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UNCLAS SECTION 01 OF 09 TOKYO 004061 
 
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 07/21/06 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
Emperor Hirohito's statement on Yasukuni Shrine: 
4) Calling it matter of the heart, Prime Minister Koizumi says Showa 
Emperor's criticism of war criminals enshrined at Yasukuni will not 
affect his visits there 
5) Emperor's Yasukuni statement will add momentum to movement to 
build new war memorial facility, un-enshrine Class-A war criminals 
 
 
North Korea problem: 
6) Japan continues effort to ratchet up pressure on North Korea by 
hitting it in the pocket book 
7) Japan, US, ROK senior officials discuss ways to further encircle 
North Korea 
 
8) Prime Minister Koizumi to travel to Central Asia as part of 
energy resource strategy 
 
Defense affairs: 
9) Saito appointed top brass of SDF 
10) Defense budget compilation may include special framework to 
cover USFJ realignment cost 
 
Political agenda: 
11) Increasingly likely that Yasuo Fukuda will not run in the LDP 
presidential race 
 
Economic and trade issues: 
12) US ends special inspections of beef processing plants but will 
shrink regular l inspections soon to around 40,000 head of cattle 
annually 
13) Chief Cabinet Secretary Abe vows to continue 30 trillion yen cap 
on deficit spending if elected prime minister 
 
14) Government to scrap M-5 rocket program as cost ineffective 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Paloma knew of water heater glitches in 1982 
 
Mainichi: 
Fukuda unlikely to run in LDP presidential race; Abe out in front 
 
Yomiuri: 
Government to introduce video-link system in criminal court to 
reduce mental stress for victims 
 
Nihon Keizai: 
Postal company to handle non-life insurance products once totally 
privatized 
 
Sankei: 
Avian flu kills 42 people in Indonesia 
 
 
TOKYO 00004061  002 OF 009 
 
 
Tokyo Shimbun: 
Koizumi: Later Emperor's Yasukuni Shrine statement will not affect 
his visits 
 
2) EDITORIALS 
 
Asahi: 
(1) Late Emperor's words on Class-A war criminals at Yasukuni Shrine 
crucial 
(2) Learn lessons from past flood damage 
 
Mainichi: 
(1) Emperor's memo: Enshrinement of Class-A war criminals at 
Yasukuni inappropriate 
(2) Use orthodox methods to get economy out of deflation 
 
Yomiuri: 
(1) Emperor spoke from heart in memo 
(2) Overheated Chinese economy requires yuan reform 
 
Nihon Keizai: 
(1) Emperor's thoughts must be respected 
(2) FRB chairman's congressional testimony 
 
Sankei: 
(1) Prime minister must continue visiting the shrine despite Tomita 
memo 
(2) Yuan peg to US dollar no longer necessary 
 
Tokyo Shimbun: 
(1) Tighten noose around bid-rigging companies 
(2) Improved rehabilitation system necessary 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, July 20 
 
NIHON KEIZAI (Page 2)  (Full) 
July 21, 2006 
 
10:32 
Met at Kantei with Deputy Chief Cabinet Secretary Futahashi. 
 
11:00 
Met Economic, Fiscal and Financial Policy Minister Yosano and 
others. Followed by Morocco Ambassador Lecheheb. Later met JDA 
Director General Nukaga. 
 
13:57 
Met Disaster Prevention Minister Kutsukake, Deputy Chief Cabinet 
Secretary for Crisis Management Noda, and others. 
 
SIPDIS 
 
14:31 
Met OECD President Gurria and others. 
 
15:05 
Met Japan Institution of International Affairs President Yukio Sato. 
Followed by Lower House member Satsuki Katayama. Then met Secretary 
General Takebe. 
 
16:45 
Met Tunisia Ambassador Hannachi and others. 
 
TOKYO 00004061  003 OF 009 
 
 
 
17:00 
Met METI Vice Minister Kitabatake, and Natural Resources and Energy 
Agency Director General Mochizuki. Attended a meeting of the Council 
on Economic and Fiscal Policy. Later, met Finance Minister 
Tanigaki. 
 
18:24 
Returned to his official residence. 
 
4) Koizumi: Emperor Showa's Yasukuni Shrine statement will not 
affect his visit 
 
TOKYO SHIMBUN (Top play) (Abridged) 
July 21, 2006 
 
In the wake of the revelation of a memorandum showing Emperor 
Showa's displeasure with the enshrinement of Class-A war criminals 
at Yasukuni Shrine along with the war dead, Prime Minister Junichiro 
Koizumi was queried by the press yesterday afternoon if this would 
have any impact on his practice of visiting the shrine. In response, 
Koizumi said: 
 
"No, it won't. To visit or not to visit is every individual's 
choice. It is a matter of the heart. No one can force it. You cannot 
say good or bad because so and so went there, either." 
 
Thus Koizumi left open latitude for a visit to the shrine before his 
term of office expires in September. 
 
Regarding a report that Emperor Showa expressed displeasure with the 
enshrinement of Class-A war criminals at Yasukuni, Koizumi said: 
 
"I don't know it in detail, but it's a matter of the heart. I think 
(Emperor Showa) had various thoughts in his mind." 
 
Regarding the fact neither Emperor Showa nor the present Emperor 
have visited Yasukuni since it enshrined Class-A war criminal along 
with other war dead, Koizumi only said: 
 
"I cannot say anything about it because different people have 
different thoughts. It's a matter of the heart. Every individual has 
the freedom to decide whether to visit or not." 
 
Touching on calls for removing Class-A war criminals from Yasukuni, 
he also said: 
 
"The government should abstain from imposing its view on any 
religious organization. People are free to discuss it, however." 
 
Meanwhile, Chief Cabinet Secretary Shinzo Abe in a press conference 
yesterday afternoon reiterated the government's view on the Class-A 
war criminals' responsibility for the war: 
 
"It is a fact that they were convicted of committing crimes against 
peace in the International Military Tribunal for the Far East. Japan 
is not in a position to raise objections." 
 
Chinese Foreign Ministry expresses hopes for speedy removal of 
obstacle to Japan-China relations 
 
Norihiro Shingai, Beijing 
 
TOKYO 00004061  004 OF 009 
 
 
 
In a telephone interview on July 20 with a Chinese Foreign Ministry 
official on the revelation of a memorandum showing Emperor Showa's 
displeasure with Yasukuni Shrine's step, he said: 
 
"There is no change in our clear intention to bring progress to 
relations with Japan. We hope for a removal of an obstacle to the 
improvement of bilateral relations." 
 
China's official Xinhua News Agency also simply reported on July 20 
that the memorandum was discovered without any commentaries. 
 
Yuji Yamamoto, Seoul 
 
On July 20, South Korea's KBS-TV 9 p.m. news program reported on 
Emperor Showa's alleged displeasure with Yasukuni Shrine's step 
regarding Class-A war criminals, while citing Prime Minister 
Koizumi's comments. The program also said that conservative Japanese 
lawmakers would lose their justification for visiting the shrine. 
 
The South Korean government has not released any official comment. 
 
5) '06 LDP presidential election: Emperor Showa's "Yasukuni" remarks 
found in a memo likely to give impetus to calls for separate 
enshrinement and construction of a new facility; Abe may find 
himself at disadvantage 
 
YOMIURI (Page 4) (Excerpts) 
July 21, 2006 
 
Following the discovery of a memo confirming Emperor Showa had 
discontinued visiting Yasukuni Shrine because of the enshrinement of 
Class-A war criminals there, speculation began growing in the ruling 
and opposition parties yesterday that this development is likely to 
give a boost to the notion of separate enshrinement, as proposed by 
former Liberal Democratic Party (LDP) Secretary General Makoto Koga, 
chairman of the Japan War-Bereaved Association. It could also help 
the move led by former LDP Vice President Taku Yamasaki for the 
construction of a national memorial facility. There is also an 
analysis that Chief Cabinet Secretary Abe, who is positive about 
paying homage at Yasukuni Shrine, may be placed at a disadvantage in 
the upcoming LDP presidential election in September. 
 
"I have nothing to comment beyond this," Abe said in a firm tone to 
end a press briefing yesterday evening, in which he faced a barrage 
of questions about the Yasukuni issue. 
 
Abe's position is that the Yasukuni issue should not be used as a 
campaign issue. In his book published yesterday, Abe insists on the 
appropriateness of visits to Yasukuni Shrine and expresses his deep 
respect for the imperial family. He appeared irritated at the sign 
of an escalation of debates over shrine visits in the wake of the 
discovery of the memo. 
 
Also, LDP Secretary General Takebe emphasized to the press corps: 
"Yasukuni Shrine is a religious corporation. So, the government and 
politicians should not tell the shrine to do this or that. It's 
wrong to see this development in the context of whether it has an 
impact on the presidential election or not." In contrast, New 
Komeito Representative Kanzaki told reporters: "Calls for separate 
enshrinement are certain to gain momentum in various quarters of 
Japan." 
 
TOKYO 00004061  005 OF 009 
 
 
 
LDP lawmakers who are in favor of the prime minister's visits to 
Yasukuni Shrine were shaken by the memo. 
 
6) Japan ratcheting up pressure on North Korea 
 
NIHON KEIZAI (Page 2) (Full) 
July 21, 2006 
 
Without waiting for additional sanctions against North Korea, both 
the public and private sectors are ratcheting up pressure on that 
nation. Some local governments have reduced or exempted the property 
tax for facilities related to North Korea. The government yesterday 
released the results of its survey on these governments and urged 
them to strengthen taxation on such facilities. In the private 
sector, many companies have voluntarily refrained from discharging 
cargo from North Korean-registered ships at ports across the 
nation. 
 
The Internal Affairs and Communications Ministry conducted a survey 
on 140 local governments that house the head office or branch 
offices of the General Federation of Korean Residents in Japan to 
see the state of their special measures to reduce the property tax 
for such facilities for fiscal 2006 and released its results 
yesterday. The ministry publicized the results of the survey for 
fiscal 2005 in March. The latest survey is intended to see if the 
tax on North Korean facilities was raised over the last four 
months. 
 
There are 44 municipal governments that have exempted North 
Korea-affiliated facilities from taxation, including Sapporo, 
Saitama, and Fukuoka. This figure is 19 less than in the previous 
survey. The number of governments that have not taken preferential 
measures increased nine to 41. 
 
Mainly private businesses have voluntarily refrained from 
discharging cargo. Nippon Express Co., has stopped cargo-handling 
operations for North Korean ships since July 7 at Maizuru Port in 
Kyoto, at which the largest number of North Korean ships called. A 
company worker said: "We voluntarily decided it, taking various 
circumstances into consideration." The company has no plan to remove 
this measure for the time being. 
 
7) Japan looking for ways to surround North Korea; High-level 
officials of Japan, US, South Korea meet 
 
YOMIURI (Page 2) (Excerpts) 
July 21, 2006 
 
Following the United Nations Security Council's (UNSC) recent 
adoption of a resolution on North Korea, visiting high-level 
officials from the US government and the South Korean government 
yesterday met separately with senior officials of Japan's Ministry 
of Foreign Affairs (MOFA) and other agencies. They discussed such 
matters as the possibility of the resumption of the six-party talks. 
While leaving room for discussions with other countries, for 
instance, under the six-party framework, the Japanese government 
intends to look for ways to tighten the net around North Korea in 
preparation for additional sanctions to take under the Foreign 
Exchange and Foreign Trade Control Law. 
 
MOFA's Asian and Oceanian Affairs Bureau Director-General Kenichiro 
 
TOKYO 00004061  006 OF 009 
 
 
Sasae yesterday met with South Korea's Foreign Affairs and Trade 
Ministry's Korean Peninsula Peace Diplomacy Department Director Chun 
Young Woo at MOFA, and the two officials agreed on the policy of 
implementing the UNSC's North Korea resolution and bringing North 
Korea back to the six-party talks as quickly as possible. They also 
confirmed that they would use the upcoming ASEAN Regional Forum 
(ARF) in Malaysia slated for July 28 in order to translate this 
policy into action. 
 
But there is a difference between Japan and South Korea in terms of 
which to emphasize, dialogue or sanctions. After the meeting, Chun, 
speaking of the UNSC's resolution that includes a provision 
preventing the transfer of money and technologies for missile 
development in North Korea, stressed: "(The resolution) must not be 
used to obstruct the resumption of the six-party talks. It should 
not be used to impose sanctions for the sake of sanctions." Chun 
then indicated a willingness to hold a five-party meeting without 
North Korea. 
 
8) Koizumi to visit resource-rich Central Asia next month 
 
YOMIURI (Page 1) (Full) 
July 21, 2006 
 
Prime Minister Junichiro Koizumi decided yesterday to visit several 
countries in Central Asia in late August. The aim is to strengthen 
relations with Central Asian countries with rich energy resources, 
such as oil and natural gas. This will be the first trip to Central 
Asia by a Japanese prime minister. Koizumi is also scheduled to go 
to Mongolia in early August as part of strategic diplomatic efforts 
to curb the increasing influence of China and Russia in this 
region. 
 
In meetings with Kazakhstan President Nursultan Nazabayev and other 
leaders in this region, Koizumi will reveal plans to support their 
efforts to adopt a market economy, construct roads, eradicate 
infectious diseases, and to protect the drought-affected Aral Sea. 
 
Japan has mapped out a plan to transport oil and natural gas 
exploited in Central Asia to the Indian Ocean via Afghanistan and 
then to import them to Japan. It is necessary to construct a 
pipeline and road network first. But such facilities will run 
through politically unstable areas, so no specifics have yet been 
worked out. In a bid to turn this plan into action, Koizumi will 
convey Japan's willingness to accelerate working-level talks. 
 
Countries in Central Asia are traditionally pro-Japanese, but as 
members of the Shanghai Cooperation Organization, they are forging 
stronger cooperative relations with China and Russia on the 
political and military fronts. By expanding its economic ties with 
Central Asia, Japan would like to prevent a formation of bloc 
economy, centered on China and Russia, in this region. 
 
9) Maritime Chief of Staff Saito tapped as joint staff head 
 
NIHON KEIZAI (Page 2) (Full) 
July 21, 2006 
 
Defense Agency (JDA) Director General Fukushiro Nukaga yesterday 
accepted Head of the Joint Staff Hajime Matsusaki's honorable 
retirement and unofficially appointed Maritime Chief of Staff 
Takashi Saito to replace him. The personnel decision will be 
 
TOKYO 00004061  007 OF 009 
 
 
officially announced upon reported and approved at a cabinet meeting 
on Aug. 4. Matsusaki, who used to be a Ground Self-Defense Force 
(GSDF) member, assumed the current post when the SDF integration 
operation system was introduced in March. Saito will be the second 
head of Joint Staff. Given the completion of GSDF withdrawal from 
Samawah, the JDA decided on the replacement. 
 
Takashi Saito: After graduating from National Defense Academy in 
1970, joined the Maritime Self-Defense Force; after serving as 
Maizuru district commandant and Yokosuka district commandant, 
assumed the post of maritime chief of staff in January 2005; comes 
from Kanagawa Prefecture; 58 years old. 
 
10) Defense spending cut likely to be focus of budget compilation; 
Tug of war  between JDA, MOF over budget for US force realignment 
 
YOMIURI (Page 4) (Full) 
July 21, 2006 
 
With a 1% cut in the national defense budget's discretionary outlays 
set by a guideline for budgetary requests, which will be formally 
decided today, a tug of war between the Defense Agency (JDA) and the 
Ministry of Finance (MOF) is likely to intensify in the budget 
compilation that will start shortly. Given the huge amount of US 
force-realignment-related costs, the focus of budget compilation 
will be (1) the question of whether the realignment costs will be 
appropriated separately from the defense budget; and (2) when and 
how the midterm defense buildup program covering fiscal 2005 through 
fiscal 2009 will be reviewed. 
 
Regarding the US force realignment costs, the guideline for 
budgetary requests states: "If trouble in terms of reducing local 
burdens is likely to arise even after the defense-related 
expenditures are further streamlined, such costs will be separately 
discussed in the process of budget compilation." The JDA has held 
that "it is impossible to include all the realignment costs in the 
defense budget," as JDA Director-General Nukaga has said. A senior 
JDA official interprets the guidelines as "leaving open the 
possibility of handling realignment costs in a separate budget." 
 
The realignment costs planned in the fiscal 2007 budget will be 
research expenses and the like, but in the three years ahead, the 
construction of an alternate facility for the US Futenma Marine 
Corps Air Station, for example, will be set into full motion, and 
the annual realignment costs are expected to reach hundreds of 
billions of yen. 
 
In the fiscal 2006 guideline for budgetary requests, there was a 3% 
cut in the defense budget's discretionary outlays, but in the fiscal 
2007, such a cut is likely to be only 1% . This has made the JDA 
relieved. 
 
The JDA's initial plan was to put off a review of the midterm 
defense buildup program until next year, when the details of the US 
force realignment plans are made clear. But in response to North 
Korea's recent ballistic missile launches, some in the JDA are 
beginning to contend that in order to minimize defense spending 
cuts, it is wise to review the buildup program this year, when there 
is a heightened sense of crisis. 
 
11) Increasingly unlikely that Yasuo Fukuda will run in the LDP 
presidential election, making Abe the easy frontrunner 
 
TOKYO 00004061  008 OF 009 
 
 
 
MAINICHI (Top play) (Excerpt) 
July 21, 2006 
 
The outlook is growing stronger that former Chief Cabinet Secretary 
Yasuo Fukuda will not declare himself as a candidate in the 
September election of the Liberal Democratic Party (LDP) president. 
In addition to the large number of supporters of Chief Cabinet 
Secretary Shinzo Abe in the Mori faction, to which Fukuda also 
 
SIPDIS 
belongs, Fukuda himself on the 20th strongly hinted to his aides his 
intention not to run. Another strong possibility that he will not 
run has been his showing in public opinion polls, always second 
after Abe. The probability has become strong now that the LDP 
presidential election will find Abe as the easy frontrunner. 
 
12) BSE: US to end special inspections as early as end of August; 
Number of cattle subject to inspection to be reduced to 40,000 a 
year 
 
TOKYO SHIMBUN (Page 3) (Full) 
July 21, 2006 
 
Washington, Shinichi Kuru 
 
Mike Johanns, secretary of the Department of Agriculture, gave a 
telephone press conference yesterday. He announced that the US would 
end special BSE inspections, which were introduced in June 2004, as 
early as the end of August and instead reinstate regular 
inspections. 
 
Japan imposed a second ban on US beef imports following to the 
discovery of specified risk materials in shipments, which are 
believed to be the cause of BSE. The outlook is now that the beef 
trade will be reinstated as early as the end of this month. The 
curtailment of safety inspections before the resumption of beef 
trade will likely incur the distrust of Japanese consumers. 
 
The special inspections target cattle categorized as high risk, 
including downer animals. Inspections have thus far been carried out 
on 759,000 cattle, and two positive cases have been found. 
 
Commenting on the special inspections, Johanns concluded, "It was 
found that the BSE level of US cattle is extremely low." Regarding 
regular inspections, which target 40,000 cows, he noted, "The 
regular inspections by the US are ten times stricter than 
international standards." He thus underscored his perception that 
there is no problem about the safety of US beef. As to the timing of 
the announcement of the decision, he took the view that it would not 
bring a sharp reaction from Japanese consumers, saying, "Announcing 
the decision now is more honest than doing so after beef trade 
resumed." 
 
13) Abe effectively pledges to maintain 30-trillion-yen government 
bond framework 
 
SANKEI (Page 5) (Excerpts) 
July 21 2006 
 
Referring to policy themes to be tackled by the post-Koizumi 
administration, Chief Cabinet Secretary Shinzo Abe in a speech given 
at a meeting of the Editorial Study Group of Subscribers to the 
Kyodo News Agency, held in Tokyo yesterday, revealed his stance of 
 
TOKYO 00004061  009 OF 009 
 
 
maintaining the current fiscal reconstruction efforts and the 
30-trillion-yen framework for the issuance of government bonds. He 
thus effectively made public commitments in the run-up to the 
Liberal Democratic Party (LDP) presidential election. He is viewed 
as being good at diplomatic and security policies, as can be seen 
his tough approach to North Korea. However, the deep-seated view in 
the LDP is that his vulnerable point is domestic policy, including 
economic policy, as an LDP-connected source put it. He has 
apparently taken a positive stance of playing up his approach to 
domestic affairs with an eye on the upcoming presidential race. 
 
Commenting on next year's draft budget, Abe noted: "Prime Minister 
Junichiro Koizumi upheld the 30-trillion-yen framework for the 
issuance of government bonds in the current fiscal year's budget. I 
will make efforts to maintain that framework." He thus hinted at 
including it in his own policy initiative. 
 
The 30-trillion-yen framework was a policy pledge Koizumi made when 
he came into office. However, he had been unable to fulfill it due 
to a tax revenue shortage until this year, when he managed fulfill 
this commitment, backed by an increase in tax revenues. 
 
14) M-5 rocket to be abandoned: JAXA to develop successor at lower 
cost 
 
TOKYO SHIMBUN (Page 3) (Full) 
July 21, 2006 
 
The Japan Aerospace Exploration Agency (JAXA) has decided to end the 
use of the M-5 solid-fueled rocket for the launch of a science 
satellite and instead develop a smaller-size solid-fuel rocket. The 
M-5 was developed by the former Institute of Space and Astronaut 
Science (ISASS). It has the capability of launching a satellite 
weighing 1.8 tons into an orbit 250 kilometers high. Six satellites 
have been launched as of this February, of which five were 
successful. The problem was that one M-5 rocket costs 7 billion yen, 
which is expensive in light of its launching capability. 
 
JAXA was established in October 2003, merging the former ISASS and 
another organization. The new organization reviewed projects that 
had been undertaken by the three organizations and decided not to 
allocate new budgetary funds to reduce the cost of the M-5. There 
was a strong call for continuing the development of a solid-fuel 
rocket, which is connected with missile technology. 
 
The launch capability of a rocket to be developed anew will be 
between 0.5 and 1 ton, but its price will be held to around 2.5 
billion yen. There is now a plan to use a solid strap-on booster for 
the main H-IIA rocket for the main part of the envisaged rocket. 
JAXA will decided on details by around next May after completing 
research and development. It said that it wants to begin 
full-fledged development starting in 2008. 
 
The launching of the Solar-B, a solar observation satellite, at the 
end of September will be the last launch of an M-5. 
 
JAXA will report its decision at a meeting of the Space Development 
Commission on July 26. 
 
SCHIEFFER