NAPSNet Daily Report 17 April, 2003

Recommended Citation

"NAPSNet Daily Report 17 April, 2003", NAPSNet Daily Report, April 17, 2003, https://nautilus.org/napsnet/napsnet-daily-report/napsnet-daily-report-17-april-2003/

 
CONTENTS

I. United States

1. PRC Role in DPRK-US Talks
2. US on DPRK Multilateral Talks
3. DPRK on DPRK-US-PRC Talks
4. ROK on DPRK-US-PRC Talks
5. SARS Summit
6. Japan Missile Defense
7. PRC US Espionage Case
8. US Agent Orange in Vietnam War
9. DPRK Human Rights
10. Japan Cluster Bomb Possession
11. Japan Role in Iraq Reconstruction
12. PRC Economic Growth
13. DPRK Humanitarian Aid
II. Japan 1. Japan’s Role in Iraq Reconstruction
2. Japan DPRK Missile Launch Simulation
3. Japan Offensive Military System
4. US Bases in Japan
5. Japan Domestic Politics
6. Japan Domestic Economy

I. United States

1. PRC Role in DPRK-US Talks

The Washington Post (Karen DeYoung and Doug Struck, “BEIJING’S HELP LED TO TALKS US CUTS DEMANDS ON NORTH KOREA,” 4/17/03) reported that the Bush administration’s decision to meet with DPRK representatives next week in Beijing, a significant retreat from its insistence that it would talk to the DPRK only in the presence of officials from Japan, the ROK and the PRC, was made in response to the PRC’s increasingly cooperative role in the DPRK crisis, senior administration officials said yesterday. The administration has also dropped its demand that DPRK first dismantle its illegal uranium enrichment program. President Bush, said a top Japanese official who helped pave the way for the meeting, “decided to go ahead with discussions without any preset conditions.” The PRC’s effort to resolve the six-month impasse over the DPRK’s nuclear weapons program came in an offer last month to host an initial tripartite meeting with the US and the DPRK, excluding the ROK and Japan, U.S officials said. The PRC also obtained the DPRK’s agreement to drop its own demand for a one-on-one meeting with the US. The PRC will be present at all sessions of next week’s talks, the officials said. “We decided to go ahead with it because China had taken such a major role in setting it up,” a senior administration official said. “After months of our telling them that they had to do more, they finally came up with this. It wasn’t perfect, but it represented much more substantial involvement by them than anything they had done before.” A US delegation headed by James A. Kelly, assistant secretary of state for Asia, will likely arrive in Beijing next Wednesday for as many as three days of talks, officials said. US officials said yesterday that the PRC’s presence satisfied Bush’s demand that any meeting with the DPRK be “multilateral.” They said there will be no substantive discussion of Pyongyang’s weapons program until the ROK and Japan, and possibly Russia, are represented at subsequent meetings. “That’s one reason why I would characterize this as exchanging views rather than a negotiation,” one official said.

2. US on DPRK Multilateral Talks

The Washington File (“US, CHINA TO BEGIN TALKS WITH NORTH KOREA,” Washington, 4/17/03) reported that White House Deputy Press Secretary Scott McClellan confirmed April 16 that diplomats from the US and the PRC will meet with DPRK officials in Beijing to begin trilateral talks aimed at addressing the DPRK’s purported nuclear program. “We’re very pleased with the involvement of the PRC, said McClellan. “The PRC agree fully with the US that the Korean peninsula must be free of nuclear weapons, as do all of North Korea’s neighbors, and that’s important. We look forward to future talks, too, that include everybody in the region.” At the time of this report, the exact dates of the talks had not been announced but McClellan told journalists aboard Air Force One April 16 the meetings in Beijing could begin “as early as next week.”

For the full transcript:

http://usinfo.state.gov/cgi-bin/washfile/display.pl?p=/products/washfile/geog/ea&f=03041701.tea&t=/products/washfile/newsitem.shtml

The Associated Press (George Gedda, “POWELL WELCOMES NORTH KOREA NUCLEAR TALKS,” Washington, 4/17/03) and the New York Times (David E. Sanger, “BUSH TAKES NO-BUDGE STAND IN TALKS WITH NORTH KOREA,” Washington, 4/17/03) reported that US President Bush has instructed the team that will negotiate with the DPRK that the US will not settle for another freeze on the country’s nuclear program. Instead, senior administration officials said today, the US will insist that the DPRK dismantle both of its major nuclear weapons projects as part of any larger bargain with the US. In interviews today, the officials said they had relatively low expectations for the first round of talks, scheduled to take place next week in Beijing. The talks, which some US officials fear could be delayed now that news of them has become public, would be the first between the two countries in more than six months. Bush approved the overall plan for the negotiating strategy at a meeting Tuesday with Secretary of State Colin L. Powell, the officials said. He told Powell that he was not ready to discuss any kind of treaties with the DPRK – something the country has demanded – until the nuclear threat is dismantled. US officials said, however, that they were seeking new and creative ways “to assure the DPRK that we are not looking to overthrow them, to take them out,” a senior official said. Bush has issued several such assurances in recent months, but US officials believe the Iraq war may have prompted fears in the DPRK leadership that they are next as Bush addresses threats.

3. DPRK on DPRK-US-PRC Talks

The Korean Central News Agency of DPRK (“SOLUTION TO KOREAN NUCLEAR ISSUE DEPENDS ON US ATTITUDE,” Pyongyang, 4/17/03) reported that Minju Joson today comments on the fact that most of member states of the UN Security Council opposed the US stand at its closed meeting held on April 9, asserting that the nuclear issue on the Korean Peninsula should be peacefully settled between the DPRK and the US The news analyst says: The outcome of the meeting represents a relatively fair and objective assessment of the two conflicting stands of the DPRK and the US on the nuclear issue of the Korean Peninsula. The nuclear issue is a matter between the DPRK and the US in every sense and it, therefore, can be settled peacefully only through the DPRK-US dialogue. It is possible to settle the nuclear issue on the Korean Peninsula if the US sincerely gives up its hostile will and honestly approaches dialogue. The present reality urgently requires the US to drop its unreasonable and wrong assertion as early as possible and opt for a peaceful solution to the nuclear issue. The DPRK will not stick to any particular dialogue format if the US has a will to make a brave switchover in its policy toward the DPRK to settle the issue. A solution to the issue hinges on what is the real intention of the US.

4. ROK on DPRK-US-PRC Talks

BBC News (“ROH BACKS US-NORTH KOREA TALKS,” 4/17/03) reported that ROK President Roh Moo-hyun has said Seoul’s exclusion from next week’s talks on the DPRK’s nuclear program was less important than the outcome. The US and the DPRK are next week due to discuss the nuclear standoff for the first time since the crisis escalated last October, with China also expected to participate. “What is important is not the format but the results of the talks,” Roh. He was speaking after being criticized for the fact that ROK is not taking part too. US officials have pointed out that the talks, due to take place in the PRC capital Beijing, are preliminary, and its regional allies the ROK and Japan could be included in later negotiations. Officials from the three countries were expected to meet in Washington on Friday, Japanese Chief Cabinet Secretary Yasuo Fukuda was quoted by the Associated Press news agency as saying. Fukuda said the purpose of the working-level talks was “to plot a course of direction for resolving” the crisis. Despite being excluded from the talks, the ROK and Japan both welcomed news of the development.

5. SARS Summit

BBC News (“ASIAN LEADERS PLAN SARS SUMMIT,” 4/17/03) reported that a group of East Asian countries is due to hold a summit to discuss ways to tackle the SARS crisis, as many countries in the region continue to battle with the disease. Thai Public Health Minister Sudarat Keyuraphan said the the meeting, which will be attended by all 10 member countries of the Association of South East Asian Nations (Asean), would be held on 29 April in Bangkok. He said that delegates from the World Health Organization (WHO) and the PRC, where the virus has hit hardest, may also attend. SARS (Severe Acute Respiratory Syndrome), which scientists have confirmed to be a mutant form of the corona virus, the cause of the common cold, has now claimed more than 160 lives and infected a further 3,000 people worldwide.

6. Japan Missile Defense

The New York Times (James Brooke, “JAPANESE OFFICIAL WANTS DEFENSE AGAINST MISSILES EXPANDED,” Tokyo, 4/17/03) reported that Japan’s defense minister called today for expansion of his country’s antimissile defenses, placing only cautious hope in arms control talks that are scheduled to start next week between the US and the DPRK. “North Korea’s missiles will not be launched against China,” the official, Shigeru Ishiba, said in an interview. “They won’t be launched against Russia. They won’t be launched against South Korea, because it’s too close. They can’t reach the US.” He said Japan was interested in buying the latest-generation Patriot missiles from the US, but left unsaid what many Japanese believe: that the DPRK has painted an invisible bull’s eye on Japan. The realization in recent months that the DPRK has about 100 Rodong missiles capable of hitting any point in Japan within 10 minutes of launch has triggered a national debate that appears to be shifting Japanese attitudes toward a more muscular defense after nearly 60 years of official pacifism. Last Sunday, three million Tokyo residents cast their ballots in gubernatorial elections. Shintaro Ishihara, a conservative who, on occasion, has called for bombing tje DPRK, was overwhelmingly re-elected. “Once upon a time Shintaro Ishihara was considered a radical right-winger,” said Ishiba, a 46-year-old member of the ruling Liberal Democratic Party.

7. PRC US Espionage Case

CNN News (Kelli Arena, “US: LEUNG MAY HAVE TIPPED CHINESE TO SPY INVESTIGATION,” Washington, 4/17/03) reported that an FBI informer in Los Angeles, accused of being a PRC double agent, may have compromised a nuclear espionage investigation by revealing the identities of two FBI agents working on the case, according to US government officials. Officials said Katrina Leung also might have tipped off the PRC government about the US’ bugging of China’s version of Air Force One. The continuing damage assessment in the Leung case includes an FBI internal review and the investigation of a second agent for possible misconduct. Leung, recruited by the FBI in 1982 as an informer, has been charged with espionage. Her FBI handler, retired agent James Smith, has been charged with gross negligence. Officials allege Leung also had an affair with another agent, now retired. That agent, William Cleveland, has not been charged. Leung was denied bail Tuesday after prosecutors argued she was a flight risk. The 49-year-old Leung is a well-known Republican activist in Los Angeles who raised thousands of dollars in political campaigns and arranged numerous California events — including a 1997 state banquet for former PRC President Jiang Zemin.

8. US Agent Orange in Vietnam War

BBC News (RICHARD BLACK, “AGENT ORANGE USE ‘UNDERSTATED,'” 4/17/03) reported that the US military used much more Agent Orange and other defoliant spray during the Vietnam war than previously thought, scientists say. A new study of US military records also found that the amount of cancer-causing dioxin chemicals in the spray has been seriously underestimated. The report, commissioned by the US Government, is the culmination of a five-year project by environmental health experts at New York’s Columbia University. Between 1961 and 1971, the US military sprayed parts of southern Vietnam with defoliant chemicals – such as Agent Orange – with the aim of allowing the Americans and their South Vietnamese allies to spot Vietcong forces moving in the forests. The Columbia team painstakingly examined operational records of individual spraying missions in Vietnam, and cross-referenced them with procurement records showing which kinds of defoliant were used at which times. They conclude that 77 million liters of Agent Orange were used – rather than 70 million liters as has been estimated previously. But according to project leader Professor Jeanne Stellman, the most significant finding concerns dioxins – chemicals known to cause cancer. “We think there was at least twice as much dioxin as had been thought before – and that number is a conservative estimate because it seems very likely that much of the earlier Agent Orange was much more heavily contaminated with dioxin,” Professor Stellman said.

9. DPRK Human Rights

The Japan Times (“PYONGYANG URGED TO HEED HUMAN RIGHTS RESOLUTION,” 4/17/03) reported that Japan on Thursday urged the DPRK to take seriously a resolution issued by the U.N. Human Rights Commission that criticizes the DPRK’s human rights abuses. “I want North Korea to take it seriously,” Prime Minister Junichiro Koizumi said. “Abduction is one of the most extreme cases of human rights abuse.” The prime minister was referring to the abduction of Japanese nationals by Pyongyang agents. The resolution, adopted Wednesday in Geneva, features references to the DPRK’s abduction of foreigners and urges the DPRK to solve the issue “clearly and transparently.” Chief Cabinet Secretary Yasuo Fukuda underlined this point, saying, “We regard it highly as a significant resolution.” Although the DPRK has objected to the resolution, Fukuda urged the DPRK to face up to the specter of international condemnation. “Now that there is a resolution, we urge (North Korea) to deal with it in a sincere manner,” he said.

10. Japan Cluster Bomb Possession

The Japan Times (“CLUSTER BOMBS HELD BY ASDF DEFENDED,” 4/17/03) reported that the Japan Air Self-Defense Force possesses cluster bombs and has no plans to get rid of them, the government’s top spokesman said Thursday. The announcement flies in the face of calls by nongovernmental organizations to ban the widely condemned antipersonnel weapons. “There is no need whatsoever to dismantle them if they are necessary from the viewpoint of a defense-only policy,” Chief Cabinet Secretary Yasuo Fukuda told a news conference. Fukuda commented on the ASDF’s cluster bombs after the Mainichi Shimbun reported Thursday that the Defense Agency concealed the purchase of the bombs in budget reports to avoid Diet debate on whether Japan should possess the weapons. According to the Mainichi, the ASDF bought 14.8 billion yen worth of the bombs between fiscal 1987 and 2002. The paper estimated that several thousand of the bombs were purchased. Fukuda confirmed that the ASDF has possessed such bombs for 15 or 16 years, and that the planned procurement was completed in fiscal 2000. He denied the government was trying to keep the purchase of the bombs under wraps, noting that they are exhibited for visitors at some ASDF bases. Fukuda said he’s aware NGOs are calling for the weapons to be banned, but the government will only consider heeding the calls after taking into account “our defense needs, situations in other countries and international opinion.” Cluster bombs consist of a large shell carrying up to 200 bomblets that scatter as they fall through the air and explode on impact. There have been calls to ban them because of their high failure rate to detonate on impact, creating a danger to civilians similar to that presented by land mines. Japan, along with many other countries, signed a treaty to ban antipersonnel land mines. The pact was spurned by the US, the PRC, and Russia, which have the three largest stockpiles of such weapons.

11. Japan Role in Iraq Reconstruction

The Japan Times (“JAPAN MAY FUND IRAQ REBUILDING THROUGH UNDP,” 4/17/03) reported that Japan is considering providing reconstruction funds for Iraq through the U.N. Development Program, sources close to the matter said Thursday. The UNDP route is attractive because it is difficult for Japan to provide direct official development assistance to Iraq, the sources said. Providing ODA requires the exchange of official notes with the government of the partner country, the sources said. An interim Iraqi authority has yet to be formed. Japan is pushing to grant the funds through the U.N. body as it will be too late to provide them before a new administration is formed in Iraq to replace any interim authority. The government has already approached the UNDP about the plan, according to the sources. Because a U.N Security Council resolution is necessary for mid- and long-term UNDP assistance, Japan intends to provide in the immediate future funds for rebuilding schools and medical facilities within the framework of humanitarian assistance, which requires no such resolution, the sources said.

12. PRC Economic Growth

The Associated Press (“CHINA REPORTS 9.9 PERCENT ECONOMIC GROWTH, Beijing, 4/17/03) reported that the PRC said Thursday its economy grew by 9.9 percent in the first three months of 2003, but warned that the outbreak of the deadly SARS virus will cut into future growth. Strong exports and state spending helped drive the fastest quarterly growth in more than half a decade, officials said at a news conference. They were in line with official projections that the PRC’s economy would expand by more than 9 percent. But the government warned that severe acute respiratory syndrome, or SARS, will cut into future growth. Anxiety about the disease already is disrupting trade and travel. “SARS, for sure, will have an influence on the economy’s performance in China,” said Yao Jingyuan, an economist at the National Bureau of Statistics. The PRC’s first-quarter gross domestic product – a measure of a country’s output of goods and services – totaled 2.4 trillion yuan ($284 billion), the statistics bureau said. The biggest contribution to the country’s fastest economic growth rate since 1997 was strong investment by the PRC’s state sector. Driven by exports, industrial production rose 17.2 percent to 834.3 billion yuan ($100.7 billion) for the quarter. Exports rose 33.6 percent to 8.6 billion yuan ($1 billion) during the first quarter, up 23.6 percentage points from the same quarter in 2002.

13. DPRK Humanitarian Aid

Agence France-Presse (“NORTH KOREA CALLS FOR RICE, FERTILIZER AID FROM SOUTH KOREA,” Seoul, 4/17/03) reported that the DPRK called for rice and fertilizer aid from the ROK, breaking a month-long freeze in official inter-Korean contact, ROK officials said. The DPRK’s government-controlled Red Cross Society Chairman Jang Jae-On sent a message to his ROK counterpart Suh Young-Hoon, asking for the ROK to send the aid, Red Cross officials here said. “The North and South belong to one nation and they have been cooperating with each other in the spirit of patriotic love and mutual cooperation. The continuance of this tradition will help achieve national reconciliation and unity and further activate inter-Korean relations,” Jang said in the message. “At this moment, we hope that your side provide us with rice and fertilizer,” Jang said. The request came two days after the ROK government said it was ready to donate 200,000 tons of fertilizer to the DPRK this year.

II. Japan

1. Japan’s Role in Iraq Reconstruction

The Japan Times (“CAUTION SHOWN ON STAFF DISPATCH TO IRAQ,” 04/16/03) reported that Japanese Chief Cabinet Secretary Yasuo Fukuda said Tuesday the government will carefully consider whether to dispatch staff to the US-led administration of occupied Iraq. “We do not have a clear picture of the structure of the body,” Fukuda said. According to the Foreign Ministry, there are no legal restraints on sending Japanese civilians to assist the organization — called the Office of Reconstruction and Humanitarian Assistance (ORHA) — as long as it does not engage in military operations. However, the dispatch of Japanese to areas affected by wars is a politically sensitive issue because Japan’s Constitution renounces war. Fukuda said the conflict is continuing and that the government will make its decision after watching developments. Foreign Ministry officials have said the ORHA is now a civilian organization, but its structure and activities are still unclear.

The Japan Times (“KOIZUMI PROMOTES OKAMOTO TO TOP FOREIGN POLICY AIDE,” 04/16/03) reported that Japanese Prime Minister Junichiro Koizumi on Tuesday appointed Yukio Okamoto, the Cabinet’s foreign policy adviser, as his top foreign policy aide. Okamoto will play a key role in formulating policy on the reconstruction of Iraq. The appointment, approved by the Cabinet, represents a promotion for Okamoto and boosts his capacity to engage in negotiations with foreign countries, according to Chief Cabinet Secretary Yasuo Fukuda. Okamoto has just returned from a trip to the Middle East, where he met with high-ranking officials to discuss the reconstruction of postwar Iraq and Japanese assistance for neighboring countries. Okamoto, a former Foreign Ministry bureaucrat, is the third special aide appointed by Koizumi. A prime minister can appoint up to five special advisers on specific issues, such as administrative reform and national security.

2. Japan DPRK Missile Launch Simulation

The Japan Times (“H-IIA LAUNCH PROVIDED MSDF WITH ‘ATTACK’ DRILL,” 04/16/03) reported that a Maritime Self-Defense Force (MSDF) destroyer equipped with the Aegis air-defense system tracked an H-IIA rocket after launch last month to practice for a DPRK ballistic missile, MSDF sources said Tuesday. The 7,250-ton Kongou collected aviation data related to the H-IIA rocket, which was launched March 28 from the Tanegashima Space Center in Kagoshima Prefecture, carrying two spy satellites that will monitor North Korean nuclear and missile activities, the sources said. The destroyer left Sasebo port in Nagasaki Prefecture that day and collected various data until the rocket put the two satellites into orbit, they said. The data is for a planned missile defense system being studied by the US and Japan, they said. The sources said the Defense Agency has been collecting data on Japanese rockets for several years. The Kongou left for the Indian Ocean on April 10 as part of Japan’s rear-area support for US military operations there and in Afghanistan.

3. Japan Offensive Military System

The Asahi Shimbun (“BATTLE STATIONS: THE DEFENSE AGENCY CHIEF FINDS HIMSELF OUT ON A LIMB AS HE TRIES TO ADVANCE THE DEFENSE DEBATE,” 04/12/03) reported the Japanese Defense Agency chief Shigeru Ishiba’s attitude and behavior on Japanese defense policy. He has been taking broadsides left and right in his campaign to push Diet debate on national security issues. Just about every time he opens his mouth, another politician — even his boss, Prime Minister Junichiro Koizumi — contradicts him. As the nation’s top defense expert, Ishiba certainly has his hands full trying to deal with prickly and unpredictable neighbor DPRK and US overtures for Japan to re-evaluate its defense capabilities and adopt a more aggressive posture. As a member of the Liberal Democratic Party’s new generation of defense specialists, Ishiba has long held the position that the Self-Defense Forces (SDF) should be aggressively utilized to achieve policy objectives. “National security debate until now has focused only on how to restrain the SDF,” said a high-ranking Defense Agency official close to Ishiba. “He probably feels that unless he fulfills his responsibility to explain policy, the debate will not move forward.” Although Ishiba has clearly stepped on a lot of people’s toes, he also has many allies, particularly in the US Defense Department. “His explanations are clear and logical,” said one Pentagon source. “It is obvious that he wants Japan to actively take part in the military alliance with the United States.” Even political opponents at home lavished praise on Ishiba for his comments on attacking enemy bases. “The problem lies with the prime minister who only relies on the United States and avoids discussing national security issues,” said Yukio Edano, policy chief for the Democratic Party of Japan (DPJ). Inside the Defense Agency itself, however, some officials have voiced concerns about the effect on overall defense debate. “If aides to the prime minister negate what Ishiba has said, that will put a stop to accumulated debate on the issue,” said a Defense Agency official. “That means we have to start debate all over again on some defense issues.” Meanwhile, Ishiba acknowledges that people have taken parts of his past comments out of context to give the impression he is ready and willing to use Japanese military capability at the drop of a hat. This, he insists, is far from the truth. That leaves him waging a lonely fight as he tries to push debate forward on national security issues.

4. US Bases in Japan

Mainichi Daily News (“DRUNK U.S. NAVY OFFICER KILLS WOMAN IN HEAD-ON CRASH,” Nagasaki, 04/12/03) reported that a woman was killed and her daughter is fighting for her life after a car driven by a drunk US Navy officer smashed head-on into their vehicle in a Nagasaki Prefecture tunnel, police said last Saturday. Petty Officer 2nd Class John Gibson escaped the accident with a knock to the face. The 29-year-old officer was drunk at the time.

Mainichi Daily News (“OKINAWANS TELL US BASE: YOUR TIME IS UP — GET OUT!,” Ginowan, 04/13/03) reported that over 100 people have staged a protest in front of the US Futenma Air Station after the deadline for an agreement to relocate the base was not met by authorities. The crowd gathered at the base’s main gate before 8 p.m. last Saturday, exactly seven years after the Japanese government announced that the controversial air station would be returned to civilian hands in five to seven years time. “It’s time for you to vacate!” one of the protesters shouted, while another said, “We don’t need no base here. Open the gate!” At least two protesters broke though a police line and managed to slip into the base. They handed a US guard a letter addressed to the commander of the air station, which demanded the immediate return of the facility.

5. Japan Domestic Politics

The Japan Times (“LDP FAILS TO WIN HALF OF PREFECTURAL ASSEMBLY SEATS ON OFFER,” 04/15/03) reported that the Liberal Democratic Party (LDP) took 1,309 of the 2,634 seats contested in 44 prefectural assembly elections on Sunday, local election boards said. The LDP won less than half for the third straight time but marked an improvement from the record low 1,288 it won in the previous election four years ago. New Komeito, one of the LDP’s two coalition partners at the national level; the Democratic Party of Japan (DPJ), the main opposition party; and the Liberal Party also won more seats than four years ago. The elections, however, brought sharp setbacks for the Japanese Communist Party and the Social Democratic Party. A record 164 women won in the prefectural assembly elections. The previous high was 136 in April 1999. Voter turnout came to a record-low 52.48 percent, with all-time lows posted in 35 prefectures.

6. Japan Domestic Economy

The Japan Times (“ECONOMY REMAINS FLAT AMID IRAQ, SARS FEARS,” 04/15/03) reported that the Japanese government on Monday left unchanged its assessment of the economy for April, but it expressed caution amid concerns over the US-led war in Iraq, the future of the US economy and the spread of Severe Acute Respiratory Syndrome (SARS) across Asia. “While the economy has become roughly flat, uncertainty still remains,” the Cabinet Office said in the monthly economic report for April, using roughly the same wording as a month earlier. According to the April report, the economy can make an incipient recovery if the US and other economies make a sustainable recovery, but uncertainties over the current and postwar situation in Iraq may exert downward pressure on final demand. According to the report, corporate profits are improving and capital spending is gradually recovering, as seen in several recent economic indicators. Exports are increasing gradually, but private consumption remains generally flat, according to the report. But the report notes that industrial production has declined and the unemployment rate remains at near-record levels. It says a temporary increase in crude oil prices linked to the Iraq war stopped consumer prices from declining further. But the Cabinet Office said persistent deflation continues.

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