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UNCLAS SECTION 01 OF 12 TOKYO 003151 
 
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 06/08/06 
 
Index: 
 
1)   Top headlines 
2)   Editorials 
3)   Prime Minister's daily schedule 
 
China and the Yasukuni issue: 
4)   Defense Secretary Rumsfeld says US will not get involved in 
  Yasukuni issue, seeks to deter China 
5)   Issue of China policy heating up in the LDP presidential 
race 
6)   Presidential hopeful Abe seeks to avoid making China a 
campaign issue 
7)   Top business executives' (Doyukai) advice to Prime Minister 
Koizumi to stop visiting Yasukuni Shrine intended to influence 
LDP election 
8)   Minshuto (Democratic Party of Japan) President Ozawa's 
planned trip to China remains up in the air, with concern that 
China will use visit politically 
9)   Minshuto's Noda seeks to check argument that separating 
Class-A war criminals will solve Yasukuni issue 
10)  Junior LDP lawmakers cite Yasukuni chief priest who said 
separating Class-A criminals once enshrined is impossible 
11)  Michael Green: Bad mistake for China to have demanded that 
Koizumi stop visiting Yasukuni 
 
12)  Foreign Minister Aso wants EEZ demarcation talks with ROK to 
  be separated from Takeshima issue 
 
Defense affairs: 
13)  New Komeito head Kanzaki: Bill making JDA a ministry will 
  pass the Diet this fall 
14)  Tokyo Shimbun columnist not satisfied with rationale for 
raising JDA to ministry status 
 
15)  Diet passes 90% of bills sponsored by the government 
 
Economic front: 
16)  Japan to join oil field development project in Eastern 
  Siberia 
17)  LDP tax panel plans basic tax reform in three stages, with 
hike in consumption tax likely in FY2009 
18)  Japan to take cautious attitude toward US deficit at 
upcoming G-8 finance ministers' conference for fear of unsettling 
exchange rates 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi, Mainichi and Tokyo Shimbun: 
Schindler searched over negligence in fatal elevator accident 
 
Yomiuri: 
Police give up on indicting General Management Consultant offices 
over quake data fraud 
 
Nihon Keizai: 
Skylark restaurant chain to be privatized through biggest 
management buyout in Japan 
 
Sankei: 
 
TOKYO 00003151  002 OF 012 
 
 
Japan Association of Corporate Executives proposes restraint in 
visiting Yasukuni 
 
2) EDITORIALS 
 
Asahi: 
(1)  Government should apologize to and compensate emigrants to 
the Dominican Republic 
(2)  We want to view both the original and plagiarized paintings 
 
Mainichi: 
(1)  Passage of financial products exchange law: Let's use the 
law to enhance transparency of the market 
(2)  Lawsuit by emigrants to Dominican Republic: Apology and 
providing relief is our political responsibility 
 
Yomiuri: 
(1)  Financial product exchange law: Slick trading practices must 
be stamped out 
(2)  Emigrants to Dominican Republic: Foreign Ministry should 
admit its responsibility 
 
Nihon Keizai: 
(1)  Substantial debate on integration of communications and 
broadcasting urged 
(2)  New law should be used to increase transparency of the 
market 
 
Sankei: 
(1)  Suit by emigrants to Dominican Republic: the government 
should come up with satisfactory relief measures 
(2)  Reinvigorating the Japanese language: Review of limits to 
Chinese characters imminent 
 
Tokyo Shimbun: 
(1)  Emigrants to Dominican Republic: Government must formulate 
relief measures 
(2)  Elevator accident: Danger was ignored 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, June 7 
 
NIHON KEIZAI (Page 2) (Full) 
June 8, 2006 
 
09:57 
Met Education Minister Kosaka, Kanazawa Mayor Yamade, and others 
at the Japan City Center in Hirakawacho. Afterward attended a 
national mayoral conference. 
 
10:35 
Returned to Kantei. 
 
13:00 
Attended an Upper House Budget Committee meeting. 
 
16:30 
Met at Kantei with former Ambassador to France Hirabayashi, 
followed by Consular Affairs Bureau Director-General Tanizaki. 
 
17:00 
 
TOKYO 00003151  003 OF 012 
 
 
Met Deputy Foreign Minister Yabunaka. Afterward attended a 
meeting of the Council of Economic and Fiscal Policy. 
 
19:40 
Returned to his residence. 
 
4) US to stay away from Yasukuni issue: Rumsfeld 
 
SANKEI (Page 3) (Full) 
June 8, 2006 
 
Yoshihisa Komori 
 
WASHINGTON-US Secretary of Defense Donald Rumsfeld has clarified 
the Bush administration's stance of staying away from the 
Yasukuni Shrine issue lying between Japan and China. In addition, 
Rumsfeld has also proposed nonintervention in another country's 
attitude over the history of past wars. On the Yasukuni issue, he 
called on China to exercise self-restraint. 
 
According to the US Defense Department's press release on June 6, 
Rumsfeld, now making a tour of Southeast Asian countries, has 
clarified that the Bush administration would stay away from the 
Yasukuni Shrine. "We will leave this matter to the parties 
concerned in the region," the Pentagon's press release quoted 
Rumsfeld as saying when he was asked in Singapore on June 4 if 
the United States would intervene in Japanese Prime Minister 
Junichiro Koizumi's visits to Yasukuni Shrine for the stability 
of Japan-China relations. "Both Japan and China wouldn't need my 
advice," Rumsfeld added. 
 
Furthermore, Rumsfeld touched on Yasukuni Shrine and other 
history-related issues in his speech and a question-and-answer 
session that followed a June 3 meeting in Singapore of the United 
Kingdom's International Institute for Strategic Studies (IISS), 
according to the Pentagon's press release. Rumsfeld noted that it 
would take time to completely make history a thing of the past 
when it comes to a war. "However, the United States and Japan 
have cleared it up as a thing of the past," Rumsfeld was quoted 
as saying. The Pentagon chief further remarked: "If other 
countries also can clear up their history as a thing of the past 
and look ahead into the 21st century, that would be in the 
interests of all these countries." With this, he criticized the 
stance of taking up the history of a war in the past as an 
international issue for the present. 
 
Rumsfeld underscored the need for Japan and China to clear up 
their past history as a thing of the past. This point can be 
taken as hinting indirectly that China should exercise self- 
restraint over Yasukuni Shrine and other issues. 
 
5) Political horse-trading intensifying over diplomacy toward 
China, with eye on LDP presidential race; Debate on Yasukuni 
issue refueled 
 
NIHON KEIZAI (Page 2) (Full) 
June 8, 2006 
 
The government and the ruling parties are intensifying political 
maneuvering over diplomacy toward China, with their eyes on the 
Liberal Democratic Party (LDP) presidential election in 
September. A group of lawmakers distancing themselves from the 
 
TOKYO 00003151  004 OF 012 
 
 
Koizumi administration are actively calling for the separate 
enshrinement of Class-A war criminals from Yasukuni Shrine, 
envisioning the possibility of making the Yasukuni problem a 
campaign issue. Meanwhile, Chief Cabinet Secretary Shinzo Abe and 
others have begun to mend fences with China by ending the freeze 
on yen loans to China and employing other policy measures. In the 
largest opposition Democratic Party of Japan (Minshuto), its 
President Ichiro Ozawa is looking into a visit to China, 
apparently motivated by his desire to shake the ruling camp. 
 
"The best way is for Yasukuni Shrine to make a decision on 
separate enshrinement of (Class-A war criminals) from the 
shrine." This remark came from Bunmei Ibuki, head of the LDP's 
Ibuki faction, when he went yesterday to visit Taku Yamasaki, 
head of the Yamasaki faction, and referred to the prime 
minister's visits to Yasukuni Shrine in explaining to Yamasaki 
about policy proposals the Ibuki faction was considering. 
Yamasaki gave the nod to Ibuki as Yamasaki himself is of the 
opinion that separate enshrinement is one option to resolve the 
Yasukuni issue. 
 
As a realistic approach, many in the LDP are skeptical about an 
early realization of separate enshrinement of Class-A war 
criminals. The question of separate enshrinement itself has 
divided the party. A group of junior lawmakers supporting shrine 
visits, including Hiroshi Imazu, yesterday met with Toshiaki 
Nanbu, chief priest of Yasukuni Shrine. After the meeting, Imazu 
told reporters: "I take special note of the shrine's opinion that 
it's impossible to separately enshrine them." 
 
Lawmakers opposing Koizumi as well as Abe share the view that the 
first step for them to do for the presidential campaign is to 
create a mood for the Yasukuni issue and Japan-China relations to 
be made campaign issues along with economic disparities. 
 
6) Chief Cabinet Secretary Abe trying to contain the Yasukuni 
issue to avoid it as a campaign issue 
 
NIHON KEIZAI (Page 2) (Full) 
June 8, 2006 
 
"It's undesirable diplomatically if policy is changed arbitrarily 
in accordance with a political decision by the government of the 
time." Junior coalition partner New Komeito Representative 
Takenori Kanzaki made this comment at a press conference 
yesterday, criticizing the government's slow decision about 
ending the freeze on yen loans to China. Taku Yamasaki of the 
ruling Liberal Democratic Party (LDP) echoed Kanzaki: "It must 
not be something used as material for diplomatic maneuvering." 
 
At a meeting on June 6 of the Council for Overseas Economic 
Cooperation, the government decided to lift the freeze on yen 
loans to China and Abe announced the lifting of the freeze. 
Meanwhile, it was Abe's aide, Senior Vice Foreign Minister 
Yasuhisa Shiozaki who had suggested freezing the yen loans in 
March. Abe apparently has taken the lead in government 
coordination to decide its stance of "freezing" or "unfreezing," 
many observers said. 
 
The LDP will tomorrow start going though necessary procedures in 
the party. A member of the party's Foreign Affairs Division 
revealed: "The explanation we hear is that the freeze came due to 
 
TOKYO 00003151  005 OF 012 
 
 
our division's opposition, but the fact is that the Prime 
Minister's Official Residence already had decided on the freeze." 
 
A group of lawmakers who pay attention to former chief cabinet 
secretary Yasuo Fukuda, as a rival of Abe in the presidential 
 
SIPDIS 
race, took the ongoing move to improve relations with China as a 
policy switch to prevent diplomacy toward China from becoming a 
campaign issue. 
 
7) Keizai Doyukai Chairman Kitashiro suggests "refraining from 
visiting Yasukuni Shrine," envisioning upcoming LDP presidential 
election 
 
SANKEI (Page 1) (Excerpts) 
June 8, 2006 
 
The details of the April 21 executive meeting of the Japan 
Association of Corporate Executives (Keizai Doyukai) that adopted 
a set of proposals -- released on May 9 -- on the future of Japan- 
China relations came out into the open from statements by several 
participants in the meeting. The proposals urge the prime 
minister to refrain from visiting Yasukuni Shrine and seek to 
build a secular memorial facility for all war victims. The 
proposals were adopted unusually following the rule of majority, 
asking whether to include the Yasukuni issue in the proposals. 
Keizai Doyukai Chairman Kakutaro Kitashiro, chairman of Japan 
IBM, then suggested that the proposals envisioned the Liberal 
Democratic Party (LDP) presidential election slated for 
September. The Sankei Shimbun probes the behind-the-scene story 
concerning the adoption of the controversial proposals. 
 
According to participants, the executive meeting was held at the 
Industrial Club of Japan at Marunouchi, Tokyo. It began before 
noon, and after the lunch, it dealt with such procedural affairs 
as a financial report in a businesslike manner. The proposals in 
question came up for discussion at around 1:30 p.m. or 30 minutes 
before the meeting was to close. After an explanation about the 
proposals was given, a heated debate took place between 
supporters and opponents. 
 
One participant favoring the proposals that ask the premier to 
refrain from visiting the shrine scathingly criticized the 
Koizumi administration: "Japan-China relations cannot be restored 
under Prime Minister Junichiro Koizumi. I'm looking forward to a 
new prime minister who will take office in September." Another 
participant indicated he was supportive of the idea of building a 
secular memorial facility, arguing: "The problem with Yasukuni 
Shrine lies in its religious nature." On the other hand, one 
opponent rebutted: "(The proposals) would only help China to take 
advantage of our country's weakness, given that the prime 
minister is fighting the Yasukuni battle." 
 
When their arguments got them nowhere, China Committee Chairman 
Nobuo Katsumata, president of Marubeni Corporation, who shaped 
the proposals, explained why the proposals have no mention of the 
propriety of the judgment made by the Tokyo Trials that tried 
Class-A war criminals enshrined at Yasukuni Shrine and asked 
Keizai Doyukai Chairman Kitashiro to make a decision. 
 
"I hope to adopt the proposals without making any change. I'd 
like to decide whether to include suggestions about the Yasukuni 
issue in the proposals by voting," Kitashiro said and asked the 
 
TOKYO 00003151  006 OF 012 
 
 
participants to raise their hands if they agreed. The proposals 
were approved by a majority. But one opponent insisted, "It's not 
wise to submit this kind of set of proposals just before the 
prime minister steps down. How about delaying the submission of 
the proposals until after his retirement?" Kitashiro, apparently 
being aware of the LDP presidential race, argued against him: 
"The proposals do not mention 'Koizumi.' They envision the next 
prime minister. I'd like you to understand this point." 
 
Kitashiro, however, denied links to the presidential race at a 
press conference on May 23, saying: "I have no intention to 
submit them by choosing the timing." He added that the proposals 
were made as usual as the organization does when the new fiscal 
year starts. 
 
8) Minshuto head Ozawa's visit to China in doubt 
 
SANKEI (Page 3) (Full) 
June 8, 2006 
 
Ichiro Ozawa, president of the main opposition party, Minshuto 
(Democratic Party of Japan), is now hesitant about visiting China 
before the September presidential election of the Liberal 
Democratic Party (LDP). He is concerned that China may take 
advantage of his visit as propaganda against Prime Minister 
Junichiro Koizumi's trips to Yasukuni Shrine, which will likely 
become a major campaign issue in the upcoming LDP leadership 
race. Some Minshuto lawmakers have insisted, however, that Ozawa 
should play up a stance of attaching emphasis to Asia through his 
China tour, using his communication channels to Chinese 
officials. 
 
The visit plan surfaced after Tsutomu Hata, supreme advisor to 
the party, traveled to China. During his meeting on May 11 with 
Hata, Chinese State Councilor Tang Jiaxuan invited Ozawa to visit 
China, saying, "He is an old friend." Referring also to both Hata 
and Ozawa, who belonged to the former Tanaka faction headed by 
former Prime Minister Kakuei Tanaka, who made efforts to open 
diplomatic ties with China, Tang praised their roles in improving 
Japan-China relations. 
 
Ozawa and his aides once considered a plan to visit China in July 
after the current Diet session ends. Ozawa was expected to 
exchange views with Chinese officials on such issues as Yasukuni. 
 
According to an informed source, Ozawa has determined that if he 
meets with Chinese leaders, he will be used by the Chinese 
government, which has taken a hard-line stance against the 
Koizumi government. Ozawa seems to have leaned toward canceling 
the planned September visit in order to devote all his effort to 
selecting candidates for next summer's House of Councillors 
election. 
 
Ozawa stated in April 2002 when he was serving as president of 
the now defunct Liberal Party: "Japan could make several thousand 
nuclear warheads in a day." China formally criticized him for 
"irresponsible and provocative" statement, but the China side 
actually said to Ozawa, "You are right." Ozawa threw a wet 
blanket this spring in Tokyo on senior officials of the 
International Department of the Chinese Communist Party's Central 
Committee, saying, "You should not get carried away." 
 
 
TOKYO 00003151  007 OF 012 
 
 
The reason why China has sent out positive signals to Ozawa is 
because Beijing welcomes recent Ozawa's statements on the 
Yasukuni issue. He stated on an NHK talk show on April 9 
regarding Class-A war criminals: "Regardless of what China and 
South Korea say, they bear the blame for having led the war." On 
June 6, too, he proposed removing the Class-A war criminals from 
Yasukuni Shrine, saying, "Yasukuni Shrine should be returned to 
its original state, under which the Emperor would be able to 
visit there formally." 
 
Ozawa's view is that there will be no change in his position even 
he visits Beijing or stays in Tokyo. 
 
There is a possibility that China may rattle its saber, using the 
Yasukuni issue as a bargaining chip for resuming summits by top 
Japanese and Chinese leaders. Ozawa's reluctance stems from his 
strategy of watching carefully the development of the LDP 
presidential race and moves of the Chinese side. 
 
9) Minshuto's Noda seeks to check calls for removing Class-A war 
criminals from Yasukuni 
 
SANKEI (Page 4) (Full) 
June 8, 2006 
 
Former Diet Affairs Chairman Yoshihiko Noda of Minshuto 
(Democratic Party of Japan) readied a set of questions yesterday 
that went: "If there is no problem in mourning the war dead, 
including Class-A war criminals, should official visits to 
Yasukuni Shrine by the Emperor and the Empress and the prime 
minister be constrained for the reason that they would be 
mourning Class-A war criminals?" His argument sought to check 
calls for removing Class-A war criminals from Yasukuni Shrine. 
 
Noda took note of February 2002 transcripts of a private panel to 
consider a national mourning and peace memorial facility that 
reported to then Chief Cabinet Secretary Yasuo Fukuda. A panel 
member then asked: "Would Class-A, Class-B, and Class-C war 
criminals be included among the souls of the war dead (to be 
mourned at the national memorial service for the war dead)?" In 
response, the Health, Labor and Welfare Ministry said: "Our view 
is that such individuals would comprehensively be included among 
the war dead." Noda called this point into question once again. 
 
Noda's questions read: 
 
"It can be taken that the government has judged that it was no 
problem, domestically and internationally, for the Emperor and 
the Empress and the prime minister to official mourn the war 
dead, including Class-A war criminals, at memorial services and 
memorial facilities." 
 
10) Yasukuni Shrine chief priest tells junior LDP members that 
removing Class-A war criminals from shrine is not possible 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 8, 2006 
 
About 30 members of a group of Liberal Democratic Party lawmakers 
supporting visits to Yasukuni Shrine for national interests and 
peace held talks with Yasukuni Shrine Head Priest Toshiaki Nanbu 
yesterday afternoon. Lower House member Hiroshi Imazu heads the 
 
TOKYO 00003151  008 OF 012 
 
 
group. To Imazu and others, Nanbu reiterated the shrine's 
position that it cannot remove Class-A war criminals from the 
shrine. 
 
Imazu quoted Nanbu as saying: "Separate enshrinement has never 
been done since Yasukuni Shrine was established. It is 
technically impossible, and we have no intention of doing so in 
the future." Ahead of their talks with Nanbu, the group toured 
the Yushukan museum. 
 
Initiated by then LDP Acting Secretary General Shinzo Abe, the 
group was launched last June by junior and mid-level lawmakers. 
The membership is about 130. 
 
11) Thoughts on paying homage at Yasukuni Shrine: Interview with 
Michael Green, Japan Chair at CSIS: China's asking Prime Minister 
to stop visits was a "bad mistake" 
 
SANKEI (Page 3) (Excerpt) 
June 8, 2006 
 
By Yoshihisa Komori in Washington 
 
Former senior Asia director on the National Security Council of 
the Bush Whitehouse, Michael Green in an interview to this 
newspaper, spoke about Japan-China relations and the US' stance. 
He criticized China's demand that Japan's prime minister halt his 
visits to Yasukuni Shrine as a "bad mistake," and he stated that 
to improve relations, China needed to make the compromise. He 
noted that the Bush administration had no intention of becoming 
involved in the Yasukuni Shrine issue, and that its stance in the 
dispute between Japan and China was to support Japan as a 
democratic ally. 
 
12) Aso to propose separating Takeshima issue in EEZ negotiations 
with South Korea 
 
YOMIURI (Page 4) (Full) 
June 8, 2006 
 
In a meeting of the House of Representatives Foreign Affairs 
Committee yesterday, Foreign Minister Taro Aso said that he would 
go into the Japan-South Korea EEZ (exclusive economic zone) 
demarcation talks starting on June 12 in Tokyo based on the 
stance of respecting the agreement reached in the 1996 Japan- 
South Korea summit. The agreement called for promoting EEZ 
negotiations separately from the issue of sovereignty over the 
Takeshima/Dokdo islets. 
 
Aso also said that in the upcoming talks, he would propose 
establishing rules, including a requirement of prior notification 
for maritime research in waters in which an EEZ boundary has yet 
to be demarcated. He was apparently keeping in mind the 
experience in which bilateral relations became tense in April 
over maritime research in waters near the Takeshima/Dokdo islets. 
 
13) Ruling coalition wants Defense Ministry bill passed this 
fall: Kanzaki 
 
TOKYO SHIMBUN (Page 2) (Excerpt) 
June 8, 2006 
 
 
TOKYO 00003151  009 OF 012 
 
 
Takenori Kanzaki, representative of the New Komeito party, a 
coalition partner of the ruling Liberal Democratic Party, met the 
press yesterday and said the ruling coalition would give top 
priority to a bill raising the Defense Agency to the status of a 
ministry at this fall's extraordinary Diet session. "We want to 
pass the bill without fail," Kanzaki added. 
 
14) Questions about raising Defense Agency to ministry 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 8, 2006 
 
Masakazu Kaji 
 
The ruling coalition of the Liberal Democratic Party and the New 
Komeito yesterday held a meeting of their project teams, in which 
the ruling parties approved a bill to upgrade the Defense Agency 
to the status of a ministry. In response, the government will 
make a cabinet decision tomorrow on the bill and will present it 
to the Diet at the current session. 
 
The bill purports to raise the Defense Agency, which is currently 
under the Cabinet Office as an external entity, to an independent 
ministry and task the Self-Defense Forces with international 
activities under the SDF Law. Its specific merits are equivocal. 
However, the Defense Agency has long desired the status of a 
ministry in order to improve the morale of its personnel. 
 
The Diet, however, does not have enough time to deliberate on the 
legislation during the current session. The bill therefore cannot 
be expected to get through the Diet in the current session. Even 
so, the government will knowingly introduce it to the Diet. 
 
Such a half-baked treatment of the legislation is what the 
Defense Agency asked for. Against this backdrop, there was a bid- 
rigging scandal involving the Defense Facilities Administration 
Agency's bureaucrats. 
 
In the bid-rigging case, the DFAA was found to have allocated 
projects to its contractors so that its retirees can land jobs 
with them. In 1998, the Central Procurement Office, a one-time 
body under the Defense Agency, was involved in a malfeasance 
incident. The bid-rigging scandal, however, disclosed that the 
Defense Agency has not changed for the better. 
 
The ruling parties sought to raise the Defense Agency to a 
ministry. However, the agency came under fire for the bid-rigging 
scandal. The government therefore decided in February to forego 
introducing the bill to the Diet. Meanwhile, the ruling 
coalition, asked by the agency, decided again to present the bill 
to the Diet in the current session. That was because the agency 
promised to take preventive steps against such a bid-rigging 
scandal. 
 
In fact, however, the Defense Agency has yet to come up with a 
final report of its in-house investigation of the bid-rigging 
incident. The agency has only dismissed those involved in the 
scandal and has yet to take oversight responsibility for it. 
 
This is a scam. How can a scandal-tainted office of the 
government make a new start without paying for it? There is 
something unconvincing about this. 
 
TOKYO 00003151  010 OF 012 
 
 
 
The Defense Agency perhaps hopes for a fait accompli in the form 
of presenting the bill to the Diet. However, the bill will be 
shelved until this fall or later. Before doing so, the agency 
should look into the incident, pay off its charges, and 
straighten up. 
 
15) Rate of successful government-presented bills at 90.1% -- 
fourth-highest under Koizumi administration -- due to failure to 
take advantage of numerical superiority 
 
MAINICHI (Page 5) (Abridged) 
June 8, 2006 
 
The government and the ruling coalition decided yesterday to aim 
at getting 82 bills approved out of the 91 government-presented 
bills before the ongoing Diet session ends on June 18. The rate 
of successful bills would be 90.1% -- the fourth highest under 
the Koizumi administration, which has experienced six regular 
Diet sessions. The ruling coalition garnered two-thirds of the 
Lower House seats in last year's election. Discontent is growing 
in the ruling coalition with the government's management of Diet 
affairs that has failed to make full use of their numerical 
superiority. 
 
The government presented 90 bills as of yesterday. It also plans 
to submit a bill on June 9 to upgrade the Defense Agency to 
ministry status. Fifty-eight bills had cleared the Diet as of 
yesterday. But given the prime minister's decision not to extend 
the ongoing session, the government and the ruling coalition 
intend to get 24 bills approved, including medical reform-related 
bills, and carry 9 bills, including a bill to revise the 
Fundamental Law of Education, over to the next session. 
 
The lowest successful rate under the Koizumi administration was 
84.3%, marked last year. The low rate was attributable to Lower 
House dissolution over postal privatization bills. The rate in 
2004 was 94.5% despite the fact that the session was not 
extended, as this year. 
 
16) Negotiations underway on Japan's participation in oil field 
development in East Siberia 
 
NIHON KEIZAI (Page 1) (Full) 
June 8, 2006 
 
The Russian government disclosed yesterday that Japan and Russia 
have been engaged in negotiations on Japan's participation in a 
project to develop oil fields in eastern Siberia. Both sides are 
aiming to bring about an agreement during a Japan-Russia summit 
on the sidelines of the G-8 Summit (St. Petersburg Summit) in 
July. In order to transport exploited oil to Japan, the Japanese 
government also aims to reach an agreement with the Russian 
government to speed up its plan to construct a pipeline that 
stretches to the coast of the Japan Sea. The two governments will 
define the joint oil field development in eastern Siberia as the 
main element in their bilateral energy cooperation. 
 
The Russian Ministry of Industry and Energy's fuel and energy 
department head Yanovsky said in an interview with the Nihon 
Keizai Shimbun yesterday that negotiations are underway between 
the Russian and Japanese governments. He then stated: "We are 
 
TOKYO 00003151  011 OF 012 
 
 
positively looking into JOGMEC's (Japan Oil, Gas and Metals 
National Corporation) participation in the development of oil 
fields in eastern Siberia." 
 
According to informed sources, JOGMEC plans to finance 50% of 
Japan's oil-exploitation rights. Among Japanese private firms, 
Sumitomo Corp. and Inpex Corp. have expressed eagerness to invest 
in the project. The Japanese government hopes to pump out oil 
jointly with Russian firms and transport extracted oil to Japan 
through a pipeline. 
 
Regarding the Pacific pipeline to transport oil in Siberia to the 
coast of the Japan Sea, the Russian government plans to 
construct, as the first stage, a pipeline stretching from an area 
near Lake Baikal to Skolonov and then export the product to China 
by railway. The Japanese government has been calling on Russia to 
quickly start the second-stage work to construct a pipeline 
stretching to the coast of the Japan Sea. 
 
17) LDP tax panel chairman's draft timetable calls for sweeping 
reform in three stages, including consumption tax hike in FY2009 
 
NIHON KEIZAI (Page 1) (Excerpts) 
June 8, 2006 
 
Chairman Hakuo Yanagisawa of the Liberal Democratic Party 's Tax 
System Research Commission has drafted a timetable for bold 
reform of the nation's tax system. According to the draft 
unveiled yesterday, the commission will discuss corporate tax 
cuts in fiscal 2007 as a measure to buoy the economy. The draft 
also proposes that the panel will discuss a review of the income 
tax system around fiscal 2008, including child-rearing tax cuts, 
and then a hike in the consumption tax, possibly in fiscal 2009. 
The report suggest that the panel will carry out reform while 
carefully watching the moves of tax revenues, but this issue will 
inevitably have some effect on policy debates in the campaigning 
for the LDP presidential race in September. 
 
18) G8 Finance ministers to meet tomorrow: Cautious debate 
expected over rectifying imbalances; GOJ concerned about impact 
on forex market 
 
YOMIURI (Page 9) (Full) 
June 8, 2006 
 
The finance ministers of the G8 will meet tomorrow in St. 
Petersburg, Russia, ahead of the full G8 summit scheduled there 
for July. One of the focuses will be "global imbalances," as 
exemplified by the massive US budget deficit. In the joint 
statement to be adopted on June 10, though, if the G8 strongly 
calls for the correction of imbalances, this could have an impact 
on the foreign exchange market, including trading of the yen 
against the dollar. The Ministry of Finance (MOF) intends to push 
for a cautious discussion. 
 
At a G7 meeting of finance ministers and central bankers in late 
April in Washington, imbalances in the global economy was taken 
up as a major issue. The joint statement read in part: "Greater 
flexibility on exchange rates among emerging economies with large 
budget surpluses would be desirable." Market players took this to 
mean that the G7 had given its blessing to correcting the 
imbalances through a weak dollar. IN the three weeks following 
 
TOKYO 00003151  012 OF 012 
 
 
the G7 meeting, the cost of a dollar dropped by 8 yen. 
 
Taking this into account, MOF is concerned about how the issue of 
imbalances will be handled at the upcoming summit. At a press 
conference following a meeting of the cabinet on June 2, Finance 
Minister Tanigaki stated: "Relying solely on adjusting exchange 
rates will lead us astray. Each economy needs to address its own 
structural problems (such as fiscal reconstruction and economic 
structural reform). 
 
It is believed that the United States on its part wants to avoid 
a situation in which a much weaker dollar stems the flow of funds 
into the country. Based on the bitter experience of the previous 
G7 joint statement, many economists believe that the joint 
statement will avoid any mention of correcting imbalances. 
 
Nevertheless, there is still strong sentiment in the US Congress 
regarding the massive trade surpluses of China and Japan, and 
there is a possibility that the issue of imbalances will emerge 
at the July summit. 
 
Another issue likely to be debated will be establishing a 
foundation for energy use and conservation in developing 
countries as a measure to deal with rising oil prices. 
 
SCHIEFFER