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UNCLAS SECTION 01 OF 11 TOKYO 003072 
 
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 06/05/06 
 
INDEX: 
 
(1) Diverse views in US on Yasukuni Shrine; US gov't officials, 
experts concerned about impact on Asia diplomacy 
 
(2) 2006 LDP presidential race: Launch of a group of 94 junior 
and mid-level lawmakers supporting Shinzo Abe 
 
(3) Clear differences in referendum bills of ruling camp and 
Minshuto; Enactment of legislation difficult even when 
deliberations start 
 
(4) Tanigaki to attend G-8 Finance Ministers Meeting scheduled to 
start on June 9 to discuss measures against skyrocketing oil 
prices and other matters 
 
(5) Interview with Jerry Paul, NNSA principle deputy 
administrator: GNEP as stepping stone for international framework 
 
(6) The challenges of a resources-poor country - energy security 
(Part 2): Saudi Arabia hopes to enhance friendship with Japan, 
leveraged by petrochemical joint venture 
 
(7) Many local governments eye independent measures to control 
suburban openings of medium-sized stores even less than 10,000 
square meters in floor space 
 
ARTICLES: 
 
(1) Diverse views in US on Yasukuni Shrine; US gov't officials, 
experts concerned about impact on Asia diplomacy 
 
ASAHI (Page 3) (Full) 
June 4, 2006 
 
WASHINGTON-How is the United States looking at Prime Minister 
Koizumi's visits to Yasukuni Shrine? With his US visit scheduled 
for later this month, there are various arguments cropping up 
from among US government officials and experts on Japan-US 
relations. They differ on his practice of paying homage at the 
shrine. Some are calling for him to stop his pilgrimage to the 
shrine. However, there are also deep-seated arguments standing 
behind him. President Bush and his administration remain silent 
about Koizumi's shrine visits out of consideration for Japan as 
an ally of the United States. However, the Bush administration is 
concerned about a potential impact on its Asia diplomacy. 
 
Japan's prime minister should promise to stop visits to Yasukuni 
Shrine, a senior US lawmaker said in a latter to US House of 
Representatives Speaker Hastert. 
 
US House of Representatives International Relations Committee 
Chairman Hyde, 82, sent the letter to the speaker in late April. 
In that letter, the congressman conditionally welcomed Koizumi if 
he would address the US Congress when he visits the United 
States. This, however, had repercussions. In the United States, 
there were two responses. 
 
One has been a view representing those who regard Hyde's opinion 
as peculiar to his generation. Hyde is a veteran who fought Japan 
in the Pacific theater of World War II. One Japan expert noted 
that Hyde's assertion came from his war experience and was not 
common to the American public. 
 
TOKYO 00003072  002 OF 011 
 
 
 
The other response represents those who think the problem it is 
not so simple, according to a source in the US Congress. For now, 
the source noted, the Yasukuni issue is a matter of little 
interest in the United States. However, there is still a chance 
of Japan's past sparking controversy between Japan and the United 
States should it be mishandled. One senior official at the 
Department of State stated that once the American people deepen 
their understanding of the Yasukuni issue, they would be 
displeased. 
 
In his mid-May speech, Michael Green, National Security Council 
(NSC) senior director for Asian affairs at the White House until 
late last year, explained public opinion in the United States by 
classifying four groups from right to left. 
 
The "far right" group, clearly anti-Chinese, supports Koizumi's 
Yasukuni homage. "The more Japan irritates China, the more 
pleased this group is," Green says. The so-called 
neoconservatives are in this group. 
 
The "right-of-center" group is represented by the Bush 
administration, which weighs the Japan-US alliance and thinks it 
better not to intervene in the issue. Moderates in the Republican 
Party belong to this group. 
 
The "left-of-center" group includes the right wing of the 
Democratic Party. This group is pro-Japanese and has expectations 
for Japan's role, so it insists that the United States should 
intervene in the issue to call for the prime minister to stop 
visiting the shrine. 
 
The "far left" group includes the Democratic Party's left wing 
and the New York Times, which has noted in an editorial that the 
United States and Asia would be isolated if the Yasukuni issue is 
left unattended. 
 
Based on Green's analysis, different standpoints in the United 
States over the Yasukuni issue and China can be illustrated 
below. 
 
Hyde is a Republican conservative. However, his war experience 
makes him take a stance of intervening in the issue. Former 
Deputy Assistant Secretary of Defense Campbell urges the Bush 
administration to intervene in the issue, asserting that 
Koizumi's Yasukuni homage is not in Japan's interests. 
 
Meanwhile, former Deputy Secretary of State Armitage, a 
Republican moderate, takes the position that Japan's prime 
minister should continue to visit Yasukuni Shrine as long as 
China complains about it. 
 
However, few think it all right to leave the issue to fester. 
That is because they think the deterioration of Japan-China 
relations can never be of benefit to the United States. "If Japan 
loses its moral superiority in Asia, the United States' position 
would also weaken," says Paul Giarra, a former senior director 
for Japan at the Department of Defense. 
 
"If China keeps quiet," Armitage also says, "there will be room 
for the prime minister make a decision." 
 
Bush administration remains silent but paying close attention 
 
TOKYO 00003072  003 OF 011 
 
 
 
What made the US administration remain silent about Koizumi's 
Yasukuni visits was the Japan-US summit that was held in Kyoto in 
November last year. 
 
Bush asked Koizumi about his view of Japan-China relations. 
Koizumi spouted his opinion about his Yasukuni visits. Bush then 
thought to himself that Koizumi would not take his word, 
according to a US government source. 
 
If the United States tells Japan's prime minister to stop 
visiting Yasukuni Shrine, that would mean tuning in to China. The 
Bush administration does not want the United States and China to 
face off with Japan. Japan's public opinion is now split over the 
Yasukuni issue, so the United States' intervention in this issue 
could incur anti-US sensitivity in Japan. 
 
"We understand this is an important issue, so we're paying 
attention to this issue," a high-ranking official of the US 
government said. "But," this official added, "the United States 
is not in a position to do something about it." The Japan-US 
summit is slated for late June. However, Bush is not expected to 
touch on the Yasukuni issue there. 
 
(2) 2006 LDP presidential race: Launch of a group of 94 junior 
and mid-level lawmakers supporting Shinzo Abe 
 
ASAHI (Page 4) (Abridged slightly) 
June 3, 2006 
 
Lawmakers from the Liberal Democratic Party (LDP) held an 
inaugural meeting on June 2 of a parliamentary group supporting 
Chief Cabinet Secretary Shinzo Abe's policy of helping those who 
fail gain a second chance. A total of 94 Diet members joined 
yesterday's session at party headquarters. Many in the LDP see 
the meeting as the establishment of "an Abe faction" by young and 
mid-level members, who are expected to back Abe in the LDP 
presidential election in September. Being aware that former Chief 
Cabinet Secretary Yasuo Fukuda is moving up quite fast behind him 
in recent opinion polls, Abe aims to win in factional competition 
with Fukuda. His sudden action has confused LDP members and 
bureaucrats. 
 
"I greet you on behalf of the government," said Abe in a speech 
at the meeting. Stressing his position as a representative of the 
government, Abe stated in a low-key way: "The government would 
appreciate it if you conduct active discussion on policy matters 
and support this policy direction." When asked about the meeting 
in a press conference later in the say, he said, "It's not a 
political move." 
 
Many people do not take Abe's explanation at face value. The 
parliamentary group is a carefully worked out "organization" for 
the presidential race by Abe and his aides. Yoshihide Suga, 
senior vice minister for internal affairs and communications, who 
is a leader of the group and a members of the Niwa-Koga faction, 
began to take action soon after the Golden Week holidays in early 
May when attention was fixed on Fukuda's visit to Washington. 
 
They had a scenario of inviting Abe as lecturer to the group on 
May 30 when he released an interim report of the government's 
"Council on Promotion of a Second Challenge," which Abe chairs. 
Under the scenario, they collected the names 20 members, the 
 
TOKYO 00003072  004 OF 011 
 
 
number required for running in the presidential race, in just two 
weeks. Abe as a cabinet member is unable to move freely outside 
the government, but he can take official action as chief cabinet 
secretary in a parliamentary group that promotes government 
 
SIPDIS 
policy. 
 
The 94 members are from various factions of the LDP. The group 
has succeeded in making a certain impact on the party. After the 
meeting, Suga proudly told reporters his support for Abe, "Now is 
not time to make a decision on matters by a tally of numbers." 
 
House of Councillors member Ichita Yamamoto said: "Many members 
from various factions have their hopes on Chief Cabinet Secretary 
Abe." Koizumi also told reporters later in the day, "The 
membership of 94 is larger than I expected." 
 
In an attempt to gain public support, Abe will increase the 
number of his appearances on TV programs starting June 3. After 
the end of the ongoing Diet session, he intends to hold dialogues 
with the public across the country to let them know of his 
"second challenge" policy, leading to the formal announcement 
after the July G-8 summit of his candidacy for the LDP leadership 
race. 
 
However, many LDP members think that it is too early to take 
action since three more months are left until September's 
presidential race. There remains the issue whether the Mori 
faction will field a single candidate. A lawmaker with close ties 
to Abe explained his move: "He has no other choice but to take 
action before (Mr. Fukuda starts his campaign) to overcome those 
veteran lawmakers who favor Mr. Fukuda." 
 
New Diet members to take loyal test 
 
Abe is determined to continue the Koizumi reform drive and to 
narrow the income gap in society, which is regarded as "negative 
legacy" of the reforms. In consideration of a consistency with 
the Koizumi reform program, he has emphasized improvement in the 
safety net, as well as an equal opportunity for offering second 
chances. 
 
The other aim is to build a personal network with senior 
bureaucrats by drafting support measures that affect all 
agencies. Although Abe is well versed in health, labor and 
welfare affairs, he has served only in the chief cabinet 
secretary post. Some lawmakers point out his lack of experience 
 
SIPDIS 
in serving in cabinet posts. 
 
The bureaucracy is reluctant to support Abe. Many senior 
officials were disturbed by the chief cabinet secretary's idea of 
drafting policies with bureau directors going over the heads of 
cabinet ministers and vice ministers. Abe therefore was unable to 
include concrete measures in the set of his campaign pledges. 
 
Abe is looking forward to proposals by the parliamentary group in 
order to flesh out his campaign pledges, but the lawmakers who 
attended the meeting are interested only in politics. House of 
Representatives member Yuzo Yamamoto, who heads the group, 
stressed, "We did not get together for preparing for the LDP 
presidential race." When asked by reporters about whether he 
supported Abe, Lower House member Jun Matsumoto, a Kono faction 
member, who has close ties with Foreign Minister Taro Aso, 
replied, "This is a pure study group to discuss imminent 
 
TOKYO 00003072  005 OF 011 
 
 
important issues." But his is a minority view. 
 
The group is composed of junior and mid-level Lower House 
members, who are now serving in their seventh-term or less and 
Upper House members serving in their second-term or less, with a 
generational change in mind. 
 
The number of Lower House members serving in their first and 
second-term alone totals 50. A new lawmaker said: "If I did not 
join the group, they would think that I dislike Mr. Abe. This is 
just a loyalty test." 
 
At a press conference on June 2, Minshuto (Democratic Party of 
Japan) Secretary General Yukio Hatoyama commented: "It seems that 
the Abe faction has been established." However, it is uncertain 
how far the group will expand. 
 
(3) Clear differences in referendum bills of ruling camp and 
Minshuto; Enactment of legislation difficult even when 
deliberations start 
 
ASAHI (Page 4) (Abridged slightly) 
June 2, 2006 
 
The ruling coalition of the Liberal Democratic Party (LDP) and 
its junior partner, New Komeito, and the largest opposition 
party, Minshuto (Democratic Party of Japan) have submitted two 
separate national referendum bills that would set procedures for 
amending the Constitution. The Diet launched yesterday 
deliberations on the bills in the House of Representatives 
plenary session, in which explanations of the purpose of the 
bills followed by a question-and-answer session were conducted. 
This was the first time for the Diet to deliberate constitutional 
reform legislation since the present Constitution was put into 
effect. Yesterday's session highlighted clear gaps in views on 
procedures for holding a national referendum and the hurdles to 
amending the Constitution that lie between the ruling camp and 
Minshuto. Diverging views will likely remain a main issue when 
the two camps negotiate changes in the draft legislation. 
 
The ruling camp-sponsored bill stipulates that a referendum would 
be conducted only for constitutional reform. LDP lawmaker Okiharu 
Yasuoka, chief director of the Lower House Special Committee on 
the Constitution, stated: 
 
"Under the direct democratic system, there are three referendums 
beside a constitutional one: a review of Supreme Court judges, 
and a referendum for the Local Autonomy Law." 
 
The Minshuto-sponsored bill, meanwhile, widens the objectives of 
referendum to significant issues in the national political agen. 
Minshuto Constitutional Commission Chairman Yukio Edano stressed: 
" It is not violation of the Constitution that the Diet conducts 
on its own will national referendum and carefully exercises its 
authority. 
 
Under the ruling camp's bill, the minimum age for granting voting 
rights should be 20, which is the same as the voting age. The 
Minshuto-proposed bill, however, calls for lowering the minimum 
age to 18 in principle. The legislation also stated that the 
minimum age should be lowered to 16 if the Diet approves. Edano 
asserted: "It is necessary to give young generations as many 
opportunities to take part in voting as possible." 
 
TOKYO 00003072  006 OF 011 
 
 
 
The two bills show clear differences in "campaigns" questioning 
whether to approve or disapprove national referendum. 
 
The ruling bloc's bill bans those who involve in voting affairs 
and certain public servants, including prosecutors and police 
officers, from carrying out the campaigns until the voting day. 
It also prohibits educators from taking advantage of their 
statuses for their campaigns. Minshuto's legislation allows 
anyone but those involved in election matters to campaign. 
Yasuhiro Sonoda of Minshuto stated: "If banned, we are concerned 
that professors would not reveal their views on constitutional 
reform in their lectures." 
 
The ruling coalition's bill prescribes vote-buying conducts as a 
crime. Tetsuo Saito of the New Komeito said, "Penalties would be 
applied only to heinous activities beyond the permissible scope 
of the common sense." Minshuto's bill does not set a bribery 
penalty. Katsumasa Suzuki stated: 
 
"It is desirable for workfellows to talk about the Constitution 
at Japanese pubs. If the boss pays for the drinks, there is the 
possibility that the boss would be punished. It is difficult to 
differentiate a campaign from an exchange of views." 
 
Regarding how to fill in the ballot, the ruling camp's 
legislation states that an O would mean approval, an X would 
means disapproval; and a blank vote cast would still be valid. A 
majority would be decided base on the total valid votes. Yasuoka 
explained the reason for that: "Public opinion would be judged 
based on the result of a referendum." 
 
Minshuto's bill stipulates that an O would be regarded as 
approval and the others would be regarded as disapproval. A 
majority would be decided based on the total cast votes. This 
means that the largest opposition party's bill would make 
constitutional reform more difficult than that of the ruling 
coalition. 
 
Akira Kawai of the Japanese Communist Party and Kiyomi Tsujimoto 
of the Social Democratic Party argued: "The two bills would lead 
to amending Article 9." They urged the bills be scrapped. 
 
The government and the ruling camp are carrying out coordination 
knowing that the current Diet session will not likely be 
extended. Therefore, the two bills will likely be carried over to 
an extraordinary session in the fall. Changes in them will also 
likely be negotiated in the next session. 
 
(4) Tanigaki to attend G-8 Finance Ministers Meeting scheduled to 
start on June 9 to discuss measures against skyrocketing oil 
prices and other matters 
 
SANKEI (Page 3) (Abridged slightly) 
June 5, 2006 
 
Meetings of the financial ministers of the Group of Eight 
industrial nations are scheduled to take place on June 9-10 in 
St. Petersburg, Russia. The meetings are likely to focus on 
energy security, such as ways to stabilize crude oil prices and 
the stable supply of energy to developing countries on the back 
of the Iranian nuclear issue. 
 
 
TOKYO 00003072  007 OF 011 
 
 
In the run-up to the G-8 Summit, Russia, a major oil producer 
comparable to Saudi Arabia, will chair the G-8 finance ministers 
meeting to come up with measures against surging oil prices, a 
destabilizing factor for the global economy. 
 
Speculative moves divorced from supply and demand have been 
pointed out in the oil futures market, where prices have shot 
past 70 dollars a barrel. In order to come up with measures, the 
G-8 financial ministers are expected to ask oil producers for 
highly accurate data on oil reserves and development plans. 
 
They will also discuss technical assistance in wind and solar 
power generation to reduce oil and natural gas consumption. Japan 
will actively announce its views as an advanced energy-saving 
country. 
 
The G-8 will also consider using such international organs as the 
International Monetary Fund and the World Bank to extend 
financial aid to developing countries in serious need of stable 
supply of oil under escalating oil prices. 
 
Interview with Finance Minister Sadakazu Tanigaki 
 
Shogo Otsuka of the Sankei Shimbun: What is the role of Russia, 
which is going to chair the G-8 Summit for the first time? 
 
Finance Minister Tanigaki: Russia is a major oil and natural gas 
producer. For the global economy, it is extremely important for 
Russia to fulfill its responsibilities in the world, including 
Asia and the Far East. Japan is eager to cooperate with Russia to 
make the upcoming Summit a success. 
 
Otsuka: What can Japan do to help increase the efficient use of 
energy as an advanced energy-saving country? 
 
Tanigaki: Having successfully overcome oil crises, Japan's energy 
efficiency is the highest in the world. Japan has much to offer 
to other countries. I will actively promote Japan's technology, 
know how, and human resources. 
 
Otsuka: What must be done to deal with speculative moves in the 
oil market divorced from supply and demand? 
 
Tanigaki: To improve the situation, we must confirm the need to 
create a system to circulate appropriate information so as not to 
allow skewed information to cripple moves in the market. 
 
Otsuka: Can we expect plausible efforts? 
 
Tanigaki: High growth in countries like China and India is 
pushing up demand for energy. At the same time, oil supply 
involves difficult geopolitical factors. It will require 
tremendous efforts, and it is not realistic to expect a cure-all. 
We must build a system for investment in every process from the 
exploration to development to production to refinement of oil, 
while pursuing energy saving. 
 
(5) Interview with Jerry Paul, NNSA principle deputy 
administrator: GNEP as stepping stone for international framework 
 
Tohoku Shimbun (Full) 
May 22, 2006 
 
 
TOKYO 00003072  008 OF 011 
 
 
The US Bush administration came up with an advanced energy 
initiative this February called "Global Nuclear Energy 
Partnership (GNEP)." Under this initiative, the US and other 
countries will develop technologies to recycle spent nuclear fuel 
that cannot be used to develop nuclear weapons and provide fuel 
services to developing countries. Tohoku Shimbun interviews Jerry 
Paul, principle deputy administrator of the National Nuclear 
Security Administration, on the Partnership concept. 
 
What is the aim of GNEP? 
 
"The initiative is designed to expand the peaceful use of nuclear 
power while reducing the threat of nuclear proliferation. Global 
electricity demand over the next 30 to 50 years is expected to 
grow two to three times above the current level. In order to meet 
the growing demand without destroying the environment, there will 
be no other means but nuclear power." 
 
-- International Atomic Energy Agency (IAEA) Director General 
ElBaradei has also advocated a multinational management concept 
for spent nuclear fuel. 
 
"We have advocated establishing a framework in which each country 
will voluntarily participate. GNEP is a concept worked out from a 
long-term perspective, and I believe that the concept will be 
turned into an international framework through repeated debates. 
I do not know how effectively this mechanism will work to solve 
Iran's and North Korean nuclear development problems, but we have 
already obtained support from Britain, France, Russia, and other 
countries. IAEA is expected to play a key role in enhancing 
energy security." 
 
-- The Japanese and US governments have agreed to conduct joint 
research, such as the joint designing of recycling facilities. 
 
"The US has kept nuclear-fuel recycling on the backburner for 
more than 30 years. Japan has produced advanced research results 
in this area. We expect Japan to develop technologies related to 
the development of new nuclear fuel and fast reactors, as well as 
nuclear safeguards. In the area of safe management, too, Japan's 
atomic power industry is at a high level, and we are paying 
attention to it." 
 
-- Some observers see such cooperation as a violation of the 
Japan-US Atomic Energy Cooperation Agreement, which bans the 
transfer of important nuclear recycling-related technologies. 
 
"As a result of a detailed study of whether there would be legal 
problems, we have concluded that the current agreement is 
satisfactory for the two countries to promote envisioned 
cooperative research and development. We believe there will be no 
need to revise the accord." 
 
(6) The challenges of a resources-poor country - energy security 
(Part 2): Saudi Arabia hopes to enhance friendship with Japan, 
leveraged by petrochemical joint venture 
 
SANKEI (Page 1) (Full) 
June 2, 2006 
 
Saudi Arabia's Prince Sultan visited Japan this past April. A 
dinner party for the prince was held at the Prime Minister's 
Official Residence. The participants in the party included 
 
TOKYO 00003072  009 OF 011 
 
 
incumbent cabinet members, such as Foreign Minister Taro Aso and 
Minister of Economy, Trade and Industry (METI) Toshihiro Nikai, 
and two former prime ministers, Ryutaro Hashimoto and Yoshiro 
Mori. Saudi Arabia is the largest oil-producing country in the 
world and is the largest oil supplier for Japan. In fact, Japan 
imports some 30% of oil from that country. 
 
Prime Minister Junichiro Koizumi was elated when he addressed the 
party: "Two former prime ministers and four incumbent cabinet 
members have unusually joined this dinner party tonight." The 
party went on in a friendly atmosphere. Prince Sultan, as if to 
respond to this hospitality, offered a plan to establish a fund 
as a token of friendship. He then said, "I'd like to donate 
500,000 dollars for exchanges between the two countries," adding, 
"This is my idea as well as King Abdallah's." 
 
Japan is closely linked to Saudi Arabia in terms of oil. But 
after Japan lost its rights to extract oil from that country's 
Khafji oil field in February 2000, "the relationship between the 
two countries grew somewhat cold to each other," an oil industry 
source said. The dinner party, however, was a sign that bilateral 
relations were returning again to a honeymoon period. 
 
The Khafji oil field was the first such project developed under 
the Rising Sun flag. Khafji became Japan's largest oil supplier, 
compared to other oil fields developed by Japan. The amount of 
oil it supplied to Japan since 1961 totaled 2.8 billion barrels. 
The concessions over Khafji were in the hands of Arabian Oil 
Company (AOC). Then AOC President Keiichi Konaga, formerly 
Administrative Vice Minister of International Trade and Industry 
(MITI which was the predecessor of the current Ministry of the 
Economy, Trade and Industry), engaged in negotiations with Saudi 
Arabia on an extension of Japan's rights in the Khafji oil field. 
 
Konaga now serves as advisor to AOC Holdings. Looking back on 
those days, he confessed: "I felt like I was bucking a strong 
wind when I pushed ahead with negotiations." When full-fledged 
negotiations to extend Japan's interests in the Khafji oil field 
started, crude-oil prices were flagging at around 10 dollars per 
barrel. Because oil was then in oversupply, many market observers 
had a bullish outlook that oil imports would always be easily 
available by cash transactions. 
 
Final negotiations held in Saudi Arabia were joined by then MITI 
Minister Takashi Fukaya, but both sides failed to agree to terms 
because Saudi Arabia, then aiming at departing from its oil- 
dependency, called on Japan to invest a huge amount of money in 
that country, for instance, 200 billion dollars or more for the 
construction of a railway. Konaga now said: "If our company and 
the government had worked in much closer cooperation to promote 
negotiations, there could have been a more significant impact of 
negotiations on Saudi Arabia." 
 
Saudi Arabia wanted to lure Japanese investment in addition to 
the sale of its oil to Japan, but Japan placed the securing of 
oil before investment. This gap led to Japan's losing its rights 
in the Khafji oil field and afterwards made it reluctant to 
invest in that country. Close relations between the two countries 
began deteriorating accordingly. 
 
What has again brought the two countries closer was a joint 
venture between Japan's Sumitomo Chemical and Saudi Arabia's 
state-run Saudi Aramco. This project is intended for refining oil 
 
TOKYO 00003072  010 OF 011 
 
 
and producing petrochemical products at the existing oil refinery 
at Rabigh, an area on the coast facing the Red Sea. The project, 
if completed, will become one of the largest integrated refining 
and petrochemical plant. A total investment is likely to come to 
one trillion yen. 
 
Sweeping aside other petrochemical manufacturers from other 
countries, Sumitomo Chemical was chosen by Aramco as a business 
partner. For Sumitomo Chemical, a major matter of concern was 
country risk. The company, after getting a risk analysis from an 
overseas research firm, decided to go ahead with the project. 
Sumitomo Chemical Executive Officer Takatoshi Suzuki, who takes 
care of the project, expressed hope openly: "Availability of 
materials at low prices, among other things, is very attractive 
indeed." 
 
The groundbreaking ceremony was held in the project site in 
March, bringing together top leaders of major Japanese firms 
concerned, such as Sumitomo Chemical President Hiromasa Yonekura, 
Itochu Corporation President Eizo Kobayashi, Marubeni Corporation 
President Nobuo Katsumata, and Mitsubishi Heavy Industries 
President Kazuo Tsukuda. President Yonekura emphasized the 
significance of the joint venture in a speech given at the 
ceremony, noting that it would "contribute to sustainable 
economic growth in Saudi Arabia. "This project that helps Japan 
to deepen its ties with Saudi Arabia will be of great 
significance for the part of Japan, as well," he added. 
 
In terms of energy strategy, it is essential for a resourceless 
country, Japan, to keep a good relationship with the largest oil 
supplier Saudi Arabia. But King Abdallah, who assumed the throne 
late last year, chose China and India for his first official 
overseas tour this January. This choice came, perhaps out of his 
desire to build relations with rising countries that are likely 
to become large oil consumers. 
 
Whether the project this time will succeed is likely to determine 
whether Japan and Saudi Arabia can build a friendly relationship 
in concrete terms by overcoming past discord over the Khafji oil 
field. 
 
(7) Many local governments eye independent measures to control 
suburban openings of medium-sized stores even less than 10,000 
square meters in floor space 
 
NIHON KEIZAI (Page 1) (Excerpts) 
Evening, June 3, 2006 
 
A growing number of local governments are preparing to restrict 
store openings in ways stricter than provisions found in the 
three amended downtown district revitalization laws aimed at 
large stores that took effect in late May. A Nihon Keizai Shimbun 
survey found that 10 prefectures and three ordinance-designated 
major cities were considering tightening regulations. The three 
laws restrict the openings of large stores over 10,000 square 
meters in total floor space in suburban areas. But some local 
governments are trying to control the openings of even mid-sized 
stores. 
 
The Hyogo prefectural government is preparing a set of guidelines 
by August that would allow operators to open stores over 6,000 
square meters in total floor space only in areas close to major 
railway stations in 14 cities in the southern part of the 
 
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prefecture, such as Amagasaki and Himeji. The prefectural 
government intends to impose controls on industrial sites, 
thinking that even mid-sized stores at suburban locations facing 
main roads could seriously affect shopping streets in the center 
of town. 
 
The Fukushima prefectural government plans to implement an 
ordinance in October making it mandatory to submit plans in 
advance to open stores over 6,000 square meters in floor space. 
 
Fukuoka intends to come up with ways by next March to restrict 
areas allowed to open large stores and to urge municipalities to 
produce city plans to control the openings of stores between 
3,000 and 10,000 square meters in floor space as well. 
 
The existence of suburban commercial areas facing main roads and 
light industrial zones exempted from the three district 
revitalization laws is a source of concern for local governments. 
The move for local governments to come up with independent 
regulations is likely to spread across Japan. 
 
SCHIEFFER