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UNCLAS SECTION 01 OF 09 TOKYO 004020 
 
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 07/20/06 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
Yasukuni Shrine issue: 
4) Showa Emperor in 1988 memo expressed displeasure that Class-A war 
criminals enshrined at Yasukuni, vowed not to visit the shrine 
5) High party official in meeting with LDP's Koga in China was 
encouraged by trend to separate war criminals from war dead at 
Yasukuni Shrine 
 
North Korea problem: 
6) Gap between Chief Cabinet Secretary Abe, who wants sanctions soon 
against North Korea, and Prime Minister Koizumi, who takes 
wait-and-see stance 
7) Yomiuri Internet poll: Over half the public see North Korea issue 
affecting LDP presidential race 
 
Defense and security affairs: 
8) US, Japan sign MOI on handling of missile defense technology 
9) US, Japan to sign agreement within year on MD information sharing 
 
10) Minshuto President Ozawa argues against Japan having a 
capability to attack enemy bases 
 
Budget ceilings: 
11) Government, ruling parties agree on 4.68 trillion yen general 
account budget containing 3% cut in foreign aid outlays 
12) Defense budget ceiling has only a 1% cut, reflecting special 
consideration to USFJ realignment cost 
 
13) Foreign Ministry establishes new international cooperation 
bureau as part of ODA reform 
 
Political merry-go-round: 
14) Former Chief Cabinet Secretary Yasuo Fukuda may not run in the 
LDP presidential race after all 
15) The "new Ozawa" appears in public all smiles, exuding patience 
 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Elpida Memory to establish new plant for DRAM in Taiwan 
 
Mainichi: 
Japan, US to sign accord to share information on missile defense in 
wake of North Korea's missile launches 
 
Yomiuri: 
Land ministry to finance repair of condos built based on old 
anti-quake standards 
 
Nihon Keizai: 
Emperor Hirohito thought Yasukuni Shrine should not honor war 
criminals, according to memo 
 
Sankei: 
 
TOKYO 00004020  002 OF 009 
 
 
Nihon Keizai Shimbun employee suspected of earning 5 million yen in 
profits from insider trading only in four days 
 
Tokyo Shimbun: 
Heavy rains leave 12 dead, 11 missing 
 
2) EDITORIALS 
 
Asahi: 
(1) Considering the GSDF experience in Iraq 
 
Mainichi: 
(1) CO poisoning involving Paloma water heater also caused by 
deteriorated safety mechanism 
(2) Calmly look into the details of Akita murders 
 
Yomiuri: 
(1) CO poisoning caused by Paloma water heater: Company, government 
forget safety 
(2) Whitepaper on Economic and Fiscal Policy lacks analysis of 
income gap 
 
Nihon Keizai: 
(1) China must accelerate reform of the yuan 
(2) Japan should aim for wide-ranging economic partnership with 
India 
 
Sankei: 
(1) Additional sanctions must be taken against North Korea 
(2) Paloma bears heavy responsibility 
 
Tokyo Shimbun: 
(1) Fatal CO poisoning: Information on danger must be thoroughly 
disclosed 
(2) Whitepaper on Economic and Fiscal Policy: Government urged to 
correct income gap among youth 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, July 19 
 
NIHON KEIZAI (Page 2)  (Full) 
July 20, 2006 
 
11:00 
Met with Vice Finance Minister Hosokawa and Budget Bureau Director 
General Fujii at the Prime Minister's Official Residence (Kantei). 
 
16:00 
Met with Foreign Minister Aso, Agriculture Minister Nakagawa, State 
Minister responsible for Economic and Fiscal Policy Nikai and Deputy 
Chief Cabinet Secretary Futahashi, followed by Internal Affairs and 
Communications Minister (MIC) Takenaka and Local Administration 
Bureau Director General Takabe. Then attended a monthly economic 
report-related cabinet meeting. 
 
17:48 
Policy meeting between the government and the ruling camp. 
 
18:58 
Returned to the official residence. 
 
 
TOKYO 00004020  003 OF 009 
 
 
4) Emperor Showa (Hirohito) thought Yasukuni Shrine should not 
enshrine Class-A war criminals, according to memorandum 
 
NIHON KEIZAI (Top Play) (Excerpts) 
July 20, 2006 
 
Emperor Showa (Hirohito) expressed his strong displeasure in 1988 at 
the decision made by Yasukuni Shrine to include Class-A war 
criminals in the list of war dead honored there. He had told former 
Imperial Household Agency Grand Steward Tomohiko Tomita (now 
deceased): "That is why I stopped visiting the shrine," according to 
a memorandum by Tomita that was obtained by the Nihon Keizai Shimbun 
yesterday. The late emperor stopped visiting Yasukuni Shrine 
following the enshrinement of Class-A war criminals there in 1978, 
but he did not officially disclose the reason. The memorandum also 
includes descriptions about the emperor's fight against disease, and 
it is of great value as a historical document. 
 
A memorandum detailing the reason the emperor ceased visiting 
Yasukuni Shrine has been found for the first time. Many have 
speculated that the enshrinement of Class-A war criminals was the 
reason, and the memorandum confirms this. 
 
Tomita wrote down the contents of his conversations with the emperor 
in his diaries and notebooks in detail. He left 12 diaries 
(1975-1986) and some 20 notebooks (1986-1997). 
 
A memo about the emperor's statement on Yasukuni Shrine dated April 
28, 1988, was attached to a notebook. According to the memo, the 
emperor said: "(Executed) Class-A war criminals were included in the 
list of war dead honored at the shrine, including Matsuoka and 
Shiratori, though I heard Tsukuba was cautious about it." 
 
"Matsuoka" is former Foreign Minister Yosuke Matsuoka, and 
"Shiratori" is former Ambassador to Italy Toshio Shiratori. Both 
have been enshrined at Yasukuni Shrine. "Tsukuba" refers to Fujimaro 
Tsukuba, the chief priest of Yasukuni Shrine. The Health and Welfare 
 
SIPDIS 
Ministry gave approval for the enshrinement of Class-A war criminals 
in 1966, but Tsukuba did not enshrine them. 
 
The memo further noted: "I wonder what the current chief priest, 
Matsudaira's son, was thinking. He did it so easily. I believe 
Matsudaira sought peace, but I think he does not know how his father 
was thinking. That is why I have refrained from visiting the shrine 
since then. That is my feeling." 
 
"Matsudaira" refers to the late Yoshitami Matsudaira, the last 
minister of the Imperial Household, and his eldest son the late 
Nagayoshi Matsudaira, who decided to enshrine the Class-A war 
criminals in 1978. 
 
5) China expresses hopes for separate enshrinement at Yasukuni 
Shrine 
 
ASAHI (Page 2) (Full) 
July 20, 2006 
 
Kengo Sakajiri, Beijing 
 
Former Liberal Democratic Party Secretary General (and chairman of 
the Japan War-Bereaved Association) Makoto Koga, now visiting China, 
yesterday met with Wang Jiarui, head of the International Department 
 
TOKYO 00004020  004 OF 009 
 
 
of the Chinese Communist Party's Central Committee in Beijing. Wang 
referred to Koga's proposal for separating Class-A war criminals 
from the war dead enshrined at Yasukuni Shrine and indicated his 
hopes: "We have paid attention to the idea of separate enshrinement. 
If that idea were acceptable in Japan, it would be a good idea." 
 
Wang added: "The Yasukuni issue has stood in the way of Japan-China 
relations. We can understand the act of consoling the souls of the 
war dead, but mixing up those who caused the war and the general 
public must not be allowed." 
 
Afterwards, Koga met with Vice Foreign Minister Wu Dawei in the city 
and asked for China's cooperation on the North Korean nuclear and 
missile issues, as well as the abduction issue. Wu told Koga: "We'd 
like to continue efforts under the six-party framework. The 
situation will not make (progress) so easily for a while, but we 
think it is necessary to continue behind-the-scenes efforts." 
 
6) Gap between Abe, who is eager for Japan to prepare with US 
additional sanctions against North Korea, and Prime Minister, who 
takes "wait-and-see" stance 
 
MAINICHI (Page 5) (Excerpts) 
July 20, 2006 
 
Chief Cabinet Secretary Shinzo Abe held a telephone discussion 
yesterday with US Ambassador to Japan Schieffer to discuss the 
imposition of additional sanction measures on North Korea. Abe 
stated, "It is important for Japan and the United States to 
cooperate closely and move ahead with preparations." Ambassador 
Schieffer came out with the same thinking. In contrast, Prime 
Minister Junichiro Koizumi told the press corps yesterday, "I think 
it is better to wait for awhile to see whether North Korea will 
sincerely respond to the UNSC resolution." A perception gap was 
revealed between him and Abe, who takes a hard-line stance. 
 
After the North Korea missile launches, Prime Minister Koizumi 
strongly avoided being out front, entrusting the handling of the 
issue to Abe and Foreign Minister Taro Aso. In that context, the two 
cabinet officials met frequently with Ambassador Schieffer and often 
exchanged information. 
 
In the discussion yesterday, the Ambassador noted: "It was a great 
achievement for Japan to have the UNSC adopt the resolution by a 
unanimous decision. This is proof of the firm alliance relationship 
between the US and Japan. I thank Japan for its efforts." Abe also 
expressed his appreciation for the US' coordinating and cooperative 
stance, saying, "I would like to continue efforts at the working 
level." 
 
7) Over 50% of public surveyed by Internet monitor poll think North 
Korea will be a campaign issue in the LDP presidential race 
 
YOMIURI (Page 2) (Excerpt) 
July 20, 2006 
 
In a second Internet-monitor survey carried out by the Yomiuri 
Shimbun (July 7-11) on the next prime minister after Koizumi, 55% of 
participants in the poll thought (answering a multiple choice 
question) that the North Korea problem would be a campaign issue in 
the September election to pick the president of the Liberal 
Democratic Party (LDP). This was a 10% jump from the first poll in 
 
TOKYO 00004020  005 OF 009 
 
 
June. 
 
In the first poll, North Korea ranked seventh in importance. This 
time, the issue had risen to third place, following "reform of the 
social welfare system, including pensions and medical care" with 77% 
, and "making the fiscal system sound" with 57% . It seems that the 
launching of seven missiles by North Korea, as well as the press 
interview by a South Korean abductee who was married to Japanese 
abductee Megumi Yokota had an influence on public thinking. 
 
8) Japan, US sign MOI on provision of MD technology 
 
TOKYO SHIMBUN (Page 2) (Full) 
July 20, 2006 
 
The government formally decided yesterday to provide the United 
States with Japan's weaponry and arms technology regarding the joint 
development of the sea-based SM-3 interceptor missile system as part 
of missile defense (MD). The government also signed a memorandum of 
implementation with the US government prohibiting the use of such 
for purposes other than the original intent and shifting them to a 
third country. 
 
The MOI stipulates specific conditions for the provision of weaponry 
and arms technology based on the notes exchanged between the two 
countries in June on joint development. This allows Japan to export 
second-stage rocket motors and warhead covers. 
 
9) Japan, US to conclude agreement on intelligence sharing on 
missile defense before year's end 
 
MAINICHI (Top play) (Full) 
July 20, 2006 
 
The Japanese and US governments decided yesterday to conclude an 
agreement that will serve as guidelines on intelligence sharing in 
jointly operating missile defense (MD). When North Korea recently 
launched several ballistic missiles, the two countries failed to 
share intelligence swiftly in some areas. This led to the decision 
to make clear rules speedily. The two governments plan to map out 
rules by December when US Forces Japan (USFJ) starts operating PAC-3 
ground-based interceptor missiles at its Kadena Air Base in Okinawa 
Prefecture. 
 
The planned agreement will stipulate situations requiring 
intelligence sharing and their areas and scopes. Tokyo and 
Washington will coordinate their views on whether to exchange 
intergovernmental notes or an agreement between Japan's Defense 
Agency and the US Defense Department. 
 
When North Korea launched ballistic missiles on July 5, US military 
early warning satellites detected them. The Maritime Self-Defense 
Force and the US military also deployed Aegis vessels capable of 
tracking ballistic missiles. Japan and the US also jointly tracked 
them using all sorts of radars, including the USFJ's X-band radar in 
Aomori and the ASDF's FPS-XX radar in Chiba. "We share intelligence 
at all levels," US Ambassador Thomas Schieffer said in describing 
close cooperation between Japan and the United States. 
 
But a senior SDF official voiced a different view: 
 
"The US hardly conveyed early warning satellite intelligence to the 
 
TOKYO 00004020  006 OF 009 
 
 
SDF swiftly. It exposed the fact that hardware has been improved 
tremendously but Japan and the US have yet to create rules on 
intelligence sharing." 
 
The US is scheduled to begin operating the PAC-3 before year's end 
and to deploy the USS Shiloh carrying sea-based SM-3 missiles to the 
USFJ in August. 
 
Japan will also deploy the PAC-3 at the ASDF Iruma base in Saitama 
by next March and upgrade the Kongo Aegis vessel to carry SM-3 by 
the end of fiscal 2007. 
 
10) Ozawa describes the enemy base strike argument as "absurd," 
calls for solid Japan-US-China relationship 
 
SANKEI (Page 5) (Excerpts) 
July 20, 2006 
 
Following North Korea's recent launching of missiles, President 
Ichiro Ozawa of Minshuto (Democratic Party of Japan) has criticized 
the government's North Korea policy, describing the growing enemy 
base strike argument as "absurd." Ozawa basically perceives that 
Japan's UN-centered policy is not working and that a trilateral 
relationship among Japan, the United States, and China has yet to 
take shape. 
 
Delivering a speech in Tokyo on July 17, Ozawa said regarding the UN 
Security Council's adoption of a resolution condemning North Korea: 
 
"Japan was forced to play a hard-line role, while the US, China, and 
Russia colluded in their views behind the scenes. Japan was forced 
to agree to drop (the UN Charter's) Chapter 7 allowing imposing 
sanctions from the resolution. (Japan) was probably not aware of 
what the US had discussed with China and Russia or of Washington's 
true intention." 
 
Ozawa thus indicated that Japan and the US were not necessarily 
monolithic. 
 
He also criticized the government's plan to impose sanctions on the 
North under the Foreign Exchange and Foreign Trade Control Law: 
 
"Results cannot be achieved unless major countries take part. 
Policymakers must make a decision after taking such a factor into 
account." 
 
Ozawa also explained his view this way: 
 
"There is no solid trilateral relationship among Japan, the US, and 
China. Japan must serve as a coordinator between the US and China in 
order to achieve political and economic stability." 
 
11) Ceiling of budget estimates for fiscal 2007: Government, ruling 
parties agree to cap general-account expenditures at 46.8 trillion 
yen; ODA to suffer 3% cut 
 
TOKYO SHIMBUN (Page 1) (Abridged) 
July 20, 2006 
 
The government and the ruling camp yesterday held a meeting and 
discussed budget request guidelines for the fiscal 2007 budget. 
Participants in the meeting agreed that policy-related 
 
TOKYO 00004020  007 OF 009 
 
 
general-account expenditures be capped at approximately 46.8 
trillion. While public-works-related spending and official 
development assistance (ODA) will suffer a 3% cut from the original 
fiscal 2006 budget, social security expenses will increase due to 
the graying society. As a result, the fiscal 2007 budget will exceed 
the previous year's initial budget by 400 billion yen. The 
government will adopt the guidelines at a cabinet meeting to be held 
tomorrow. 
 
The government set the budgetary cap in line with the basic policy 
guidelines on economic and fiscal management and structural reforms 
for the fiscal 2006 national budget, which incorporated spending 
cuts up to 14.3 trillion yen over five years starting in fiscal 
¶2007. 
 
Some 220 billion yen will be cut from the expected natural increase 
in social expenditures due to the aging society, such as by lowering 
the state's share of employment insurance. Natural increases in 
fiscal 2007 were expected to reach 770 billion yen, so spending on 
social security will increase by 550 billion yen after the cuts. The 
budgetary cap on the general-account expenditures topped the 46.4 
trillion yen of the initial budget for the fiscal 2006 because of 
extra expenditures for the Upper House election next summer. 
 
12) Budget request guidelines: Defense spending cut 1% ; Government, 
ruling camp to treat expenses for USFJ realignment as exception 
 
MAINICHI (Page 2) (Almost Full) 
July 20, 2006 
 
The government and the ruling parties yesterday agreed to cap the 
fiscal 2007 general account budget at 46.8 trillion yen. According 
to the guidelines, growth in social security expenditures will be 
held to 550 billion yen. Defense-related spending and subsidies to 
private schools will also suffer a 1% cut from the previous year. 
Other spending items, such as discretionary expenditures and 
public-works-related spending, will be slashed 3% from the previous 
year. As a result, the overall increase over the previous year's 
budget will be held to 440 billion yen. As part of a plan to jointly 
reform revenue and expenditures, certain budgetary items have been 
slated for cuts over the next five years, meaning that the budget 
request guidelines for fiscal 2007 have been set in a more detailed 
manner than in the past. 
 
The guidelines set a 22 billion yen cut in public works expenditures 
from the preceding year and a 140 billion yen reduction in other 
expenditures, though 200 billion yen was allocated to cover the cost 
of the Upper House election next summer and 50 billion yen for 
priority spending items. As a result, general account expenditures 
will expand by 440 billion yen from the previous year, but the 
Finance Ministry intends to further cut expenditures in the budget 
compilation process at the end of the year. 
 
For the promotion of efficiency and prioritization of spending 
items, the guidelines incorporated a 1% cut in subsidies to public 
utility corporations, standardizing discretionary contracts with 
public utility corporations, and reducing subsidies to local 
governments. 
 
As exceptions to the budgetary cap, the government and the ruling 
camp will discuss expenses for the USFJ realignment and a revision 
of child allowances as part of measures to deal with the declining 
 
TOKYO 00004020  008 OF 009 
 
 
birthrate in a separate framework in the run-up to the year-end 
budget compilation. 
 
The government will present the budget request guidelines to the 
Council on Economic and Fiscal Policy, which is to meet on the 20th, 
and adopt it at a cabinet meeting on the 21st. Each government 
agency will submit budgetary requests by the end of August. 
 
13) Foreign Ministry to establish an international cooperation 
bureau as part of ODA reform, bolster policy planning capability 
 
SANKEI (Page 3) (Full) 
July 20, 2006 
 
The Ministry of Foreign Affairs (MOFA) will dismantle the existing 
Economic Cooperation Bureau and establish in its place an 
International Cooperation Bureau in order to strengthen the 
ministry's policy planning functions. Working directly under the 
chief of this new bureau will be a deputy director-general in charge 
of global scale issues. The deputy director-general will deal with, 
for instance, environmental issues and avian flu. MOFA will also 
establish a Southern Asia Department in charge of Southwest Asia and 
ASEAN. This reorganization plan will be given approval at a cabinet 
meeting tomorrow. 
 
As part of the reform of Japan's official development assistance 
(ODA), the government will establish an Overseas Economic 
Cooperation Council, which will map out ODA strategy under the 
leadership of the prime minister. The ODA implementation agencies 
will be consolidated into the Japan International Cooperation Agency 
(JICA). Following this reform plan, MOFA will review the current ODA 
system -- under which the Economic Cooperation Bureau is in charge 
of ODA on a bilateral basis and the Global Issues Department is in 
charge of ODA on a multilateral basis -- in order to bolster the 
functions of ODA planning and consolidate these two offices into the 
International Cooperation Bureau. 
 
A Multilateral Cooperation Division, a Specialized Agencies 
Division, and a Global Environment Division, all to be newly 
created, will come under the supervision of a deputy 
director-general, who will work under the direct control of the 
director general of the International Cooperation Bureau. 
 
The United Nations Administration Division under the Global Issues 
Department will be reorganized into a United Nations Coordination 
Division, which will come under the control of the Foreign Policy 
Bureau responsible for reform of the UN Security Council and other 
reforms. Under this new system, "We will pursue strategic 
UN-centered diplomacy," a senior MOFA official said. 
 
With the establishment of a Southern Asia Department under the Asian 
and Oceanian Bureau, the principal aim will be to make clear Japan's 
diplomatic position of attaching importance to India, which is 
increasing its presence on both the political and economic fronts, 
as well as "to prepare a system for us to pay due attention to Asian 
countries surrounding China," the same official added. The 
implication is to counter a rising China. 
 
14) Fukuda may not run in LDP presidential race 
 
ASAHI (Page 1) (Full) 
July 20, 2006 
 
TOKYO 00004020  009 OF 009 
 
 
 
Former Chief Cabinet Secretary Yasuo Fukuda informed the Liberal 
Democratic Party (LDP) Tokyo chapter that he would not attend its 
general assembly slated for July 28, sources revealed yesterday. 
This general meeting is viewed as a forum for contenders for the 
post of the prime minister to speak about their policies ahead of 
the LDP presidential race in September. Whether Fukuda would attend 
the forum and express his willingness to run drew much attention, 
but now that it has become certain that he will not attend the 
forum, many in the party are beginning to speculate that he will not 
run in the presidential race. 
 
Chief Cabinet Secretary Abe, Foreign Minister Aso, Finance Minister 
Tanigaki, State Minister for Financial, Economic, and Fiscal Policy 
Yosano, and Fukuda had been all invited to the general meeting. 
Except for Fukuda, all the others will attend, with Aso taking part 
via a video feed. 
 
According to various polls, Fukuda has enjoyed the second highest 
support rate after Abe. But he has not made clear whether he will 
declare his candidacy, thereby fueling the view in the LDP that Abe 
is likely to enjoy an easy run. 
 
15) Smiling "new Ozawa" meets foreign correspondents in public 
relations event 
 
TOKYO SHIMBUN (Page 2) (Full) 
July 20, 2006 
 
Ichiro Ozawa, head of the Democratic Party of Japan (DPJ = 
Minshuto), yesterday gave an interview to foreign news companies at 
the Foreign Correspondents' Club of Japan in Tokyo, to present to 
them the image of a "new Ozawa." 
 
In a speech given at the outset of the interview, he unusually 
cracked up the audience with a joke, "Since I am not as smart as 
Ichiro of the Seattle Mariners, I am frequently criticized by the 
media." Presumably out of a desire to change his image of being 
strong-arm and opinionated, he referred to his effort to transform 
himself: "I used to offered rebuttals before by firmly stating my 
policy. However, I am now trying to be patient and respond with a 
smile as much as possible. That is where I have changed a little, if 
you say I have changed." 
 
He politely replied to questions during the one-hour interview, 
wrapping it up by playing up his determination to take over the 
reins of power: "Human beings cannot do anything that is beyond 
their capacity. I am a country bumpkin, but I am now doing my utmost 
in my own way to capture the reins of government." 
 
SCHIEFFER