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UNCLAS SECTION 01 OF 13 TOKYO 003289 
 
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 06/15/06 
 
 
Index: 
1) Top headlines 
 
2) Editorials 
 
3) Prime Minister's daily schedule 
 
4) Koizumi-Bush summit statement to stress the alliance in a 
global setting 
 
5) Prime Minister Koizumi: Timing of SDF from Iraq will be a 
"comprehensive decision" 
 
6) Fukuoka governor accepts the final report of the USFJ 
realignment 
 
7) Yokosuka mayor goes along with deployment of nuclear-powered 
US Navy carrier 
 
8) Yokosuka sailor arrested for molesting teenage girl 
 
9) ROK foreign minister announces sea-bottom survey next month 
around disputed Takeshima isles 
 
10) Indonesia delays signing of exchange of notes with Japan on 
provision of "weapons" -- patrol boats -- under foreign aid 
program 
 
11) METI minister meets ASEAN security-general in Tokyo to 
discuss East Asian economic partnership agreement 
 
12) No end to consumer distrust of US beef as government ends 
public hearings in 10 cities to gauge public views on restarting 
imports 
 
13) In deciding to resume US beef imports, Japan plans to ban 
only those companies that commit risk-material violations 
 
14) Finance Ministry panel's proposals to include hike in 
consumption tax, dedicated tax for social security 
 
15) US' Public Company Accounting Oversight Board (PCAOB) asks 
FSA to let it independently oversee the Japanese auditors 
 
16) Diet ends on June 18 with residue of disgruntlement among 
lawmakers desiring extension of session 
 
17) Minshuto (Democratic Party of Japan) weakens call for 
resignation of BOJ Governor Fukui for investment in scandal- 
ridden Murakami Fund 
 
18) Mori faction now likely to unite around Shinzo Abe as its LDP 
presidential candidate 
 
19) Survey of LDP local chapters shows 23 ready for Abe-Fukuda 
presidential race in the fall 
 
Contents: 
1) TOP HEADLINES 
 
Asahi: 
Japan Obstetrics and Genecology Association survey shows nation 
 
TOKYO 00003289  002 OF 013 
 
 
has only 3,000 delivery facilities - about half of government 
data 
 
Mainichi: 
Salary-based bid-rigging and amakudari system established by DFAA 
Construction Department: A firm accepting a councilor for 15 
million yen a year is allowed to place an order worth 800 
million, a 12-million-yen bureau chief comes with 600-million-yen 
order, a 10-million-yen department chief with a 400-million-yen 
order 
 
Yomiuri: 
Government to establish amakudari watchdog body in Cabinet Office 
to check irregularities 
 
Nihon Keizai: 
Government, LDP eye lowering drug prices next spring to reduce 
government's contrition by 100 billion yen; Prices may be lowered 
up to 10 PERCENT  yearly 
 
Sankei: 
Health, Labor and Welfare Ministry: Childbirths could drop to 
430,000 in 2050 - 40 PERCENT  of current level 
 
Tokyo Shimbun: 
Fiscal panel calls for consumption tax hike strictly for social 
security payments 
 
2) EDITORIALS 
 
Asahi: 
(1)Diet session to end: 150 days a disappointment 
(2)EEZ demarcation: Japan, South Korea need clear rules to avoid 
critical situation 
 
Mainichi: 
(1)Elderly people deserve good medical care 
(2)BOJ Gov. Fukui must disclose assets 
 
Yomiuri: 
(1)DPJ shouldn't act out of partisan interests 
(2)High court overturns district court's absurd ruling on 
protection of news sources 
 
Nihon Keizai: 
(1)Consumers deserve improved housing code 
(2)Japan, South Korea must conduct talks persistency 
 
Sankei: 
(1)"Big-boned" policy guidelines must reflect fiscal panel report 
(2)Elevator accidents: Grater safety awareness imperative 
 
Tokyo Shimbun: 
(1)BOJ Gov. Fukui must resign 
(2)Japan must underline need for scientific whaling at IWC 
meeting 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, June 14 
 
NIHON KEIZAI (Page 2)  (Full) 
 
TOKYO 00003289  003 OF 013 
 
 
June 15, 2006 
 
10:45 
Met at Kantei with ambassador to Madagascar. 
11:05 
Met with Shimada, special advisor to the Cabinet Office. 
11:32 
Met at LDP headquarters with Chief Cabinet Secretary Abe, 
Secretary General Takebe, and LDP Upper House Secretary General 
 
SIPDIS 
Katayama. 
12:09 
Met at Kantei with Deputy Chief Cabinet Secretary Nagase. 
13:03 
Attended a meeting of secretaries general of LDP prefectural 
chapters. 
13:28 
Arrived at Kantei. 
15:15 
Met with Internal Affairs and Communications Minister Takenaka, 
followed by Science and Technology Minister Matsuda, and lawmaker 
Hiroyuki Abe, member of the Council for Science and Technology 
Policy. 
16:05 
Met with Vice Foreign Minister Yachi. Met afterwards with Science 
Council of Japan Chairman Kurokawa and Chief of Secretariat 
Nishigahiro. 
17:57 
Attended party for the late Prime Minister Takeshita at Akasaka 
Prince Hotel. 
18:35 
Attended at Kantei a meeting of the Council for Science and 
Technology Policy. 
19:36 
Dined with commentator Naoki Tanaka, Canon Chairman Fujio 
Miterai, and Toyota Motor Chairman Hiroshi Okuda at Garden Court 
in New Otani Hotel. 
21:21 
Returned to his official residence. 
 
4) Japan, US to mention Japan-US alliance in the world in a joint 
statement to be released after bilateral meeting, first summit 
statement in 10 years 
 
SANKEI (Page 5) (Excerpts) 
June 15, 2006 
 
The Japanese and US governments are now in the final stage of 
coordination aimed at releasing a joint statement to be released 
after the upcoming summit meeting between Prime Minister 
Junichiro Koizumi and US President George W. Bush. The statement 
will position the Japan-US alliance in a global context, several 
government sources revealed. This will be the first joint Japan- 
US summit statement in 10 years, since the April1996 one released 
by Prime Minister Ryutaro Hashimoto and President Bill Clinton 
after their talks in Tokyo. Japan would like to use this summit 
as an occasion to sum up Prime Minister Koizumi's diplomatic 
efforts by highlighting to the rest of the world the significance 
of the Japan-US alliance now and in the future. 
 
The joint statement, in stressing the global importance of the 
alliance, will go one step beyond the previous Hashimoto-Clinton 
document that mentioned the bilateral alliance as "playing a key 
 
TOKYO 00003289  004 OF 013 
 
 
role for peace, stability, and prosperity in the Asia-Pacific 
region." It also will underscore such commonly shared values as 
freedom and democracy. 
 
Both Japan and the US have agreed in principle to include a 
policy of emphasizing human rights in the planned joint 
statement. The Japanese government also wants to somehow stress 
in the statement the need to resolve the North Korea abduction 
issue. In addition, the statement is likely to mentions progress 
and cooperation in Japan-US economic relations. 
 
The statement will be concise and have a stronger political 
message than the previous one. It will seek to discourage China, 
North Korea, and Iran from their respective military buildups. 
 
5) Gov't to consider all factors in deciding on timing for GSDF 
pullout from Iraq: Koizumi 
 
MAINICHI (Page 2) (Full) 
June 15, 2006 
 
Prime Minister Junichiro Koizumi told reporters at his office 
yesterday evening that he would consider all factors in deciding 
on when to withdraw Ground Self-Defense Force troops currently 
deployed to Iraq. "I'm not wedded to the idea (of withdrawal 
during my term)," Koizumi added. The premier then ruled out the 
possibility of visiting Iraq. 
 
6) Fukuoka gov. accepts final report on USFJ realignment 
 
MAINICHI (Page 2) (Full) 
June 15, 2006 
 
Fukuoka Prefecture yesterday held a meeting of its assembly over 
the final report on the planned realignment of US forces in 
Japan, including a plan to relocate US military aircraft training 
to the Air Self-Defense Force's Tsuiki base in Fukuoka 
Prefecture. In the session, Fukuoka Governor Wataru Aso stated: 
"The realignment is a matter of Japan's security policy. In 
addition, we also should consider the wishes of people in Okinawa 
Prefecture to alleviate their base-hosting burden. I'm not 
thinking of asking the government to retract the plan." The 
governor also said he would ask the government for specific 
measures concerning the relocation of training flight missions. 
 
7) Yokosuka mayor accepts nuclear carrier deployment 
 
SANKEI (Page 3) (Full) 
June 15, 2006 
 
The city of Yokosuka, Kanagawa Prefecture, held a plenary meeting 
of its municipal assembly yesterday over the US Navy's planned 
deployment of a nuclear-powered aircraft carrier to its Yokosuka 
base in the prefecture. In the session, Yokosuka Mayor Ryoichi 
Kabaya clarified his intention to accept the US Navy's plan to 
deploy the USS George Washington, a nuclear-powered aircraft 
carrier, to Yokosuka in two years. "I think it would be 
unavoidable to let a nuclear-powered aircraft carrier enter 
port," the mayor stated before the assembly. Now that the mayor 
has accepted the nuclear carrier deployment plan, Yokosuka will 
be the first homeport in Japan for a nuclear-powered US flattop. 
 
 
TOKYO 00003289  005 OF 013 
 
 
In response, the Japanese and US governments will hold a meeting 
of their joint committee today and will reach a basic agreement 
on berth dredging in the port of Yokosuka for a nuclear carrier's 
port entry. After that, the government will ask Yokosuka City for 
permission to start dredging work. 
 
Kabaya also stated, "I will ask the Japanese and US governments 
to ensure the safety of local residents and dissolve their 
anxieties." With this, the mayor has indicated that Yokosuka will 
hold consultations on safety assurances, including a mutual 
antidisaster assistance agreement with the US Navy. 
 
The Japanese and US governments agreed in October last year to 
replace the USS Kitty Hawk, a conventional aircraft carrier 
currently deployed to Yokosuka and expected to be mothballed in 
2008, with a nuclear-powered aircraft carrier. However, Kabaya 
opposed the deployment of a nuclear carrier to Yokosuka and 
called for the US Navy to deploy the USS John F. Kennedy, another 
conventional flattop. In April this year, however, the US 
government accounted in writing for the safety of nuclear 
carriers. Kabaya then hinted at his intention to accept the 
nuclear carrier deployment plan. On June 12, the mayor met with 
Foreign Minister Taro Aso. After that, the mayor indicated his de 
facto acceptance of the deployment plan. "The government assured 
safety," he said. 
 
Kabaya won the mayoral election in June last year with a campaign 
pledge to call for the US Navy to continue its deployment of a 
conventional aircraft carrier. In October last year, the city's 
municipal assembly also resolved unanimously to call for the US 
Navy to retract its nuclear carrier deployment plan. 
 
Later in the day, Chief Cabinet Secretary Shinzo Abe met the 
press and appreciated the mayor's acceptance of the nuclear 
carrier deployment plan. "I appreciate the mayor for his 
understanding of the government's position," Abe said. 
 
8) US sailor held for molesting high school girl in Yokosuka 
 
MAINICHI (Page 31) (Full) 
June 15, 2006 
 
Yokosuka police in Kanagawa Prefecture arrested a US sailor 
yesterday on the spot for molesting a 15-year-old high school 
student. 
 
Danny Joseph Valerie, 47, a Yokosuka-based petty officer second 
class of the US Navy, is suspected of touching the first-year 
private high school girl's breast and kissing her at around 7:55 
p.m. when she was talking to a friend at a square in front of 
Yokosuka Chuo Station on the Keihin Kyuko line of Keihin Electric 
Express Railway Co. in the city of Yokosuka, Kanagawa Prefecture. 
Valerie was drunk and has denied the allegations. 
 
9) ROK foreign minister: "We will conduct a marine current survey 
around Takeshima/Dokdo next month"; Tensions may heighten again 
if survey is conducted 
 
ASAHI (Page 2) (Excerpts) 
June 15, 2006 
 
Tadahisa Takatsuki, Seoul 
 
TOKYO 00003289  006 OF 013 
 
 
 
At a news conference yesterday, South Korean Minister of Foreign 
Affairs and Trade Ban Ki Moon, speaking of the planned marine 
current survey in waters around Takeshima/Dokdo islets, stated: 
"Conducting a marine current survey within our territorial waters 
is our legal right. Japan cannot ask us to stop the survey." He 
thus revealed his intention to conduct the survey as planned. 
 
10) Indonesia postpones signing an ODA agreement on Japan's offer 
of patrol boats; Jakarta opposed to limited use of boats only for 
antiterrorism and antipiracy 
 
YOMIURI (Page 2) (Excerpts) 
June 15, 2006 
 
Etsunari Kurose, Jakarta 
 
The Japanese government had decided to offer three patrol boats 
in grant aid to Indonesia, treating this offer as an exception to 
the three principles banning weapons exports. A signing ceremony 
on an agreement on this offer was held yesterday, but the signing 
of the document was postponed at the last minute at the request 
of the Indonesian government, which stated an objection to the 
contents of the agreement. This development involving the ODA- 
related agreement is extremely unusual because that agreement was 
prepared as part of official development assistance (ODA), and 
the conditions for the agreement were closely examined before the 
agreement took shape. 
 
According to an official concerned, the two governments have 
agreed on limiting the use of patrol boats for such purposes as 
dealing with terrorism at sea and pirates, in view of Japan's 
three principles banning weapons exports. 
 
However, at the signing ceremony held in Jakarta yesterday, a 
senior Indonesian Foreign Ministry official asked Japanese 
Ambassador to Indonesia Shin Ebihara to alter the current wording 
to a more general expression like "activities relating to 
maritime safety." Japan rejected this request, and the two 
governments began coordinating on the wording again, but it is 
difficult for Japan to make concessions, as this is a very 
delicate matter that could violate the three principles on 
weapons exports. No prospect of both sides reaching accord has 
come into sight yet. 
 
A Japanese Embassy official commented: "They could have discussed 
the contents beforehand. We have no idea why they changed their 
mind today." 
 
11) East Asia EPA; ASEAN secretary general during talks with METI 
minister indicates forward-looking stance toward discussing issue 
with ASEAN member nations 
 
TOKYO SHIMBUN (Page 8) (Excerpts) 
June 15, 2006 
 
Minister of Economy, Trade and Industry Toshihiro Nikai yesterday 
met with visiting Association of Southeast Asian Nations (ASEAN) 
Secretary General Ong Keng Yong at a Tokyo hotel. In response to 
 
SIPDIS 
Nikai's proposals for signing an East Asian region economic 
partnership agreement (EPA) and setting up an organization for 
economic cooperation (OECD) and develop in that region, the 
 
TOKYO 00003289  007 OF 013 
 
 
secretary general noted, "The proposal is worth considering. I 
 
SIPDIS 
would like to discuss the issue with ASEAN member nations." 
 
12) Public hearings in 10 cities on US beef imports end, but 
doubts raised about demands 
 
TOKYO SHIMBUN (Page 8) (Excerpts) 
June 15, 2006 
 
The Ministry of Health, Labor, and Welfare and the Ministry of 
Agriculture, Forestry, and Fisheries yesterday ended public 
hearings held with consumers in 10 cities across the nation on US 
beef imports. The government has already reached agreement with 
the US on a timetable for inspections of US plants with licenses 
to ship beef to Japan before resuming imports and will decide as 
early as next week to reopen its market to US beef. The first 
shipment is expected to arrive in late July. Domestic importers, 
though, are somewhat perplexed, as high demand in US beef cannot 
be anticipated due to public distrust in its safety. Related 
industries, including retailers and the food-service industry, 
are likely to be slow to move. 
 
Measures 
 
"Why is the US unable to take the same BSE preventive measures as 
Japan?" In a public hearing in Tokyo yesterday, one participant 
asked the above question. Similar views were presented in other 
places. 
 
In an effort to erase public distrust in the safety of US beef, 
the Japanese and US governments discussed plans to set rules on 
the assumption of problems occurring after trade is resumed, like 
a violation of safety procedures. But such rules were put on the 
backburner due to opposition from the US, which wanted to avoid 
taking time to set rules. 
 
Japan's decision to restart US beef imports apparently came under 
pressure from US legislators, with an eye on the upcoming midterm 
election. The Japanese government would like to obtain 
understanding from consumers with such measures as prior 
inspections, but consumer distrust is unlikely to be easily 
cleared away. 
 
Perplexity 
 
"The situation is quite different from when imports were resumed 
in December of last year, as there have been few inquiries about 
US beef," a responsible member of the Japan Meat Trade 
Association said with a tone of puzzlement. 
 
A spokesperson for Ito-Yokado Co. said: "We have no plan to put 
US beef on our store shelves until consumers regain confidence in 
the safety of the product." Zensho Co., the operator of the 
Sukiya chain, has categorically said: "We will not use US beef 
until such measures are taken as the complete removal of 
specified risk materials, the imposition of strict feed 
restrictions, and the implementation of blanket BSE testing." 
 
Another reason for the export association's mixed feelings is the 
1,000 tons of meat worth about 1 billion yen stored in freezers 
or refrigerators across the nation since it could not clear 
customs following the imposition of a second ban on Jan. 20 of 
 
TOKYO 00003289  008 OF 013 
 
 
this year. Once imports are resumed, the stored beef will be the 
first shipment, but their prices will inevitably fall. The 
association asked the US government to buy back the product, but 
the request was turned down. 
 
Expectations 
 
The Beef Barbecue Industry Association is waiting for an import 
resumption. An association member commented: "There is latent 
demand for US beef. There are people seeking low-priced, 
delicious beef." However, many beef barbeque chains are still 
undecided as to whether to use US beef, even if the government 
decides to resume imports. 
 
Restaurant chain Yoshinoya D&C Co. plans to put its signature 
gyudaon (beef bowl) back on the menu 6-8 weeks after Japan 
resumes US beef imports. The prices of the parts used for beef 
bowls are expected to be higher than those before December 2003, 
and the import volume is also likely to be smaller. Given this, 
the company intends to "offer the beef bowl for a limited time," 
according to a spokesman. 
 
13) US beef imports: Government considering embargo on products 
from meat processing plants that have violated export conditions 
in event of inclusion of SRM in resumed US beef shipment to avoid 
total embargo 
 
YOMIURI (Page 1) (Full) 
June 15, 2006 
 
It was learned yesterday that in the event of a possible 
inclusion of specified risk materials (SRM), a material banned in 
Japan as a BSE risk, in US beef shipments, Japan will in 
principle impose an embargo on products only from the 
slaughterhouses that shipped them. Several government sources 
revealed this. The government will likely decide to resume US 
beef imports after discussions with the US, making it a condition 
that the Japanese side conducts prior inspections of US 
meatpackers. It will clarify guidelines for imposing an embargo 
by that time. 
 
The government this January placed a total ban on US beef imports 
when vertebral columns were found in shipments, based on the 
supplementary item included in the report compiled by the Cabinet 
Office's Food Safety Commission. The item stipulates that it is 
necessary to temporarily suspend imports if a serious situation 
in which risks against humans cannot be ruled out occurs. 
However, there have been some critical views on this for being 
vague. 
 
For this reason, the government will confer on this issue with 
the US and set guidelines, including that a total ban will be 
placed only in the event of a serious violation of the bilateral 
agreement, making it a principle that an import ban be placed 
only on a meat processing plant that has violated the agreement. 
However, some government officials take the position that the GOJ 
will not be able to obtain understanding from the public unless a 
total ban is imposed in the event of export violation. 
 
The South Korean government has indicated a policy of postponing 
the resumption of US beef imports slated for early this month, 
following the finding of problems in inspections of US 
 
TOKYO 00003289  009 OF 013 
 
 
meatpackers. In response to this move, a proposal that Japan 
should resume imports after conducting inspections of US 
meatpackers has been floated. In that case, a delay in the 
drafting of guidelines is likely to occur. 
 
14) Fiscal System Council proposes turning consumption tax into 
special purpose tax to appropriate revenues for social welfare 
 
TOKYO SHIMBUN (Top Play) (Excerpts) 
June 15, 2006 
 
The Fiscal System Council (an advisory panel reporting to the 
Finance Ministry) yesterday presented to Finance Minister 
Sadakazu Tanigaki an opinion paper on unified reform of 
expenditures and revenues, which sets a direction for fiscal 
reconstruction. The report pointed out the need to increase the 
consumption tax, noting that since social security expenditures 
are bound to increase due to the low birth rate and the graying 
society, it is important to secure stable funding that is 
relatively less affected by the health of the economy. It 
referred to the idea of turning the consumption tax into a social- 
welfare-dedicated tax by mentioning that appropriating increased 
revenues from such a hike for the payments of social security 
benefits will be meaningful from the standpoint of obtaining 
understanding from the people. 
 
The report stressed that social security expenses, which account 
for more than 40 PERCENT  of general-account spending, will 
expand at a rate exceeding economic growth. In view of the 
prospect that the proportion of money spent on basic pension 
plans will increase by fiscal 2009, the report underscored the 
need to secure specific and stable funding resources (tax 
revenues), thereby strongly indicating the need to hike the 
consumption tax. 
 
Regarding other social-welfare-related spending items, the panel 
proposed a revision to the system of additional payments of 
welfare benefits to families of mothers and children and the 
abolition of government spending on unemployment benefits. 
 
Regarding local finances, an issue that is equally important to 
the social security issue, the report pointed out that the 
primary balance, which indicates fiscal soundness, of the central 
government is in the red, while that of local governments is in 
the black. 
 
For a revision to the system of tax allocation to local 
governments, under which a fixed amount of revenues from national 
taxes, such as the income tax, are distributed to local 
governments, the report proposed that such a revision should be 
made in a way to lead to a reduced national burden, including a 
cut in the legal rate. 
 
15) US supervisory board ready to oversee Japanese audit firms; 
FSA proposes firms' briefings in US 
 
ASAHI (Page 1) (Excerpts) 
June 15, 2006 
 
The Public Company Accounting Oversight Board (PCAOB) - a private- 
sector, non-profit corporation to oversee accounting firms in the 
US - has started arrangements with the Financial Services Agency 
 
TOKYO 00003289  010 OF 013 
 
 
(FSA) to implement its own inspections of Japanese audit firms. 
According to informed sources yesterday, PCAOB has asked Japan to 
allow it to start by the end of this year on-site inspections 
into 12 corporations registered with it, including ChuoAoyama 
PricewaterhouseCooper and other three major corporations. The 
FSA, however, based on the view that "their sovereignty might be 
infringed," has proposed that the targeted audit firms would 
visit the US to explain their management systems. The agency 
plans to hold talks with PCAOB executive members. 
 
PCAOB was established based on the Sarbanes-Oxley Act in July 
2002, set off by a series of scandals involving Enron and other 
firms. As measures to prevent such scandals, the corporation has 
been tasked with overseeing the business contents of accounting 
firms in the preparation of informative and independent audit 
reports. 
 
Foreign accounting firms overseeing listed companies in the US 
are required to register as members of PCAOB. In the US, many 
foreign firms have been listed on the US market, including Sony 
Corp. and Toyota Motor Corp. If public confidence of foreign 
accounting firms is undermined, there may be an adverse impact on 
the US securities market. As of June, 1,669 auditing firms in 
about 80 countries have registered with PCAOB. 
 
PCAOB has made the same request to countries other than Japan and 
has already carried out on-site inspections of accounting firms 
in Britain and Canada in cooperation with local authorities. In 
the case of Japan, since public confidence in the audit 
corporation system has crumbled in the wake of the scandal 
involving ChuoAoyama and heavy administrative punishment imposed 
on it, PCAOB has judged it necessary to immediately conduct 
inspections. 
 
16) Ruling camp decides not to extend current Diet session; LDP, 
New Komeito members dissatisfied with Koizumi going over parties' 
heads 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 15, 2006 
 
The ruling Liberal Democratic Party (LDP) and its junior 
coalition partner New Komeito confirmed in a meeting yesterday of 
their secretaries general and Diet affairs committee chairmen a 
policy of not extending the current Diet session, which will 
close on June 18. The ruling camp has made this decision in 
compliance with the wishes of Prime Minister Junichiro Koizumi, 
who had rejected the possibility of an extension. LDP lawmakers 
representing educational-policy interests (bunkyo-zoku), who 
called for an extension to pass such important bills as education 
reform bill through the Diet, and New Komeito members are 
increasingly dissatisfied with Koizumi, who ordered Diet 
management decisions to the ruling parties going over their 
heads. 
 
On May 30 Koizumi made a final decision not to extend the current 
session. The educational clique immediately reacted strongly to 
his decision because they were eager to pass the bill revising 
the Basic Education Law through the Diet during the current 
session. 
 
On June 1 successive education ministers called at the Prime 
 
TOKYO 00003289  011 OF 013 
 
 
Minister's Official Resident to directly ask Koizumi to extend 
the session. They told the prime minister: "Why don't you crown 
your glory with the passage of education reform legislation?" 
Koizumi simply replied, "I don't have no such intention." 
 
One former education minister said angrily, "We could not 
continue to say anything more. It is unbelievable that so many 
crucial bills have been left untouched." 
 
The LDP and New Komeito agreed on June 2 to make a decision this 
week as to whether an extension would be needed or not and to 
seek a minor extension if prospects for passage of key bills were 
in sight. 
 
On June 7, however, Chief Cabinet Secretary Shinzo Abe and LDP 
Secretary General Tsutomu Takebe already agreed not to extend the 
 
SIPDIS 
session. 
 
Moreover, prior to the meeting of secretaries general and Diet 
affairs committee chairmen, Koizumi met yesterday with LDP 
executives, including Takebe, in which they confirmed that the 
session would not be extended. 
 
17) Minshuto hesitant about demanding Fukui's resignation over 
Murakami Fund investment in wake of e-mail fiasco 
 
ASAHI (Page 4) (Excerpts) 
June 15, 2006 
 
Minshuto (Democratic Party of Japan) executives are cautious 
about pursuing Bank of Japan Governor Toshihiko Fukui's 
responsibility for investing 10 million yen in the Murakami Fund. 
Some mid-level and junior members are eager to even demand 
Fukui's resignation, however. Having learned a bitter lesson from 
the recent fake e-mail fiasco, the party leadership apparently 
fears that the Fukui case will escalate into a "witch hunt" 
involving the entire political community, as was the case with 
the unpaid national pension premium scandal in 2004. But 
depending on how the Upper House Budget Committee session today 
turns out in trying to find out facts, the largest opposition 
party may bolster its pursuit. 
 
The Diet affairs chiefs of Minshuto, the Japanese Communist 
Party, and the Social Democratic Party reached an agreement 
yesterday to demand Fukui's attendance at today's Upper House 
Budget Committee session and out-of-session hearings as well as 
to pursue Prime Minister Koizumi's responsibility for appointing 
him to the post. But not all opposition party executives share 
the same view. 
 
For instance, Minshuto Secretary General Yukio Hatoyama said in 
his speeches yesterday in Sapporo and Yokohama: "The BOJ governor 
have been raking in from a high-yield fund while people were 
suffering from the zero interest rate. Such is morally absurd." 
Minshuto policy chief Takeaki Matsumoto also said yesterday: "I 
think Mr. Fukui will decide on his course of action 
independently." Neither Hatoyama nor Matsumoto mentioned Fukui's 
resignation. 
 
Minshuto Diet affairs chief Kozo Watanabe insisted on June 13 
that Fukui must resign. But in an apparent reversal of his 
previous stance, Watanabe only said yesterday: "The matter must 
 
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be elucidated from the people's viewpoint." In stark contrast to 
Watanabe, SDP head Mizuho Fukushima crisply said in a press 
conference yesterday: "We will demand Mr. Fukui's resignation." 
 
A Minshuto Diet affairs executive also commented: "It's better 
not to jump at a juicy story of this sort. We just had our e-mail 
flop." Some Minshuto members think their party should focus only 
on finding out facts for the time being. 
 
18) Many Mori faction members support Abe as candidate for LDP 
presidency 
 
NIHON KEIZAI (Page 1) (Full) 
June 15, 2006 
 
Senior members of the largest faction in the Liberal Democratic 
Party (LDP) got together last night at a Tokyo hotel to discuss 
measures for the LDP presidential election in September. 
Attending the meeting were former Prime Minister Yoshiro Mori, 
who heads the faction, and Nobutaka Machimura, secretary general 
of the faction. Based on the perception that many faction members 
support Chief Cabinet Secretary General Shinzo Abe, the senior 
members agreed that they should run a united candidate in a drive 
to prevent a split in the faction. They also confirmed that if 
former Chief Cabinet Secretary Yasuo Fukuda decides to run in the 
race, the faction would go along with his decision. 
 
LDP Diet Affairs Committee Chairman Hidenao Nakagawa, Koji Omi, 
and Seishiro Eto attended the meeting. They did not ask Abe and 
Fukuda to attend the session. 
 
After the discussion, Machimura told reporters, "We shared the 
same view that the majority of the faction wanted it to run a 
unified candidate." The senior members also agreed to maintain 
the unity of the faction, while waiting for decisions by Abe and 
Fukuda. Another senior member told reporters, "Many in the party 
support Mr. Abe." 
 
Mori is expected to meet Prime Minister Junichiro Koizumi to 
discuss the matter. Koizumi has expressed that there is no need 
for the faction to run a unified candidate, saying, "There is no 
way to prevent a person, who wants to run, from running in the 
election." Abe also stated a similar view to Koizumi. In order to 
avoid the faction from splitting, Mori expects either Abe or 
Fukuda will give up the idea of running the race on his own 
decision. 
 
19) Survey of LDP presidential race: 23 prefectural chapters 
expect face off between Abe, Fukuda; Abe wins nine supporters, 
Fukuda six 
 
MAINICHI (Page 1) (Excerpts) 
June 15, 2006 
 
The Mainichi Shimbun has conducted an opinion survey of all 
Liberal Democratic Party (LDP) prefectural chapter secretaries 
general on the upcoming LDP presidential election. In the poll, 
23 party officials -- nearly half of the total -- said they would 
like to see a showdown between Chief Cabinet Secretary Shinzo Abe 
and former Chief Cabinet Secretary Yasuo Fukuda. Both candidates 
belong to the Mori faction. In contrast, only 11 secretaries 
general favored producing a single candidate through talks. 
 
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Fourteen people, the largest number, also cited the correction of 
the social disparity as the most important campaign issue. Nine 
people said Abe was most fit to become the next prime minister, 
followed by Fukuda with six, and Foreign Minister Taro Aso with 
five. 
 
The survey was conducted between June 7 and 12. Responses came 
back from 41 regional secretaries general. In an LDP presidential 
election, local votes are allocated based on the number of rank- 
and-file party members. Prefectural secretaries general are 
believed to have strong voices toward local organizations, as 
former prefectural assembly members with abundant experience 
usually take on such posts. 
 
SCHIEFFER