VZCZCXRO3173
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3182/01 1600110
ZNR UUUUU ZZH
P 090110Z JUN 06 ZDK
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 3033
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/COMUSJAPAN YOKOTA AB JA//J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/COMPATWING ONE KAMI SEYA JA
RUEHNH/AMCONSUL NAHA 9251
RUEHFK/AMCONSUL FUKUOKA 6631
RUEHOK/AMCONSUL OSAKA KOBE 9869
RUEHNAG/AMCONSUL NAGOYA 6563
RUEHKSO/AMCONSUL SAPPORO 7781
RUEHBJ/AMEMBASSY BEIJING 2701
RUEHUL/AMEMBASSY SEOUL 8874
RUCNDT/USMISSION USUN NEW YORK 0665

UNCLAS SECTION 01 OF 10 TOKYO 003182 
 
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 06/09/06 
 
 
TOKYO 00003182  001.2 OF 010 
 
 
Index: 
 
1)   Top headlines 
2)   Editorials 
3)   Prime Minister's daily schedule 
 
Al -Zaqarwi killed by US, Iraqi raid: 
4)   Prime Minister Koizumi welcomes Al-Zaqarwi's death as a 
  "step forward" in the war on terror 
5)   With Al-Zaqarwi dead, Tokyo expects public security to 
return to Iraq, leading to conditions for GSDF withdrawal 
 
Defense issues: 
6)   Ambassador Schieffer in Osaka speech stresses that 
  relocation of Marines on Okinawa premised on completion of 
  alternate facility 
7)   US, Japan start senior-level talks in Hawaii on 14th to 
draft detailed plans implementing USFJ realignment agreement 
8)   Komeito shifted stance on bill raising JDA to ministry in 
order to pass it this fall and not see it tangled in Upper House 
election campaign next year 
 
North Korea problem: 
9)   With Pyongyang admitting existence of Kim Young Nam and 
  inviting mother to see him, Tokyo worried the ploy may split 
  Japan-ROK cooperation on abductions 
10)  Prime Minister Koizumi stresses need for Japan-ROK 
cooperation to get the abductees home from North Korea 
11)  Government worried North Korea will now close the books on 
the abduction issue with its recognition of Kim Young Nam, 
abductee from ROK 
12)  LDP, Minshuto (Democratic Party of Japan) at final stage of 
drafting North Korea human rights bill but hung up over aid to 
refugees from that country 
 
13)  Japan's INPEX enters final coordination tomorrow with Iran 
  on whether to go ahead with Azadegan oil field project 
 
14)  Prime Minister Koizumi mulling one-time only cash 
  compensation for emigrants to Dominican Republic 
 
15)  LDP considering introducing an environment tax in order to 
  meet target of Kyoto Protocol 
 
16)  Alarm spreads over falling stock market, but government 
  intends to hold firm to its reform policy line 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi and Tokyo Shimbun: 
Akita woman admits to killing 7-year-old boy 
 
Mainichi: 
Livedoor official sent email to Murakami Fund employee that 
Livedoor would be able to acquire 30% of Nippon Broadcasting 
Shares 
 
Yomiuri: 
85 incidents involving passengers trapped inside Schindler-made 
elevators 
 
TOKYO 00003182  002 OF 010 
 
 
 
Nihon Keizai: 
Internal Affairs and Communications Ministry to substantially 
slash NTT's fiber-optic access charges as early as 2008 
 
Sankei: 
Al-Zarqawi killed in US raid 
 
2) EDITORIALS 
 
Asahi: 
(1)  Elevator accident: Pre-incident indicators were ignored 
(2)  Java earthquake: Japan should help support Java residents 
learning from their mutual support spirit 
 
Mainichi: 
(1)  Don't count on safety of elevators too much 
(2)  Internal affairs and communications minister's report lacks 
viewpoint of users 
 
Yomiuri: 
(1)  Ensuring the safety of elevators vital 
(2)  World Cup: Zico Japan to challenge the world 
 
Nihon Keizai: 
(1)  Global downturn in stocks urges changes in the money glut 
(2)  Hope for historical and memorable World Cup 
 
Sankei: 
(1)  Death of al-Zarqawi should be turning point to end terrorism 
and conflict in Iraq 
(2)  Reunion of kidnapped son and his mother: Keep close watch on 
North Korea's strategy of breaking Japan-South Korea cooperation 
 
Tokyo Shimbun: 
(1)  Opening of World Cup: Let's make hearts of 30 billion 
viewers one 
(2)  Responsibility for awarding plagiarized paintings serious 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, June 8 
 
NIHON KEIZAI (Page 2) (Full) 
June 9, 2006 
 
10:09 
Sent the Emperor and Empress off to Southeast Asia at Haneda 
Airport. 
 
11:18 
Returned to official residence. 
 
11:49 
Returned to Kantei. 
 
13:31 
Met Deputy Chief Cabinet Secretary Futahashi. 
 
15:33 
Met President Mogae of Botswana. 
 
 
TOKYO 00003182  003.2 OF 010 
 
 
16:17 
Met Futahashi. 
 
17:17 
Attended an Intellectual Property Rights Strategic Office 
meeting. 
 
18:24 
Attended a Security Council of Japan meeting. 
 
19:04 
Met at Kantei with Chief Cabinet Secretary Abe, Administrative 
Reform Minister Chuma, Upper House Administrative Reform Special 
Committee Chairman Otsuji, ruling party directors, and others. 
 
4) A step forward: Koizumi 
 
NIHON KEIZAI (Page 3) (Full) 
June 9, 2006 
 
Prime Minister Junichiro Koizumi yesterday evening welcomed the 
death of Abu Musab al-Zarqawi, Iraq's most-wanted militant. 
"Iraqi people provided information in cooperation with the 
extermination of terrorist networks, so it's a step forward," 
Koizumi said. He was replying to a question from reporters at his 
office. Meanwhile, Senior Vice Foreign Minister Katsutoshi Kaneda 
indicated in a press conference yesterday that the government 
would keep tabs on the security situation in Iraq. "We hope the 
security situation in Iraq will change for the better, but it's 
still unpredictable," Kaneda said. 
 
5) Al-Zarqawi killed; Government expects restoration of public 
order; Watching carefully Iraqi situation for GSDF pullout 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 9, 2006 
 
Abu Musab al-Zarqawi, Al-Qaida's leader in Iraq, reportedly has 
been killed in a joint US-Iraqi military air strike. The Iraqi 
government appointed on June 8 the interior minister in charge of 
civil order and the defense minister. Given those developments, 
the Japanese government now feels relieved. Officials think that 
it there will now be a greater chance to restore public security, 
which has been disrupted by conflict between Shiite and Sunni 
Muslims. 
 
Prime Minister Junichiro Koizumi welcomed yesterday these moves 
in Iraq, saying, "They are signs that the Iraqi people are making 
efforts to rebuild their country on their own gradually." 
 
The government has been carrying out coordination with other 
countries in order for an early withdrawal of Ground Self-Defense 
Force personnel stationed in the southern Iraqi city of Samawah. 
If Iraq's public order improves, chances are that the 
multinational force will be pulled out after the handing over of 
police authority for Samawah, which is relatively safe, to the 
Iraqis. 
 
However, since it is uncertain how far public order will be 
restored, the government will carefully assess each new 
development. Koizumi, referring to withdrawal of GSDF troops, 
just said, "I will decide comprehensively." He reiterated that he 
 
TOKYO 00003182  004 OF 010 
 
 
would respond to the matter carefully. 
 
6) US Ambassador Thomas Schieffer stresses completion of 
replacement facilities as precondition for Marine relocation 
 
ASAHI (Page 2) (Full) 
June 9, 2006 
 
US Ambassador to Japan Thomas Schieffer yesterday delivered a 
speech in Osaka at the invitation of the Asahi Shimbun. Referring 
to the realignment of US forces in Japan, he said, "US Marines 
will be moved to Guam after new replacement facilities are 
built." He again stressed that the completion of construction of 
alternate facilities based on Japan's cooperation as a 
precondition for the relocation of US Marines from Okinawa to 
Guam and Futenma Air Station. He pointed out: "It is too 
dangerous (from security standpoint) to move before they are 
ready." He expressed hopes for an early start of construction of 
the replacement facilities. 
 
7) Senior-working-level talks to start June 14 to map out 
detailed US force realignment implementation plans 
 
SANKEI (Page 4) (Abridged slightly) 
June 9, 2006 
 
The governments of Japan and the United States have decided to 
hold senior-working-level talks on a detailed implementation plan 
for US force realignment starting on June 14 in Hawaii. It will 
be the first senior-working-level talks since the Japan-US 
Security Consultative Committee (2-plus-2) reached an agreement 
on the final report on May 1. The two countries will aim to 
complete the implementation of most realignment plans by 2014, 
including the relocation of Futenma Air Station. 
 
In the upcoming talks, the two countries will study establishing 
a team tasked with sorting out a set of implementation procedures 
and specific challenges based on the Japan-US Road Map, as 
specified in the final report. 
 
The two countries intend to produce a construction plan for 
relocating Futenma Air Station to the coastline of Camp Schwab to 
present it to a consultative body made up of the central 
government and local communities. Officials in charge from the US 
Marines and the Defense Facilities Administration Agency are 
likely to play a central role in the team. 
 
Coinciding with the senior-working-level talks, the Defense 
Agency, the US Missile Defense Agency, and other offices will 
also hold a conference to discuss ways to share intelligence on 
missile defense to deal with ballistic missiles. 
 
8) Defense Ministry bill to be spotlighted 
 
ASAHI (Page 4) (Full) 
June 9, 2006 
 
The government decided in yesterday's meeting of the Security 
Council to adopt bills upgrading the Defense Agency to the status 
of a ministry. The bills are in a package of legislative measures 
to revise the Defense Agency Establishment Law, the Self-Defense 
Forces Law, and other relevant laws. The government will make a 
 
TOKYO 00003182  005 OF 010 
 
 
cabinet decision today on the legislation and will send it to the 
Diet. The Defense Agency's ardent wish, time and again coming 
forward but fading out over the past decade, will now be before 
the Diet in its current session. However, the government and 
ruling parties will carry over the legislation to the next Diet 
session for continued deliberation and will leave it into the 
hands of the post-Koizumi cabinet. The Diet will soon close its 
current session. Even so, the government will introduce the 
legislation to the Diet at the last minute. Behind the scenes, 
the New Komeito, the coalition partner of the ruling Liberal 
Democratic Party, is worried about next year's simultaneous local 
elections and House of Councillors election. So the party changed 
its mind and approved the legislation. 
 
The New Komeito held a plenary meeting of its policy board 
yesterday to discuss the legislation. In the meeting, however, a 
number of objections were raised. 
 
"If the Defense Agency becomes a ministry, it might be difficult 
to control the Self-Defense Forces," one said in the meeting. 
Another voiced a question: "I wonder if it's possible to obtain 
neighboring countries' understanding." There was also a voice 
insisting on a majority decision. 
 
In the end, the Komeito leadership managed to approve the 
legislation. However, Komeito President Kanzaki released an 
unusual comment about allowing the SDF to act within the bounds 
of Article 9 in the Constitution of Japan, prohibiting the right 
of collective self-defense, and constraining the defense budget. 
This was out of consideration for deep-seated anxieties and 
dissatisfaction in the party. 
 
In 1997, a government-sponsored advisory panel on administrative 
reform finalized its report of recommendations. In that final 
report, the panel referred to the advisability of raising the 
Defense Agency to a ministry as "an issue to be discussed in the 
political arena." Since then, the Defense Agency has desired 
ministry status. 
 
Last November, the LDP set forth its intention to present the 
legislation to the Diet in the current session. Kanzaki and other 
Komeito executives also changed their minds to accept the idea of 
giving ministry status to the Defense Agency. In the Komeito, 
however, there were arguments against that idea. In January this 
year, the Defense Facilities Administration Agency was found to 
have been involved in a bid-rigging scandal. The party then 
stopped its discussion on the matter. 
 
In June, however, the Komeito leadership was inclined to present 
the legislation. "Next year, there will be simultaneous local 
elections and an upper house election," one of the party's 
executive officers noted. This officer added: "In and out of our 
party, there are objections to this troublesome legislation. We 
can't handle it. There's no choice but to present the bills to 
the Diet in the current session and fast-track the legislation in 
this fall's extra session of the Diet." 
 
Another Komeito executive was concerned about Democratic Party of 
Japan (Minshuto) President Ozawa's political style. "If we scrap 
the bills, the DPJ would come up with a 'National Defense 
Ministry' bill, which we can never accept," the party executive 
said, adding, "He would try to cause a fissure in the ruling 
 
TOKYO 00003182  006.2 OF 010 
 
 
bloc. We don't want to impair our coalition with the LDP." 
 
9) Kim Young Nam to have reunion with his mother; Government on 
alert against Pyongyang's intention to drive wedge between Japan 
and South Korea; Tokyo still eager to join efforts with Seoul 
 
YOMIURI (Page 4) (Excerpts) 
(June 9, 2006) 
 
North Korea's announcement to allow South Korean abductee Kim 
Young Nam, who is believed to be husband of Japanese abductee 
Megumi Yokota, to meet his mother Choi Gye Wol, has put the 
Japanese government on high alert. Officials suspect that 
Pyongyang is using this to drive a wedge between Tokyo and Seoul. 
The government intends to deal with the matter in close 
cooperation with South Korea. 
 
Prime Minister Junichiro Koizumi told reporters at his official 
residence last night about the planned reunion between Kim and 
his family: 
 
"I know the family is dying to meet with him, but there are many 
more abductees. (Japan and South Korea) must cooperate with each 
other in order to achieve the repatriation of all abductees." 
 
Chief Cabinet Secretary Shinzo Abe in a press conference also 
underlined the need for the two countries to cooperate, saying: 
 
"We would like to consult with South Korea thoroughly on various 
aspects, including how the reunion will take place, while 
receiving information from Seoul. It is important for Japan and 
South Korea to join efforts for rescuing Mr. Kim and Ms. Megumi 
Yokota." 
 
The government has been searching for ways to cooperate with 
South Korea since it was found in April that Kim and Megumi 
Yokota were likely husband and wife. This can explain why Tokyo 
is so concerned that the South Korean public might soften their 
stance toward the North, disrupting unity between Japan and South 
Korea as a result. 
 
10) Prime Minister: Japan, ROK need to work together to bring all 
abductees back to home 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 9, 2006 
 
Prime Minister Koizumi, when asked late yesterday about an 
analysis that the planned family reunion between South Korean 
abductee Kim Young Nam and his family members is possibly aimed 
at driving a wedge between Japan and South Korea, pointed out it 
is important for Japan and South Korea to continue to work 
together, noting: "Whatever happens, there are many things for 
Japan and South Korea to cooperate on. There are many more 
abductees, so both sides need to cooperate to bring them all back 
to home." 
 
Koizumi also commented: "Family members of abductees may wonder 
what to do. I'd like to consult with them." He was replying to 
questions posed by reporters at the Prime Minister's Official 
Residence. 
 
 
TOKYO 00003182  007 OF 010 
 
 
11) Tokyo alarmed by Pyongyang's possible move to draw curtain on 
abduction issue as husband of abductee Megumi is set to meet his 
family 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
June 9, 2006 
 
Ryuji Watanabe 
 
The government has analyzed the planned family reunion in North 
Korea between Kim Young Nam -- a South Korean abductee believed 
to be the husband of Japanese abductee Megumi Yokota -- and his 
family members as a sign that Pyongyang intends to draw the 
curtain on the abduction issue. Tokyo remains firm in keeping its 
previous position of resolving the issue through dialogue while 
increasing pressure on North Korea. 
 
Back in October 2002, North Korea proposed to Megumi's father, 
Shigeru, and her mother, Sakie that they come to North Korea and 
meet Megumi's daughter, Kim Hye Gyong. Megumi's parents declined 
to visit North Korea, out of concern that if they meet Hye Gyong 
in North Korea where there is no freedom, North Korea would use 
the meeting with Megumi's daughter as an occasion to force the 
parents to accept the death of Megumi as a fact and then to try 
to draw the curtain on the abduction issue. 
 
Kim Young Nam's mother, Choi Gye Wol, visited Japan late May and 
expressed her desire to meet her son and granddaughter during a 
question and answer session in the Lower House Special Committee 
on the Abduction Issue that she attended as a witness. Sakie then 
told Choi Gye Wol: "As long as they are in North Korea, they 
definitely cannot say, 'We want to return home.' It's risky for 
us to visit North Korea." 
 
Speaking of the upcoming family reunion between Kim Young Nam and 
her mother, a government official made this prediction: 
"Probably, Mr. Kim will give a detailed account of his wife 
Megumi's death." "The risk cannot be ruled out that his mother, 
Choi Gye Wol, might not come home for a while," the official 
added. 
 
12) North Korean human rights bill: Revision talks between LDP, 
Minshuto in final stretch; Fail to reach agreement on support for 
North Korean defectors 
 
YOMIURI (Page 4) (Full) 
June 9, 2006 
 
The Liberal Democratic Party and Minshuto (Democratic Party of 
Japan) held revision talks yesterday on a North Korean human 
rights bill to deal with the North's violations of human rights, 
such as abductions. But they failed to reach an agreement on 
national assistance to North Korean defectors. 
 
They will discuss the matter today as well. In order for the bill 
to clear the Diet in the ongoing session, it has to pass through 
the Lower House no later than June 13. The two parties will make 
every effort to enact the bill. 
 
The LDP and the New Komeito and Minshuto have submitted their own 
draft bills to the Lower House. Yesterday's session was held 
among the LDP's Ichiro Aisawa and Kazuaki Miyaji and Minshuto's 
 
TOKYO 00003182  008 OF 010 
 
 
Hiroshi Nakai, Masaharu Nakagawa, and Jin Matsubara. The LDP 
formally presented revisions to the draft bill produced by the 
ruling coalition. 
 
The ruling coalition's revised plan is designed to make North 
Korean defectors, in addition to abductees, subjects to Japan's 
relief measures for the victims of the violations of human rights 
by the North. Specifically, the revised plan includes such new 
phrase, such as: "The government shall make efforts to take 
appropriate measures for North Korean defectors." The revised 
plan that reflects Minshuto's standpoint to some extent points to 
the ruling coalition's desire for early enfacement. 
 
While giving a positive assessment to the revised plan, Minshuto 
demanded: "The expression "to make efforts" is not sufficient. 
Support measures for North Korean defectors should be specified 
in a more lucid way." The views of the two parties remained wide 
apart. 
 
Chief Cabinet Secretary Shinzo Abe noted in a press conference 
yesterday: 
 
"It is significant to enact a human rights bill. It will allow 
Japan to send out a message that the abduction issue must be 
resolved." 
 
13) Iranian petroleum minister: Iran to enter final-stage 
negotiations with Japan on Azadegan oil-field development 
possibly tomorrow 
 
YOMIURI (Page 2) (Full) 
June 9, 2006 
 
Norito Kudo, Teheran 
 
Iranian Petroleum Minister Kazem Vaziri-Hamaneh said on June 7 
that Iran would enter the final stage of negotiations with Japan 
as early as June 10 on the development of the Azadegan oil field 
located in southwestern Iran, according to the news agency 
operated by the Iranian Petroleum Ministry. Inpex Corp. has been 
granted concession rights for the field. 
 
Vaziri-Hamaneh stated: "Iran will probably reach an agreement 
with Japan in the final-stage negotiations on starting the 
development," but he added: "If we fail to find common ground, 
Iran will independently exploit the field." He thus indicated 
that Iran would cancel the given concession rights should the 
talks end in failure. 
 
As the main reason for the delay in launching the Azadegan 
project, Inpex Corp. has cited the landmines laid down during the 
Iran-Iraq war (1980-88) that have yet to be completely removed. 
But the petroleum minister indicated his willingness to try to 
find a breakthrough at the upcoming negotiations. 
 
14) Government to offer financial handout to Japanese emigrants 
to Dominican Republic, following Prime Minister Koizumi's order; 
Specific action will take shape in July 
 
MAINICHI (Page 3) (Full) 
June 9, 2006 
 
 
TOKYO 00003182  009.2 OF 010 
 
 
The government yesterday began discussions to offer a lump-sum 
payment to Japanese emigrants to the Dominican Republic, 
following the recent outcome of the suit over the government 
campaign for emigration there. Prime Minister Junichiro Koizumi 
ordered the Ministry of Foreign Affairs (MOFA) to study such a 
payment and how much money should be offered to those emigrants. 
Later in the day, Koizumi asked former Health Minister Hidehisa 
Otsuji, who has handled the Dominican emigration issue, to 
discuss specific steps with MOFA. 
 
Koizumi late yesterday met with Otsuji and others at the Prime 
Minister's Official Residence and revealed his intention to work 
out a new set of measures by the end of July at the latest, 
saying: "It's time for politicians to deal with the problem. July 
29 will mark the 50th anniversary of their emigration. I hope we 
can celebrate it in a pleasant way." Koizumi asked Otsuji "to act 
as a coordinator with MOFA and come up with a set of relief 
measures." 
 
The Tokyo District Court in its decision made on July 7 dismissed 
the plaintiffs' claim, citing the statute of limitations, but it 
recognized the government's failure to fulfill its legal duty. 
The lump-sum payment the government plans to offer is intended to 
fulfill its moral duty. 
 
As for how much money will be paid, a government official 
indicated that the government would discuss the amount based on 
the 3.1 billion yen claimed by the plaintiffs as compensation. 
 
15) LDP research panel calls for introducing environment tax to 
reach Kyoto target 
 
YOMIURI (Page 2) (Full) 
June 9, 2006 
 
The Liberal Democratic Party's Research Commission on the 
Environment, chaired by House of Representatives member Takashi 
Kosugi, submitted to Environment Minister Koike yesterday a 
report of recommendations to achieve the target set in the Kyoto 
Protocol for Japan's cut in greenhouse gas emissions. The report 
calls for introducing an environment tax and other measures. The 
Kyoto pact requires Japan to reduce greenhouse gas emissions by 
6% from 1990 levels between 2008 and 2012. Japan's emissions of 
such gases in 2004, though, were up 8% over a year earlier. The 
report stresses the need to adopt a philosophy of protecting the 
environment in the nation's tax system. Chairman Kosugi 
commented: "We have been calling for an environment tax. But the 
public and private sectors must study things more extensively and 
take feasible measures; otherwise, it will be difficult for Japan 
to meet the goal." 
 
16) Government stresses determination to hold fast to reform 
line, out of concern over further plunge in stock prices 
 
NIHON KEIZAI (Page 2) (Full) 
June 9, 2006 
 
Senior members of the government and the ruling parties 
reiterated yesterday the policy maintaining the current reform 
course after the Liberal Democratic Party presidential election 
in September. They are worried that a spread of the image of the 
reform line being downplayed might bring down stock prices 
 
TOKYO 00003182  010.2 OF 010 
 
 
further. The Nikkei Stock Average of 225 selected issues tumbled 
below 15,000 yesterday. 
 
Prime Minister Junichiro Koizumi told reporters at his official 
residence yesterday: "Although the Japanese stock market has been 
affected by the US economy, the Japanese economy has been 
steadily recovering." He expressed his view that the stock plunge 
will be only temporarily. New Komeito President Takenori Kanzaki 
also emphatically said: "Various indicators show that the 
Japanese economy itself has not lost momentum." 
 
With an eye on the September presidential race, senior LDP 
members have begun to move to alter the reform course. LDP House 
of Councillors' Caucus Chairman Mikio Aoki has opposed proposed 
spending cuts. 
 
LDP Policy Research Council Chairman Hidenao Nakagawa told 
reporters at party headquarters: "Reform will not move backward." 
Chief Cabinet Secretary Shinzo Abe, the most likely candidate to 
succeed Koizumi, also said in a press conference: "If the 
coalition of the LDP and the New Komeito is maintained, the 
Koizumi reform line will be continued." 
 
SCHIEFFER