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UNCLAS SECTION 01 OF 09 TOKYO 006576 
 
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:  DAILY SUMMARY OF JAPANESE PRESS 11/16/06 
 
 
INDEX: 
 
(1) Column Jiji-kokkou: Lower House committee passes bill revising 
Basic Education Law; Prime Minister Abe agrees to frontal clash 
between the ruling and opposition camps, placing priority on keeping 
momentum 
 
(2) Editorial -- Passage of bill amending Basic Education Law by 
Lower House panel with attendance of ruling parties only: Long-range 
plan for future of education now frustrated 
 
(3) Regulatory Reform Council led by Kusakari gets under way with 
emphasis on reforming government-controlled markets - medical 
services, agriculture, transport; Education area likely to be 
postponed 
 
(4) Queen Elizabeth II abandoned plan to visit Chidorigafuchi 
National Cemetery during her tour of Japan in 1975, out of concern 
about being it becoming entangled in Yasukuni Shrine issue, 
according to diplomatic files disclosed by British government 
 
(5) Interview with Inpex Chairman Kunihiko Matsuo on Azadegan oil 
field development 
 
ARTICLES: 
 
(1) Column Jiji-kokkou: Lower House committee passes bill revising 
Basic Education Law; Prime Minister Abe agrees to frontal clash 
between the ruling and opposition camps, placing priority on keeping 
momentum 
 
ASAHI (Page 2) (Excerpts) 
November 16, 2006 
 
The Abe government has now made a first step toward revising the 
Basic Education Law, which is called "Constitution on Education." 
Yesterday the House of Representatives' special committee adopted 
the bill in the absence of lawmakers from opposition parties. Some 
in the ruling coalition had been reluctant to put the bill to a vote 
before the Nov. 19 Okinawa gubernatorial election. Running this 
important bill through the Diet during the current session is a 
major goal for the Abe administration. If it fails to do, it will be 
dealt a serious blow. The ruling coalition, therefore, rammed the 
bill through the committee. Once the legislation clears the Diet, a 
review of a number of related bills and systems will start moving on 
a full-scale. Since the axis of the Basic Education Law will move 
from "individual respect" to "public respect," schools will 
inevitably be affected. 
 
"It was regrettable that opposition lawmakers were not attend the 
session to take a vote on the bill. It was good anyway that the 
committee adopted it," Prime Minister Shinzo Abe proudly told 
reporters last night at the Prime Minister's Official Residence. 
 
The Abe government made a good start in its diplomacy. Since it 
made, however, such mistakes as "staged questions" at town meetings, 
it might lose its impetus quickly. Abe reportedly agreed to the idea 
of putting the bill to a vote in his talks on the phone with Liberal 
Democratic Party (LDP) Diet Affairs Committee Chairman Toshihiro 
Nikai and Nobutaka Machimura, chief committee director. 
 
After the bill was pushed through the special committee, Machimura 
stressed at a press conference: "We spent a lot of time -- the fifth 
 
TOKYO 00006576  002 OF 009 
 
 
longest time in the postwar period -- for deliberations on the bill. 
We never took arm-twisting approaches." He meant that the ruling 
camp spent more than 100 hours for the debate, accepting the 
opposition's demand. Nikai had repeatedly said that a forced vote 
would not be taken. A senior LDP member said, "We sought a 
soft-landing approach in managing the Diet." 
 
However, Ichiro Ozawa, president of the largest opposition party, 
Minshuto (Democratic Party of Japan), assumed a stance of fighting 
back, the ruling coalition failed to take a soft-landing approach. 
 
The reason why the ruling camp forced the bill through the committee 
even though they knew that a hard-line approach would inevitably 
affect the Okinawa gubernatorial race is their concern that if a 
vote call was put off, debate would be conducted on the opposition's 
pace, and that even if the current session was extended, the bill 
would not clear the Diet. A former education minister commented: 
"The Okinawa race is important. But this is more significant than 
the Okinawa election." 
 
The fact that the opposition did not assume a tactic of physical 
resistance made it work for the ruling coalition. If the session 
became disorderly, the ruling camp would have unavoidably come under 
fire. A senior New Komeito member said, "We made the decision to 
take a vote on the bill after ascertaining there would be no 
physical resistance by the opposition camp." Nikai told reporters: 
"Using good sense on the education issue, the opposition lawmakers 
expressed their views in the form of absenting themselves from the 
session." He expressed his appreciation to Minshuto. 
 
However, there still seems to be no prospect that the bill will be 
passed in the current Diet session. A senior LDP member commented: 
"If necessary, we may have to give up on the bill upgrading the 
Defense Agency to the status of a ministry." 
 
Among the opposition parties, Social Democratic Party head severely 
criticized the ruling coalition's bulldozing the bill, saying, "It 
is a contemptible trick that the ruling coalition is trying to push 
through the bill, deceiving and telling lies to the public." 
 
The opposition parties, with an eye on the Okinawa race, in which 
they back the same candidate, plan to appeal to the public the 
ruling camp's refusal of deliberations on the legislation. Today, 
after holding a protest rally in the Diet building, senior 
opposition members will give street corner speeches. Minshuto 
President Ozawa held a meeting last night with Secretary General 
Yukio Hatoyama and said: "It was important that the opposition 
parties, including the Japanese Communist Party, fell into line." 
 
(2) Editorial -- Passage of bill amending Basic Education Law by 
Lower House panel with attendance of ruling parties only: Long-range 
plan for future of education now frustrated 
 
MAINICHI (Page 5) (Full) 
November 16, 2006 
 
The governing Liberal Democratic Party (LDP) and its junior 
coalition partner New Komeito yesterday took a vote on the bill 
amending the Basic Education Law at a session of the Lower House 
Special Committee on the Basic Law of Education. We have until now 
reiterated the starting point for revision is unclear or why the law 
needs to be amended is unclear. We wonder if the ruling parties 
would say that such a question has been resolved now. Although we 
 
TOKYO 00006576  003 OF 009 
 
 
can't see any reason why they had to be so much in a hurry, they did 
vote yesterday on the amendments at a committee meeting that 
opposition parties boycotted. A bill that passed committee with only 
the ruling parties attending is certain to be a source of trouble in 
the future. 
 
At one point, even some members of the ruling parties suggested 
delaying the vote until next week arguing that if the amendment were 
forced through the committee, there would be negative impact on the 
gubernatorial election in Okinawa on Nov. 19. Why did the ruling 
camp railroad the bill yesterday? Many questions remain unanswered, 
but one sure thing is that Prime Minister Shinzo Abe was determined 
to do so. 
 
The amendments in question were submitted to the previous ordinary 
session of the Diet. Although former Prime Minister Junichiro 
Koizumi had no interest in the bill, Abe (who then served as chief 
cabinet secretary) was passionate about it, according to sources. 
The amendment, which states the goal of education is "to foster love 
of country and homeland," has been criticized from the start as 
giving too much priority to the desire of rewriting the current law 
because it was imposed by the Occupation. 
 
Compared to the previous Diet session, much more time has been 
devoted to deliberations on the amendment, but it still remains 
unclear how Japanese education systems will be improved by amending 
the law -- although Abe was asked a number of times about that 
point. 
 
In the current Diet session, new problems have cropped up relating 
to educational administration, such as children committing suicide 
after experiencing bullying in school, the schools' failure to teach 
compulsory subjects, and bureaucrats prearranging questions and 
answers for planted participants in government-led town-hall 
meetings. School bullying and the failure to teach compulsory 
subjects are both pressing tasks that involve the very basis of the 
present educational system. Still, the prime minister and officials 
remain unable to answer the question, "Will those problems be 
remedied if the Basic Education Law is revised?" They just dodge the 
question by saying, "The Basic Education Law has nothing to do with 
them." Consequently, they in effect admitted that there was no 
urgency in revising the Basic Education Law. 
 
If the vote on the amendments had been delayed until next week or 
later, it would have been difficult to enact it into law during the 
current Diet session unless the session were extended. Except for 
the resumption of summit meetings with China and South Korea, 
respectively, right after he took office as prime minister, Abe has 
yet to achieve any tangible results elsewhere. That is why he might 
have been so keen about producing results quickly  -- only for his 
convenience. 
 
On the other hand, the largest opposition Democratic Party of Japan 
(DPJ or Minshuto) plays up the ruling parties' overbearing behavior, 
but it, too, deserves criticism. Minshuto has submitted a counter 
bill intended to amend the Basic Education Law, but it appears that 
it has no enthusiasm about enacting it, and it has only called for 
the need to take time for deliberations. After concluding that the 
current Basic Education Law needs to be amended, Minshuto should 
have submitted its own bill instead. But the party has not yet 
united over the question of whether to agree to amend the law. In 
order to avoid causing division in the party, the ruling bloc's 
forcing the bill through committee has helped Minshuto get out of a 
 
TOKYO 00006576  004 OF 009 
 
 
rut. The public should realize well that Minshuto was counting on 
this to happen. 
 
Amending the Basic Education Law should have been part of a 
long-range plan for the government and the ruling parties. But the 
bill is going to pass the Lower House without the nation deeply 
understanding its contents. The current law is being criticized by 
the administration as forced on Japan by Occupation forces, but the 
way it is passing the amended law is likely to leave doubts in 
peoples' minds for the future. 
 
(3) Regulatory Reform Council led by Kusakari gets under way with 
emphasis on reforming government-controlled markets - medical 
services, agriculture, transport; Education area likely to be 
postponed 
 
NIHON KEIZAI (Page 3) (Excerpts) 
November 14, 2006 
 
The government's Regulatory Reform and Privatization Promotion 
Council (chaired by Takao Kusakari, president of Nippon Yusen KK) on 
Nov. 13 discussed a final report to be compiled late next month. 
Participants decided to mention in the report such areas as medical 
services and agriculture as key areas for regulatory reform, 
characterizing them as government-controlled markets, because new 
participation in those areas is difficult due to government 
regulations. Reform of the education area will likely be relegated 
to a successor panel. With fierce resistance expected to come from 
concerned government agencies over remaining areas, concern about 
the reform drive losing momentum is mounting. 
 
Last major work 
 
Since the panel is scheduled to go out of existence at the end of 
next March, deregulatory debate will likely be taken over by a 
successor panel. The final report to be issued this time will be the 
present panel's last major work. 
 
The draft of the gist of the final report presented at the meeting 
underscored the need to reform medical services, agriculture, 
information technology, energy, transportation, financial services 
and other areas, calling them government-controlled markets. 
 
The panel will promote deregulation with focus on the entry of stock 
companies into medical services, increased access to agriculture by 
private companies, including reform of agricultural cooperatives, 
integration of broadcasting and telecommunications and reform of NHK 
in the IT field, and expanded liberalization of power and gas 
businesses. Regarding the transportation area, easing procedures for 
customs clearance and the clarification of rules on the allocation 
of landing and departure slots at airports has surfaced as argument 
points. 
 
For the employment and labor area, the panel will look into how to 
expand the number of foreign workers to be allowed into Japan as 
part of efforts to realize an open economic society through reform 
and competition, the target, which the prime minister advocated in 
his policy speech. 
 
Race against time 
 
Kusakari, picked as a member of the panel in 2004, led reform of 
social regulations in such areas as medical services and education. 
 
TOKYO 00006576  005 OF 009 
 
 
Upon taking office as the panel's chairman, he added two persons who 
are knowledgeable of the situation in the labor and agriculture 
areas as a measure to bolster the panel. 
 
However, there is only about a month left until the issuance of the 
final report. The process of working out deregulatory measures from 
now on will be a race against time. Kusakari told reporters after 
the meeting: "I want to produce results in compliance with the prime 
minister's policy, but some issues cannot be dealt with because of 
the limited time. I will relegate matters that remained unsettled by 
the end of the year to the successor panel." There is concern that 
deregulatory efforts in the agricultural and medical services areas 
might be stalled at the stage of readjusting argument points. 
 
Educational reform will most likely be postponed. Kusakari and other 
panel members have looked into deregulation aimed at increasing the 
freedom of local governments, including the scrapping of the 
obligation to set up a board of education. However, following 
serious bullying cases at schools, an argument calling for 
strengthening the functions of the education boards has emerged in 
the government and ruling camp. State Minister in charge of 
Administrative Reform has urged State Minister in charge of 
Administrative Reform Sata to take a second look at the panel's 
policy. 
 
Regulatory reform as cardinal feature of Abe's growth strategy; 
Opportunities for challenges to be expanded 
 
The report the Regulatory and Privatization Promotion Council will 
issue in December will focus on social regulations, such as labor 
and foreign workers issues. The panel has thus far made proposals 
for reforming social regulations, but their proposals have been 
hampered by resistance from the iron triangle of organizations that 
are afraid of losing vested rights and interests, bureaucrats who 
have jurisdiction over concerned areas and Diet policy cliques 
specializing in those areas. A source connected with the pane said, 
"We have achieved only 40% of the target." 
 
Difficulty in reforming social regulations is that it is subject to 
the criticism that it will threaten people's lives and widen income 
and regional disparities. Of course, it is necessary to give full 
consideration to those who are unable to take part in competition 
due to some kind of handicap they have. However, deregulation is a 
potent means of expanding opportunities for challenges by anybody. 
The essence of the prime minister-proposed measures to give second 
chances to people should be found in this point. 
 
The Regulatory Reform Council is the creator of the Privatization 
Test Law or the public service reform law intended to urge 
liberalization of government-controlled businesses. Government 
organizations, such as the Social Insurance Agency, have 
experimented privatization tests. Now that local governments are 
more aware of the idea of privatization has risen, 26 entities have 
started considering introducing privatization tests. 
 
If private companies that tendered successful bids in open public 
bidding involving local governments make profits in that line of 
business, tax revenues of the local governments that were beaten in 
the bidding will eventually increase. In that sense, it can be said 
that privatization tests will be a tool to push ahead with 
administrative and fiscal reforms simultaneously. In other words, it 
is the linchpin of the administration's economic growth strategy. It 
comes down to that this is why the prime minister has to bolster 
 
TOKYO 00006576  006 OF 009 
 
 
regulatory reform. 
 
(4) Queen Elizabeth II abandoned plan to visit Chidorigafuchi 
National Cemetery during her tour of Japan in 1975, out of concern 
about being it becoming entangled in Yasukuni Shrine issue, 
according to diplomatic files disclosed by British government 
 
YOMIURI (Page 9) (Full) 
November 16, 2006 
 
Chiharu Mori, London 
 
When Queen Elizabeth II made her first visit as the head of Britain 
in 1975, both the Japanese and British governments had a plan for 
her to visit the Chidorigafuchi National Cemetery, but the plan was 
later dropped because of concern about doing damage to the Yasukuni 
Shrine issue. This episode came to light through classified 
diplomatic documents disclosed on Nov. 14 by the British 
government. 
 
Accepting Emperor Showa's invitation, the Queen visited Japan on a 
six-day tour from May 7-12 of 1975. According to the British 
government's draft itinerary for the Queen prepared on Jan. 14, 
1975, there was a mention of a visit to the Chidorigafuchi National 
Cemetery by the Queen and her husband Prince Philip on May 8, the 
second day of her tour, to lay a wreath. 
 
According to a document written by the British Embassy in Japan 
around that time, during working-level talks between Japan and 
Britain, British officials indicated an intention for the Queen to 
visit the Commonwealth of Nations Cemetery in Yokohama City's 
Hodogaya, where British prisoners of war during World War II had 
been buried. In response, Japanese officials asked them to add a 
plan to visit the Chidorigafuchi National Cemetery in order to "keep 
a balance." The visit to Chidorigafuchi was then added to the 
Queen's itinerary. 
 
At the time, the question of whether Yasukuni Shrine should be 
protected by the state was a political issue, and British officials 
from the beginning did not plan for the Queen to visit the shrine. 
But because the Chidorigafuchi National Cemetery, where the remains 
of the war dead who had no relatives were buried, was not affiliated 
with any religious group and was not a target of a dispute, British 
officials accepted the Japanese  proposal. 
 
However, according to an official telegram dated Feb. 25 of the same 
year sent by the British Embassy in Japan to the home office, during 
bilateral talks held in the latter half of February of that year, 
Japanese Foreign Ministry officials became less eager for the Queen 
to visit Chidorigafuchi, advising British officials instead, "It may 
be a good idea to cancel the plan to visit the cemetery." British 
officials became worried then that if the Queen visited 
Chidorigafuchi, Britain could become entangled in a domestic 
political dispute over Yasukuni Shrine. Japanese politicians 
favoring the idea that the state should protect Yasukuni Shrine were 
alarmed by the possibility that the Chidorigafuchi National Cemetery 
would take the place of Yasukuni Shrine, British officials 
concluded. Wary of becoming wrapped up in the Yasukuni Shrine issue, 
the British decided not to have the Queen visit the national 
cemetery but to only visit the Commonwealth Cemetery as planned. 
 
Emperor Showa laid a wreath in front of the cemetery of unknown 
soldiers at Westminster Abbey in London in 1971, but the Queen was 
 
TOKYO 00006576  007 OF 009 
 
 
unable to pay respect in Japan as the Emperor did in Britain. 
 
The Japanese populace warmly welcomed the Queen and her visit to 
Japan was described as a great success, but Japan was and has been 
left with the question of how to respond to the victor nation's head 
of state's willingness to pay respect to the war dead. 
 
(5) Interview with Inpex Chairman Kunihiko Matsuo on Azadegan oil 
field development 
 
YOMIURI (Page 13) (Slightly abridged) 
November 14, 2006 
 
The Japanese government-funded oil company Inpex Holdings held 75% 
of the rights to develop Iran's Azadegan oil field, but the ratio 
has been reduced to 10% . Chairman Kunihiko Matsuo, 71, responded to 
an interview with the Yomiuri Shimbun. 
 
-- Your company's right to develop the Azadegan oil field has been 
significantly reduced, hasn't it? 
 
Iran was calling for an early start of the Azadegan project, but 
there was no guarantee for it to be able to procure the development 
cost worth about 2 billion dollars, or about 235 billion yen from a 
government-affiliated financial institution. About 10% of the right 
is appropriate for the company to proceed with the project with its 
ready money. 
 
-- What prospects did the company have when the company signed a 
contract to undertake the project in February 2004? 
 
At that time, we had anticipated that all the landmines would be 
removed in a year or so, but it took more than two years. Given 
this, the Azadegan project overlapped with other large-scale 
projects in which our company will take part in Australia, 
Indonesia, and other countries. In terms of management resources, 
like human resources, too, conditions became severer, so we made the 
decision upon determining the optimal allocation of resources. 
 
-- Did Iran's nuclear development program and North Korea's nuclear 
test have any effects? 
 
We continued to inform the Japanese government (the biggest 
shareholder) as one of the big shareholders of progress in 
negotiations. But it is not correct to think that the nuclear issue 
prompted us to decide to reduce our concession right. 
 
-- Has your company received a serious blow from the large shrinkage 
of the concession right? 
 
Since our company will remain in the project as a business partner, 
we will be able to maintain mutual confidence with Iran. We expect 
Iran as the second largest oil producing country among the OPEC 
(Organization of Petroleum Exporting Countries) countries to come up 
with another new project in the future. I think this was the best 
way of settlement both for our company and the Iranian side. 
 
-- Isn't there the possibility that the portion of concession right 
you lost may go to foreign companies? 
 
Iran is willing to push ahead with the oil development project at an 
early date. I think well-known foreign petroleum companies with 
great capital resources and high technology will join the project 
 
TOKYO 00006576  008 OF 009 
 
 
over the medium-to long-term. We have no desire to increase our 
rights again. 
 
-- Even after business mergers, there are still wide gaps in 
business scale between your company and American and European oil 
mergers, don't they? 
 
There are wide discrepancies between our company and the super oil 
majors. In the group of companies coming after the majors, though, 
our company is in the middle. Although the volumes of crude oil and 
natural gas produced by majors remain unchanged or are on the 
decrease, but our company is planning large-scale projects and 
expects an annual 5% growth in production. 
 
We will continue to invest more than 200 billion yen in developing 
oil fields every year. In FY2005, we produced 380,000 barrels of oil 
a day, but we expect the amount to increase to 500,000 barrels in 
FY2010 and 1 million barrels around 2015. If our product reaches to 
this level, our company will be labeled as a quasi-major. 
 
-- What large-scale projects are you planning for the future? 
 
We are planning to pump 6 million tons of liquefied natural gas 
(LNG) annually in 2012 from the Ixis gas filed off the west coast of 
Australia. We will also develop a large-scale natural gas field in 
the Timor Sea (Abadi) in Indonesia. 
 
-- Do you expect the oil industry will be reorganized further? 
 
Our company would like to promote negotiations on plans for M&A 
(merger and acquisition) or for purchase of business rights that 
will contribute to enhancing the company's value. But there are 
limits to mergers between Japanese companies. And there is no 
Japanese company that can boost our company's value (through M&As). 
There are a variety of options overseas. We will always keep our 
eyes open. 
 
-- Japanese companies are beginning to have a hard time in battles 
for new concession rights overseas. Do you think it is possible for 
Japan to produce energy resources in a stable way in the future? 
 
There are two reasons why Japan has faced such a situation. One 
reason is that new rivals, like China and India, are appearing. 
Another reason is that resource nationalism is growing in 
resource-rich countries. China has made utmost efforts to secure 
resources, but oil countries take the view that overdependence on 
certain countries will undermine the independence of its diplomacy. 
Meanwhile, they have a good image of Japan. Oil countries hope to 
deepen relations with Japan. I believe that Japan and the resource 
powers have a common basis. 
 
-- Foreign companies have cooperated with their governments in 
securing resources. 
 
In negotiations with oil countries, our partners are cabinet 
ministers. But we are private sector types. Japanese companies also 
need to prepare a comprehensive menu including official development 
aid and the transfer of technology so that they can meet partners' 
demands; otherwise, Japanese firms will find themselves in difficult 
circumstances. In Western countries, prime ministers or presidents 
take action to secure resources. It is indispensable for Japan also 
to strengthen its diplomatic approach to secure resources. 
 
 
TOKYO 00006576  009 OF 009 
 
 
DONOVAN