokyo, as ally of US, now in a double bind in face of 
Washington's call on Japan to consider sanctions on Iran 
 
NIHON KEIZAI (Page 3) (Full) 
June 1, 2006 
 
The issue of Iran's nuclear development seems likely to affect 
Japan. The US government has asked Japan to consider financial 
sanctions on Iran. This move came as part of Washington's effort 
to explore the possibility of forming a "coalition of the 
willing" led by the United States in case international 
organizations, such as the United Nations Security Council 
(UNSC), do not work properly. But as Iran is a major oil supplier 
for Japan, Tokyo may wait for a while to see how the situation 
develops. But should the US, an ally of Japan, urge it to take 
more specific action in the weeks ahead, Japan will find itself 
in a fix. 
 
Iranian oil embargo certain if sanctions imposed 
 
An international conference on Iran's nuclear program was held in 
London in late May. The conference was attended by Deputy Foreign 
Minister Tsuneo Nishida and other officials from Japan. During 
the session, the US reportedly pushed Japan to consider financial 
sanctions on Iran. 
 
The US expects Japan to take action under its Foreign Exchange 
 
TOKYO 00003012  003 OF 012 
 
 
Law, which was amended in 2004 to impose economic sanctions on 
North Korea. If Japan were to suspend remittances to certain 
firms and individuals, "Iran without fail would respond, 
including a suspension of oil exports," a senior Foreign Ministry 
official explained. In fact, Iranian Foreign Minister Mottaki has 
stated that if Japan were to take part in sanctions on Iran, 
"Iran will reconsider economic cooperation (with Japan)." It will 
be extremely difficult for Japan to decide to sign on to 
financial sanctions on Iran. 
 
Japan concerned about China's possible move to snatch oil 
interests 
 
Some in Japan have begun expressing the concern that there may be 
an impact on the joint development project for the Azadegan oil 
field in the southern part of Iran. This oil field is the largest 
in the Middle East and estimated to have 5 to 26 billion barrels 
of oil reserves. Should this project be dropped, China or other 
countries trying to secure natural resources could acquire oil 
interests from Japan. 
 
The Japanese government expects the situation to calm down 
without sanctions. At a press conference yesterday, the Foreign 
Ministry's Spokesman Yoshinori Katori made only this comment: "We 
hope to see Iran take the international call seriously and engage 
in discussions in a way to get Iran to halt its uranium 
enrichment activities." 
 
(3) USFJ realignment: Cabinet decision a far cry from ensuring 
implementation 
 
SANKEI (Page 3) (Abridged) 
May 31, 2006 
 
The government yesterday made a cabinet decision approving a 
basic course of action regarding the planned realignment of US 
forces in Japan. The cabinet-adopted realignment blueprint, 
however, is devoid of specificity, as it avoids specifying where 
to relocate the US Marine Corps' Futenma Air Station. The cabinet 
decision is a far cry from ensuring its effectiveness. The 
Koizumi cabinet has now left local coordination and budgetary 
steps to its successor. The US military's realignment in Japan 
will rely heavily on the post-Koizumi cabinet. 
 
"I hear that Okinawa Prefecture and Nago City can't agree (to the 
planned US force realignment)." With this, Minister of State 
Yuriko Koike, who is in charge of Okinawa and the northern 
territories, upbraided the Defense Agency in yesterday's cabinet 
meeting regarding the agency's rush for a cabinet decision. The 
Cabinet Office is in charge of Okinawa development. Meanwhile, 
the Defense Agency did not conduct spadework with the Cabinet 
Office and fast-tracked its negotiations with Okinawa and its 
base-hosting localities over Futenma relocation. Koike therefore 
implied her dissatisfaction with the agency in the cabinet 
meeting. 
 
Base-hosting localities are strongly critical of the Defense 
Agency for its negotiating stance. The agency, feeling pressed 
for cabinet approval, changed a number of officials in its 
negotiations with local officials. In the end, the agency 
appointed a senior official who was not in charge of base issues. 
This is one of the reasons why Okinawa Prefecture and its base- 
hosting municipalities stiffened their attitudes. "The Defense 
 
TOKYO 00003012  004 OF 012 
 
 
Agency is trying to push its way through with someone who is 
ignorant of the circumstances in the past," said a senior 
official of the Okinawa prefectural government. 
 
On May 26, the Defense Agency was at a moment of truth in its 
coordination over the wording of its basic policy documentation 
regarding the US force realignment. Foreign Minister Taro Aso 
called Defense Agency Director General Fukushiro Nukaga to urge 
the defense chief to retouch the document's wording. "This will 
create problems in the future," Aso told Nukaga over the phone. 
That is because the agency's policy document did not specify a 
coastal area of Camp Schwab in the city of Nago as the site for 
Futenma relocation. 
 
In its policy document for cabinet approval, the Defense Agency 
put the Japan-US agreement on the backburner and gave priority to 
Okinawa Prefecture, which has rejected the agency's plan to lay 
down a pair of runways in a V-shape at a new facility. That is 
why the agency avoided specifying the relocation site in the 
document. With the June 29 Japan-US summit ahead, the agency only 
glossed it over with cabinet approval. 
 
The Defense Agency is going to work out the V-shaped construction 
plan this October. However, the agency backpedaled on the 
construction plan with insubstantial wording, as the document 
only says the agency will "immediately work out" the construction 
plan. Despite such a concession, Okinawa Prefecture is upset at 
the cabinet decision, with Governor Keiichi Inamine calling it 
"extremely regrettable." 
 
The document says the Defense Agency will take legislative and 
budgetary measures in order for Japan to facilitate cost sharing 
for the relocation of US Marine Corps troops from Okinawa to 
Guam. However, Prime Minister Junichiro Koizumi has clarified 
that the government would not introduce a realignment 
facilitation bill to the Diet at its current session and would 
leave the legislation for this fall's extraordinary session or 
later. At this point, the legislation is up in the air. 
 
In the meantime, the government has yet to find a way to cover 
realignment costs or to clear up whether to earmark a separate 
budget slot for such costs outside defense spending. To begin 
with, it will take time, as Koizumi has noted, to calculate and 
estimate the total cost of realignment. The government will 
review the current midterm defense buildup program and study fund- 
raising measures in order to share the realignment costs. 
However, the government will inevitably find it difficult to do 
so. 
 
The post-Koizumi cabinet will face difficulties upon its 
inauguration. The realignment talks lasted two and a half years. 
To wrap up the talks, however, the basic policy paper is too 
empty and unsubstantial. Japan may have to pay for it later in 
the process of implementing the planned realignment, which is to 
be completed in eight years. 
 
(4) Full text of gov't policy to implement US force realignment 
in Japan 
 
MAINICHI (Page 6) (Full) 
May 31, 2006 
 
The government yesterday made a cabinet decision that approved 
 
TOKYO 00003012  005 OF 012 
 
 
its policy regarding the planned realignment of US forces in 
Japan. Its full text is as follows: 
 
Government efforts to restructure the presence of US forces in 
Japan 
(Approved by the Cabinet, May 30, 2006) 
 
¶1. Japan and the United States have held intergovernmental 
consultations, in which the Japanese and US governments reviewed 
the structure of US forces in Japan as well as the Self-Defense 
Forces' roles, tasks, and capabilities. On Oct. 29, 2005, the 
Japan-US Security Consultative Committee (SCC) approved an 
interim report of recommendations on these matters. Japan and the 
United States continued their intergovernmental consultations 
thereafter. On May 1, 2006, the SCC approved a final report of 
bilateral agreements reached between the Japanese and US 
governments on specific steps for the realignment of US forces in 
Japan (hereinafter referred to as "realignment-related steps). 
 
¶2. It is important that Japan and the United States maintain and 
develop their bilateral security arrangements in order to 
continue ensuring Japan's national security in the new security 
environment and in order to maintain peace and stability in the 
Asia-Pacific region in such an environment. The US military 
presence in Japan is the core of the bilateral security 
arrangements, and it is therefore necessary to secure the US 
military's use of facilities and areas. Okinawa Prefecture is 
home to a large number of facilities and areas in the US 
military's use. In Japan's mainland prefectures as well, 
localities hosting US military facilities and areas are becoming 
urbanized. These US military facilities and areas there are 
greatly affecting the living environment and development of local 
communities. Given such a situation, it is important to continue 
securing the US military's use of facilities and areas with broad 
understanding and cooperation obtained from the Japanese people. 
At the same time, it is also important to alleviate the burden of 
base-hosting localities while sustaining deterrent capabilities 
in order to maintain and develop bilateral security arrangements. 
 
¶3. The final report of agreements between Japan and the United 
States on the US force realignment incorporates specific steps, 
such as: 
 
-- Reducing about 8,000 US Marine Corps troops in Okinawa 
Prefecture, where US forces use a large number of facilities and 
areas; 
-- Relocating Futenma airfield to Camp Schwab; 
-- Returning the sites of US military facilities and areas to a 
considerable extent in densely populated districts south of 
Kadena airbase (including the overall reversion of Futenma 
airfield, Makiminato service area, and Naha port facility); 
-- Consolidating bilateral intercommand cooperation with the Air 
Self-Defense Force setting up the Air Defense Command's 
headquarters at Yokota airbase and with some other command 
relocations; 
-- Revamping the command functionality of US Army Japan at Camp 
Zama; 
-- Installing a US military radar system at the ASDF's Shariki 
Detachment base for ballistic missile defense; 
-- Redeploying a carrier-based air wing from Atsugi base to 
Iwakuni base; 
-- Returning Camp Zama and Sagami Depot in part; and 
-- Transferring some training missions 
 
TOKYO 00003012  006 OF 012 
 
 
 
Japan and the United States have agreed to implement these 
realignment-related steps in a steady way, giving heed to the 
timeframes specified in the final report. 
 
¶4. It is one of the government's most critical policy measures to 
ensure bilateral security arrangements in order for Japan to 
maintain its peace and national security, and the government 
therefore needs to make efforts for that purpose on its own 
responsibility. As it stands, the government will consider the 
wishes of local public entities to be additionally burdened in 
implementing the realignment-related steps. In return for their 
great contributions to Japan's peace and national security, the 
government will implement economic stimulus packages, including 
measures for the development of local communities. In addition, 
the government will continue to make its utmost efforts to 
facilitate the utilization of sites after their reversion and 
ensure the job security of employees working at US military 
bases. 
 
¶5. It is extremely important to redeploy US Marine Corps troops 
from Okinawa Prefecture to Guam in order to alleviate its 
intensive base-hosting burden. Japan will share costs needed for 
this Marine relocation to Guam and will expedite it. 
 
¶6. Under this policy, the government will take measures, 
including legislative and budgetary measures, in order to 
implement the realignment-related steps in an adequate and prompt 
manner. However, Japan is in dire fiscal straits. The government 
will therefore need to carry out further streamlining-oriented 
cost reductions in an even more drastic manner to improve the 
efficiency of Japan's defense buildup. The government will review 
its midterm defense buildup program for fiscal 2005-2009-which 
was approved in a cabinet decision of Dec. 12, 2004-as soon as 
the government can estimate total costs needed for the 
realignment-related steps in consideration of specific 
realignment plans. 
 
¶7. When it comes to the relocation of Futenma airfield, the 
government will facilitate Futenma relocation based on a plan 
approved by the SCC on May 1, 2006. In this Futenma relocation, 
the government will factor in the standpoints of the Okinawa 
prefectural government and other relevant local public entities. 
In addition, the government will also consider the past 
consultations over Futenma-related measures, such as building a 
new facility, entering into a basing agreement, and taking 
measures for the development of base-hosting local communities. 
Based on these factors, the government will proceed with Futenma 
relocation while heeding the necessity of removing Futenma 
airfield's danger and preserving the natural environment as well 
as the feasibility of Futenma relocation. The government will 
immediately work out a plan to build an alternative facility for 
Futenma airfield. When it comes to its specifics, the government 
will set up a consultative body with the Okinawa prefectural 
government and other relevant local public entities to discuss 
measures in terms of the Futenma alternative construction plan, 
safety and environmental protection, and local development. 
Accordingly, the government will repeal its previous policy 
documentation pertaining to Futenma airfield's relocation, which 
was approved in a cabinet decision of Dec. 28, 1999. In fiscal 
2006, the government will implement projects that are based on a 
clause subtitled "II. Local development" in the abovementioned 
government policy. 
 
TOKYO 00003012  007 OF 012 
 
 
 
(5) Aircraft carrier deployment to Yokosuka: Persuasive US 
documentation of safety record 
 
Commentary by Tetsuya Endo, 71, former deputy chairman of the 
Nuclear Energy Council. 
 
YOMIURI (Page 13) (Full) 
May 31, 2006 
 
Following its decision to deploy in 2008 the USS George 
Washington to Yokosuka Naval Base (in Kanagawa Prefecture), 
Washington has made efforts to dispel local anxiety by issuing 
"factsheets" that explain the safety of nuclear-powered warships. 
The contents of the factsheets are fully appreciated. Though I 
defer to others on the security-related significance of the 
deployment, I would like to speak out here as an expert on 
nuclear affairs. Despite the restrictions on military secrecy, 
the US government has provided Japan, probably for the first 
time, with detailed technical information that explain how 
nuclear warships can continue their operations safely even in 
combat. 
 
Civilian nuclear power reactors do not have the same 
characteristics as a nuclear-powered carrier, which carries 
enough fuel to last for 25 years and can resist impacts up to 50 
times the force of gravity. One can easily expect the USS George 
Washington as a major US military warship has multiple defense 
systems, including a quick emergency shutdown system and a 
seawater cooling system. It is also built with multiple safety 
systems such as a robust nuclear container and hull structure. 
The US builds nuclear-powered carriers without being restricted 
by commercial profitability. It can be said that with a crew of 
up to 5,500 living aboard a carrier proves the safety of nuclear- 
powered warships. 
 
Apart from getting into what the definition of an "accident" is, 
experts recognize that there has never been an accident in the 
nuclear power reactors of US Navy carriers. Preparedness and then 
response in case there trouble occurs is of the utmost 
importance. The track record of operations of US nuclear-powered 
warships over the past 50 years shows that appropriate responses 
have always been taken. 
 
The reasons cited for opposing an aircraft carrier deployment 
include: 1) concern that an enriched uranium reactor might cause 
a disaster similar to the Chernobyl accident; and 2) radioactive 
waste might be discharged from the ship. 
 
The Chernobyl accident was caused by structural defects that 
included the danger of a reactor runaway under low-power 
operations, the lack of an emergency shutdown system, and the 
absence of a containment reservoir around the reactor. The 
accident was marked by a disdain of safety. This kind of accident 
will never occur in Japanese nuclear power plants or in the light- 
water reactors (including pressurized-water reactors) of US 
nuclear-powered warships. 
 
The factsheets explains that the aircraft career possesses 
multiple safeguards and that the crews have been trained for 
emergencies.  It also states that the US Navy never conducts 
special disaster drills outside its bases even on the mainland, 
since it does not need to take any special defense measures. I 
 
TOKYO 00003012  008 OF 012 
 
 
have heard that a survey team that visited US Naval San Diego 
Base in April heard first-hand this point from local government 
officials. 
 
In order to secure the peace of mind of Yokosuka residents, 
building a relationship of trust between the local residents and 
US military will be the most important challenge in the future as 
well. For example, one idea is to open a hotline connecting 
Yokosuka City Hall and an off-site facility that would be built 
within the base. 
 
The factsheets confirm that: the discharge of radioactive waste 
within 12 nautical offshore would be banned; fuel changes and the 
repair of nuclear reactors would be carried out within the US; 
and the operation of nuclear reactor would be suspended while the 
carrier is in port. The US military will never carry out work 
that requires radiation control. 
 
The nuclear reactors of US warships have been operating for about 
50 years. The number of operating-years of all warships totals 
5,700 years. Japanese commercial nuclear reactors total less than 
1,500 years. No one can predict that since there were no 
accidents in the past, there will never be an accident in the 
future, as well. But I think one can certainly say that US 
nuclear-powered warships have kept an excellent safety record. 
 
(The author, who is 71, served as the first ambassador to the 
International Organization In Vienna and as ambassador to the 
Korean Peninsula Energy Development Organization (KEDO).) 
 
(6) Editorial: Measures necessary to build compact cities to 
protect environment, stop population decrease 
 
TOKYO SHIMBUN (Page 5) (Full) 
May 31, 2006 
 
The White Paper on the Environment for 2006 gives consideration 
to environmental protection with an eye on the advent of an age 
of population decrease and looks back over the 50 years since the 
first official report of the outbreak of Minamata disease behind 
the nation's high economic growth. 
 
The Environment Ministry is not optimistic about the effect of 
the declining population on the environment. The white paper 
predicts: "The volumes of resources and energy consumed in Japan 
are expected to decrease, but this effect might be wiped out as 
the number of households increases, and public lifestyles change 
over the short run." 
 
As a result of more people moving into urban areas, the 
destruction of mountain villages will become even more serious. 
An expansion of abandoned farmland and a decrease in the number 
of storage reservoirs will deprive living creatures of their 
habitats, and escalate the crisis of the loss of biodiversity. 
 
Changes will also occur in cities, once highly populated during 
the high growth period. The cities will become less populous, and 
the distance of travel by humans and goods will be lengthened. As 
a result, the burden of transportation on the environment will 
become heavier. 
 
Given this, the white paper calls for measures to reduce the 
urban sprawl of regional cities. As good models, the paper cites 
 
TOKYO 00003012  009 OF 012 
 
 
Toyama's revival of streetcars as a downtown revitalization 
measure and Futatsui-machi's project to create bicycle-friendly 
towns by recycling abandoned bicycles in Akita Prefecture. 
 
As an overseas case, a project in Montreal, Canada, can be cited. 
The city succeeded in developing a people-friendly urban 
environment within walking distance by concentrating urban 
functions into a underground shopping complex newly established 
within a one-kilometer radius. Montreal reportedly took the multi- 
storied city envisioned by Leonard da Vinci 500 years ago as a 
model. 
 
In designing a compact city, the local environment and 
circumstances must be carefully examined. It is also necessary to 
look into the capabilities of local communities to protect the 
environment. 
 
The so-called Cool Biz program, the revival of Japanese wrapping 
cloths (furoshiki), and other nationwide environment-conscious 
performance are much needed efforts. But it might be even more 
important when managing the environment during a period of 
population decrease for the Environment Ministry to coordinate 
views with other government agencies to draw out local 
communities' potentials. 
 
For instance, the Ministry of Agriculture, Forestry and Fisheries 
has been at a loss about what to do with fallow land left 
uncultivated. Cooperation must be a new source of power. 
Attention should be paid to the remarkable reconstruction of 
Minamata City as a model case. 
 
By using the disgraceful labeling of an unprecedentedly seriously 
polluted town as the springboard, Minamata succeeded in turning 
itself into one of the greatest environment-friendly towns, owing 
to residents' wisdom and actions, as well as the local 
government's coordination capability. 
 
(7) The challenges of a resources-poor country (Chapter 3)-Energy 
security (Part 1): No visible strategy for sea-lane security 
 
SANKEI (Page 1) (Abridged) 
June 1, 2006 
 
In April this year, Qatar-a country facing the Persian 
Gulf-hosted an international energy forum at a high-class resort 
hotel in its capital city of Doha. Energy ministers gathered 
there from about 70 countries. The forum heated up and turned 
into a battle of words between oil producers and consumers. US 
and European delegates asked oil-producing countries to step up 
their outputs. Their request, however, encountered rebuttals from 
the delegates of oil-producing countries. "There's no problem 
with our supply capacity," one oil-producing country's minister 
argued. This oil minister went on, "Oil prices are now 
skyrocketing, but that's because of diplomatic tensions." 
 
In fact, waves of tension are surging across the Persian Gulf 
community. The United States and Europe are trying to stop Iran 
from enriching uranium that can be used potentially to develop 
nuclear weapons. In March, Iranian Interior Minister Pur- 
Mohammadi countered by issuing a warning: "We have the world's 
most sensitive energy shipping route." He implied with this 
remark a military blockade of the Straits of Hormuz. This remark 
triggered a runup of oil prices. In April, the oil market hit an 
 
TOKYO 00003012  010 OF 012 
 
 
all-time high of 75 dollars per barrel. 
 
Japan is a resourceless country, which imports crude oil for 
domestic consumption. In particular, Japan depends on the Middle 
East for nearly 90% of its oil imports. 
 
It takes a shipment of oil to travel more than 20 days at sea 
from the Persian Gulf to Japan. There are at any one time 80 
large oil tankers moving to or from the Persian Gulf along the 
sea-lane that reaches Japan. Japan therefore needs sea-lane 
security there for oil supply. 
 
The Straits of Hormuz, which are situated between Iran and the 
Oman Peninsula, are the most important point on the 6,000- 
kilometer oil road to Japan. The straits are about 50 kilometers 
wide. However, the straits are rocky on the side of Iran. The 
rock-free waterway for tankers' safe passage through the straits 
is only several kilometers wide. The greater part of oil 
shipments from the Middle East to Japan passes through these 
waters. 
 
Oil-shipping tankers bound for Japan have to clear another 
difficult pass, the Straits of Malacca, which are situated 
between Malaysia, Indonesia, and Singapore. The narrowest 
waterway in the straits is 2.5 kilometers. There are many 
shallows in the straits, so large tankers can pass through the 
straits only when the tide is in. In addition, Malacca is also a 
dangerous point, where armed pirates are ambushing ships. 
 
One solution to overcome the risk of Japan's sealane is to lower 
the degree of dependence on the Middle East. In May, the Ministry 
of Economy, Trade and Industry (METI) revised Japan's energy 
strategy. METI, in its new strategy paper, underscored the need 
for Japan to break away from its dependence on the Middle East. 
However, METI did not specify any numerical benchmark. That is 
because it could not find any other steady oil suppliers. 
 
If Iran should mine the Straits of Hormuz, all tankers would 
inevitably have to halt at sea. As a result, oil exports to the 
daily extent of 15 million barrels would be stopped. "If that is 
the case," Institute of Energy Economics, Japan (IEEJ) President 
Masahisa Naito said, "the price of oil would go higher than 200 
dollars per barrel." 
 
What can Japan do to avoid such a worst-case scenario? "Japan has 
to make every possible diplomatic effort," a senior METI official 
stressed. However, the government has several competent offices 
for Japan's sealane. One of them is the Ministry of Land, 
Infrastructure and Transport. The Japan Coast Guard and the 
Defense Agency are also in charge. They are not monolithic, 
however. 
 
Japan is now reaching a moment of truth in reconsidering its 
energy security, which will affect Japan's national interests. 
 
(8) Nine prefectures to introduce own suburban large store- 
opening restrictions 
 
ASAHI (Top Play) (Slightly abridged) 
June 1, 2006 
 
Nine prefectural governments have introduced or are looking into 
introducing their own stricter restrictions on building 
 
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supermarkets and other large-scale stores in the suburbs. A bill 
amending the Downtown Revitalization Law was enacted yesterday by 
the Diet. Including this law, three laws designed to prohibit 
suburban large-scale store openings in principle will be 
introduced across the nation by the fall of next year. The nine 
prefectures intend to add their own restrictions to the 
regulations in these three laws. 
 
An amended Town Planning and Zoning Law was also enacted during 
the current Diet session. Under this measure, retailers will not 
be allowed to open large facilities with a floor space of 10,000 
square meters or larger in the suburbs, such as supermarkets or 
movie theaters. Of the urban areas designated by municipalities, 
category-2 restricted residential areas, quasi-residential areas, 
and industrial areas will be added to the list of areas where 
large store openings are restricted, in addition to residential 
areas. Urbanization control districts are also subject to the 
restriction. Retailers will be allowed to open new large stores 
only in downtown commercial districts, neighborhood commercial 
districts, and quasi-industrial districts. 
 
But there are quasi-industrial districts located near downtown 
areas. It is also possible to build facilities even in the 
restricted areas if their floor space is slightly less than 
10,000 square meters. The nine prefectures will cover such 
loopholes by introducing their own regulations. 
 
Fukushima Prefecture enacted an ordinance on store-opening 
restrictions last October as the first prefecture in the nation. 
Hokkaido, Yamagata, Kyoto, Hyogo, Fukuoka, and Kumamoto 
prefectures have already drafted or are drafting guidelines on 
regulations. Iwate and Kanagawa prefectures have also studied the 
possibility of introducing their own regulations. 
 
Fukushima Prefecture's ordinance, which will come into effect 
this October, sets the allowable maximum floor space at 6,000 
square meters. The ordinance gives the prefectural government the 
authority to order the store-opening applicants to review their 
plans if it is feared that their plans might negatively affect 
nearby municipal governments. If potential store openers submit 
falsified plans, they will be fined up to 200,000 yen. 
 
Hokkaido plans to apply the brakes to store opening in quasi- 
industrial areas. Under its guidelines due out in July, municipal 
governments will be required to designate quasi-industrial areas 
as special-use districts. 
 
Hyogo Prefecture has decided to designate areas that come under 
its store-opening restrictions in August. In cities and towns 
along the coastline of the Seto Island Sea, the prefecture allows 
retailers to open stores with a floor space of 10,000 square 
meters or less in small shopping malls in front of stations and 
stores with a floor space of 6,000 square meter or less in 
suburban areas. Fukuoka Prefecture also plans to draw up store- 
opening guidelines by the end of this fiscal year. 
 
Reflecting views solicited this April from nearby local 
communities, Yamagata Prefecture has introduced a system to give 
the prefectural government the right to call for a review of 
store-opening plans. Kyoto Prefecture also intends to formulate 
guidelines to introduce a similar system. 
 
(Corrected copy) Draft trade white paper for 2006 proposes making 
 
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Japan an investment-oriented nation, boosting investment in Asia 
 
NIHON KEIZAI (Page 5) (Full) 
June 1, 2006 
 
The draft trade white paper for 2006 proposes making Japan an 
investment-oriented nation by increasing its surplus in the trade 
balance, based on the prospect that its trade surplus is expected 
to shrink given the current population decrease. The paper 
reiterates the necessity for Japan to boost direct investment 
particularly in growing Asia. 
 
The Ministry of Economy, Trade and Industry, which drafted the 
paper and released it yesterday, will submit it in a cabinet 
meeting late June. Japan's surplus in the income balance in 
fiscal 2005 totaled about 12.6 trillion yen, outstripping the 
surplus in the trade balance (about 9.6 trillion yen) for the 
first time. The white paper, though, notes that the rate of 
Japan's earnings from its overseas assets is still at the upper 
range of 2%, lower than those of the US and Britain (the upper 
range of 3%). 
 
Japanese firms have invested mainly in securities, on which the 
earning ratio remains low. The ratio of Japan's foreign direct 
investment (FDI) to its all assets overseas is 9%, lower than 
Britain's 17% and the United States' 33%. The white paper defines 
this result as one of the main reasons for Japan's low earnings 
rate. 
 
In 2004, 38% of Japanese firms invested in the US, while 19.5% 
invested in Asian countries. The white paper suggests that 
Japanese firms should shift their investment destinations to Asia 
with high growth potential, in order to increase their earning 
rates. The paper emphasizes the importance of removing 
restrictions on trade and investment by promoting EPAs. 
 
SCHIEFFER