Cablegate: Daily Summary of Japanese Press 03/02/06

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UNCLAS SECTION 01 OF 06 TOKYO 001120

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 03/02/06

INDEX:

(1) USDA Secretary Johanns on US beef: Would "welcome prior
inspections by Japan" if means early resumption of imports

(2) Horie e-mail: Three hurdles for DPJ to overcome: Maehara
vision could bog down; Presidential election likely to be speeded
up in order to find breakthrough?

(3) Battle going on in government, ruling parties on propriety of
introducing numerical targets after monetary policy shift

(4) MOFA, MOF at odds over respective rights and interests in
compiling final report on ODA reform; Focus on revision of JICA
Law

(5) Japan frets over GSDF pullout in tandem with Britain,
Australia

ARTICLES:

(1) USDA Secretary Johanns on US beef: Would "welcome prior
inspections by Japan" if means early resumption of imports

NIHON KEIZAI (Top play) (Excerpt)
Evening, March 2, 2006

By Tetsuya Minoru in Washington

In an interview with the Nihon Keizai Shimbun on March 1, US
Secretary of Agriculture Johanns, touching on cautious views in

SIPDIS
Japan toward resumption of US beef imports, stated: "If we are
asked for additional measures, we will respond flexibly. We also
would welcome (prior) inspections by Japanese inspectors." He
emphasized a stance of making maximum efforts to recover
confidence in US beef in Japan. In addition, he indicated his
hopes for an early resumption of imports, stating, "We believe
that once there is detailed study of our (inspection) system and
investigative report, there will be a swift decision to resume
trade."

Secretary Johanns at first expressed regret that beef with

SIPDIS
backbones attached were shipped in violation of the Japan-US
agreement, saying, "First, I regret that such an incident
occurred." At the same time, he stressed that there was no
problem with the safety of US beef, saying: "The US system is
superior. (The incident this time) is an issue from the
standpoint of the US-Japan agreement, but it is not a safety
problem."

(2) Horie e-mail: Three hurdles for DPJ to overcome: Maehara
vision could bog down; Presidential election likely to be speeded
up in order to find breakthrough?

SANKEI (Page 3) (Full)
March 2, 2006

The Democratic Party of Japan (DPJ) is faced with a serious
crisis because of a fiasco over the Horie e-mail issue. It has
been decided that Diet Policy Committee Chairman Yoshihiko Noda
will step down, but the party is still in a chaotic state, unable
to pick his successor. Secretary General Yukio Hatoyama still
appears to be determined to quit. There are three hurdles lying

TOKYO 00001120 002 OF 006

ahead for party head Seiji Maehara, including what will happen to
Hatoyama.

Future course of Hatoyama

Undergoing soul-searching on the e-mail fiasco, Hatoyama
yesterday decided to set up a verification team intended to
prevent a recurrence, chaired by Deputy Secretary General
Koichiro Genba, and to release a report of the outcome by mid-
month. The press conference held the previous day by Lower House
member Hisayasu Nagata has fueled the anger of the Liberal
Democratic Party (LDP), leading to the presentation of an open
letter. General Coordination Bureau Director General Hirofumi
Hirano is now tasked with dealing with the letter from the LDP.
He intends to make Nagata toe the party's line that the e-mail at
issue was not authentic.

Though Hatoyama is toiling to settle the situation, some suspect
that he might want to quit as soon as possible, according to his
aide. That is because Hatoyama noted on Feb. 28, "When the matter
is settled, I then would like to decide what I will do next."

What action Hatoyama will take is going to be the first hurdle.
Chances are that he will put an end to the matter, for the time
being, at a national conference of secretaries general and
persons responsible for elections to be held on Mar 4, when
investigation by the verification team will be ended, according
to a mid-level official.

He may judge the matter as settled if the conference on the 4th
goes smoothly.

Lower House by-election

Even if Hatoyama stays on, the next possible ordeal is a
scheduled by-election in the Chiba Constituency No. 7 on Apr. 23,
for a seat that LDP lawmaker Kazumi Matsumoto vacated. The DPJ
had hoped to use the by-election as an opportunity to recover its
power, because the reason for the resignation of Matsumoto quit
was to take responsibility for election violations by a senior
official in his election headquarters. However, the Horie e-mail
fiasco has upset this scenario, the same mid-level official
noted.

The ruling camp usually displays overwhelming strength in by-
elections. There have been few by-elections in which the DPJ won.
The Oct. 2002 by-elections, in which the DPJ won in only one
constituency out of seven constituencies for the Lower and Upper
Houses, became the occasion for Hatoyama to lose his power base
as DPJ head.

Dumping Maehara

The greatest barrier will likely be how to finalize a Maehara
vision on domestic issues and diplomatic and security policies.
Maehara has shown eagerness to put out such a paper since he came
into office as party head. The party leadership is aiming to
formulate the vision around the Golden Week holiday in early May.
However, there has been deep-seated internal opposition to
(Maehara's) visions on diplomatic and security policies from the
beginning.

When he visited the US and China late last year, Maehara

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expressed strong concern over the military expansion policy of
the People's Liberation Army of China. Regarding the
constitutional revision issue, too, he has called for the limited
use of the right of collective self-defense. However, now that
the leadership's power base has declined sharply, criticism of
and discontent with the party's realistic policy might evolve
into a move to dump Maehara, as the process of formulating the
Maehara vision begins full scale.

In order to overcome such a setback, some DPJ members have begun
to discuss the possibility of speeding up the timetable for the
party presidential election. Maehara noted, "My tenure runs to
the end of September, time to the expiration of former head
Katsuya Okada's tenure. I would like to do my utmost to fulfill
my role." However, a number of members take the view that there
is no guarantee that Maehara can serve out his tenure," as the
same mid-level official noted.

Maehara once before looked into the possibility of an early
presidential election with an eye on the LDP presidential
election. The party platform stipulates that it is possible to
elect a leader at a plenary session of members of the both
chambers of the Diet. Maehara was elected, when Okada stepped
down last September. The election at the time was held, based on
a special exception rule adopted by the Standing Executive
Meeting. Chances are that such a rule or a special exception
might be looked into, depending on the future situation in the
party.

(3) Battle going on in government, ruling parties on propriety of
introducing numerical targets after monetary policy shift

TOKYO SHIMBUN (Page 9) (Full)
March 1, 2006

The Bank of Japan (BOJ) will lift its ultra-easy monetary policy
soon. Prior to this, debates are heating up on what targets are
needed in accordance with the new policy. Responsible officials
in the government and the ruling parties are actively discussing
the propriety of introducing numerical targets such as an
"inflation target." Meanwhile, the BOJ is trying to map out
effective targets to meet the difficult condition of "making
policy management more transparent and flexible," according to
Governor Toshihiko Fukui.

Liberal Democratic Party Policy Research Council Chairman Hidenao
Nakagawa yesterday reiterated the need to introduce an inflation
target, saying:

"The Bank of Japan should work out a policy goal that can
completely beat deflation and is highly transparent."

In a press conference yesterday, State Minister in charge of
Economic and Fiscal Policy Kaoru Yosano spoke for the BOJ, which
is negative about introducing numerical targets. Yosano said:

"If a rigid framework is imposed on the Bank of Japan, its
monetary policy will unavoidably become less flexible and the
future of Japan will be negatively affected. ... Numerical
figures tend to develop a life of their own."

Dominant in the government, however, is the view that some
numerical targets will be necessary after the monetary policy

TOKYO 00001120 004 OF 006

shift. A senior economic official commented: "It will be
undesirable if interest rates fluctuate violently and if there is
a negative impact on the recent trend of the Japanese economy
breaking away from deflation."

Numerical targets in Industrialized countries' monetary policies
have both good and bad aspects. The inflation goal adopted by
Britain has high transparency but lacks flexibility because
restrictions are placed on commodity price setting. The message
formula introduced by the US Federal Reserve Bank (FRB) is highly
flexible but less transparent, due to such factors as divided
interpretations of messages among market players.

(4) MOFA, MOF at odds over respective rights and interests in
compiling final report on ODA reform; Focus on revision of JICA
Law

ASAHI (Page 4) (Excerpts)
March 1, 2006

The report - released yesterday by the Study Group o Overseas
Economic Cooperation - calls on the government to implement
official development assistance (ODA) policy more strategically
and effectively. The report features a plan to dissolve the Japan
Bank for International Cooperation (JBIC), over which the Finance
Ministry (MOF) has jurisdiction, and then to transfer its
functions to the Japan International Cooperation Agency (JICA),
which is under the Foreign Ministry's (MOFA) jurisdiction. In the
process of compiling the report, however, the two ministries were
at loggerheads in an attempt to protect their respective rights
and interests.

Reflecting the Koizumi administration's policy of reduced
government spending, many officials are calling for measures to
be taken to cut ODA. Even MOFA has had to accept this view: "The
age of distributing money lavishly has ended. We now need to work
out a highly strategic ODA policy in line with the nation's
foreign policy," said a senior official. Under such
circumstances, the government has decided to reform the nation's
ODA policy.

The planned ODA reform is seen as part of the reform of
government-affiliated financial institutions now underway in
response to the prime minister's instruction. The Liberal
Democratic Party (LDP) took the lead in deciding to dissolve the
JBIC. The decision met strong objections from MOF, which will
lose a landing place for retired officials, and from business
circles, which get loans from the JBIC for projects.

Different interpretations

The standoff between MOF and MOFA was reflected in a ministerial
meeting held on the morning of Feb. 17. According to informed
sources, Chief Cabinet Secretary Abe said: "The yen-loan section
will be separated from JBIC and integrated into JICA. I hope the
ministries concerned will cooperatively manage it."

Hearing Abe's remark, MOF interpreted it as, "JICA will be under
the joint management of the ministries concerned," while MOFA
took it as meaning that "MOFA has jurisdiction over JICA, and
only the yen-loan business will be jointly undertaken."

As a result of consulting with LDP Policy Research Council

TOKYO 00001120 005 OF 006

Chairman Hidenao Nakagawa, Abe instructed MOF and MOFA to try to
reach a settlement. On Feb. 20, the administrative vice ministers
from the two ministries held a meeting and agreed on a plan for
MOF, MOFA, and the Ministry of Economy, Trade and Industry to
jointly undertake the yen-loan program.

In compiling the report, the study group gave consideration to
the LDP plan, which is close to MOFA views in content. As of Feb.
24, the report included passages calling for keeping the identity
of the JBIC, but these parts were deleted in the final version.
In a press conference yesterday, Akio Harada, chairman of the
study group, said: "We will now start specific discussion of the
new system."

Wrangling drags out?

The bureaucracy will take charge of discussing details of the new
system, including a revision of the JICA Law. A senior MOFA
official grumbled: "MOF might begin to intervene in all personnel
actions in JICA, with the yen-loan program as its basis." Harada
also commented yesterday: "Various problems could occur in the
separation and integration process."

A senior MOF official was overheard saying: "The revision
resulted from things not proceeding smoothly under the MOFA
lead." But there is still no mechanism to verify ODA reform yet.

(5) Japan frets over GSDF pullout in tandem with Britain,
Australia

SANKEI (Page 3) (Full)
March 2, 2006

Japan is in the final phase of exploring steps to recall its
ground troops currently deployed in the southern Iraqi city of
Samawah. The government, while weighing Japan's bilateral
relations with the United States, wants to withdraw the Samawah-
based Ground Self-Defense Force troops along with the British and
Australian security troops in Samawah. Intensifying religious
conflict in Iraq is also liable to cloud the government's
judgment. However, the Foreign Ministry and the Defense Agency
will decide early next week to withdraw the GSDF troops and will
then enter into final coordination with the prime minister's
office.

In the wake of last December's election for Iraq's parliament,
the government began early this year to consider the GSDF's
pullout in earnest. The government will make a final decision in
March to withdraw the GSDF troops and will complete their pullout
in May.

In Samawah, the GSDF currently deploys a ninth detachment of
troops dispatched mainly from GSDF garrisons under the command of
the Eastern Army, which has its headquarters in Tokyo's Nerima,
to help with Iraq's nation-rebuilding efforts. The GSDF, when
withdrawing its troops from Iraq, will downsize the Samawah-based
engineering contingent, which has been tasked with facility
repair and other services. The GSDF will divert that engineering
unit's personnel to base security and will strike camp.

The Samawah-based detachment includes about 100 rangers from the
1st Airborne Brigade, which is the strongest of all GSDF combat
units, and the rangers are tasked with the security of the GSDF's

TOKYO 00001120 006 OF 006

Samawah camp. In addition, the GSDF is also planning to send a
backup contingent of 100 troops to Kuwait, where they will be
engaged in the work of sending equipment from the Samawah camp to
Japan. In order to do so, the government is mulling several
options, such as: 1) sending more troops; 2) replacing some of
the detachment; and 3) issuing an order to ready another
contingent.

"Japan is closely in touch with the United States, Britain, and
Australia at various levels," Defense Agency Director General
Fukushiro Nukaga told a news conference on Feb. 28. With this,
Nukaga stressed Japan's stance of falling in line with these
three countries. That is because "Japan alone cannot ignore the
United States to pull out," a senior official of the agency
explains. Japan, the United States, and Australia will hold a
security dialogue in Sydney on March 18, and Foreign Minister
Taro Aso will also attend it. On that occasion, Japan and
Australia are expected to ask for US Secretary of Rice's
understanding for their troop pullout.

The United States, however, does not want Japan and Australia to
pull out. The Bush administration, with an off-year election
scheduled for this fall, wants both Japan and Australia to
continue their deployment of ground troops as a symbol of their
commitment as US allies, according to a government source. When
Iraq's permanent government comes into being, the US government
will presumably work on the Iraqi government to ask Japan to
continue its deployment of GSDF troops in Iraq, the source says.

Meanwhile, Washington has sounded out Tokyo on sending GSDF
officers to a provincial reconstruction team (PRT), which is made
up of civilians to assist with Iraq's security maintenance and
reconstruction. However, the GSDF cannot undertake security
maintenance. The Japanese government is therefore poised to
reject the proposal. "That's legally difficult," Nukaga said.

The Japanese government wants to obtain the US government's
understanding for Japan's troop pullout while offering to expand
the scope of the Air Self-Defense Force's airlift missions
between Kuwait and Iraq's southern district. In concrete terms,
Defense Agency officials mull covering Baghdad in the scope of
ASDF airlift services, in addition to Qatar, where the US Central
Command locates headquarters for its troops on the front.
However, the uniformed staff remains reluctant, with one officer
pointing to a high risk of being shot down. A tug of war is also
likely to be activated.

In Iraq, Islamic Shiites and Sunnis have been intensifying their
conflicts. Such a situation in that country may also affect the
GSDF's pullout timetable. The government will decide in March to
pull the GSDF troops out of Iraq. But some government officials
are raising questions about such a decision-making schedule. "We
still can't say this and that about the pullout in the current
situation," one government official noted. Another official
insists on responding to developments in a flexible way.

SCHIEFFER

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