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Speeches and Statements by Prime Minister Junichiro Koizumi

(Provisional translation)

General Policy Speech by Prime Minister Junichiro Koizumi
to the 162nd Session of the Diet

January 21, 2005


In convening the 162nd session of the Diet, I would like to ask for the understanding and cooperation of the people of Japan while sharing here the basic policies for national administration.

Together with the people of Japan, I would like to express my heartfelt congratulations to Her Imperial Highness Princess Nori on the announcement of her engagement last month.

Japan was struck by a number of heavy rains and typhoons, and also suffered immense damage from the Niigata Prefecture Chuetsu Earthquake. Numerous countries have incurred an unprecedented level of damage following the great earthquake and tsunami which occurred off the coast of Sumatra Island of Indonesia at the end of last year. I would like to take this opportunity to express my sincere words of sympathy to the people who have suffered from the disaster and those still forced to live in hardship.

The government has designated the disaster-stricken regions in Japan as suffering extreme damage and has compiled a supplementary budget to enable prompt implementation of reconstruction projects. The government will make utmost efforts for rehabilitation and reconstruction of the disaster-stricken regions so that people suffering from damage can live with peace of mind as early as possible. The government will also endeavor further towards the goal of becoming a disaster-resilient nation with this year marking the 10th year since the Great Hanshin-Awaji Earthquake.

The Government have dispatched medical staff, disaster relief teams and the Self-Defense Forces (SDF) as Japan Disaster Relief Teams to the countries surrounding the Indian Ocean that incurred damage on a mission to search and rescue victims in the disaster-hit regions. For the time being, Japan will provide aid supplies such as tents, food and pharmaceutical products as well as up to 500 million dollars of grant aid. As a fellow Asian partner, Japan will provide reconstruction assistance to the maximum extent possible in consideration of the damage in each country. The Government will actively advance cooperation among countries concerned and the United Nations (UN) for the establishment of a Tsunami early-warning mechanism for countries surrounding the Indian Ocean utilizing Japan's experience and technology in that field on the basis of the recommendation adopted at the United Nations World Conference on Disaster Reduction currently held in Kobe.

(Securing the "Safety" of People)

Since my appointment as Prime Minister, while promoting reforms under the policies of "leave to the private sector what it can do" and "leave to the localities what they can do," it has also been my belief that an important role for the nation is to secure safety and reassurance for the people of Japan, and I have been constantly striving to realize this role.

The number of crime cases that had been following on an upward trend has decreased for two consecutive years, but there still are many malicious crimes. We must immediately restore a society in which people can live with a sense of reassurance. In the next fiscal year, the government will increase the number of police officers by 3,500 and expend all efforts to eliminate "empty Koban" and aim to revive "Japan, the safest country in the world."

Safety is achieved, not given. With the aim of restoring safe and sound cities by eliminating organized crime groups and criminal organizations by foreigners from such areas as Kabukicho in Shinjuku and other urban areas across the nation, the government will support the region-wide efforts initiated by the people living there.

Trafficking in persons is a serious violation of human rights and its prevention is an international issue. The government will enhance the control of malicious brokers, develop penalties and provide thorough protection for victims. The government will continue to advance consideration of a system on protection of human rights.

The Basic Law on Victims of Crime was enacted during the last extraordinary session of the Diet. The government will enhance its assistance, such as consultation and information provision, so that the victims of crime and their families can recover at the soonest date possible and live with a sense of reassurance

Against the backdrop of the heightening threat of terrorism around the globe, we have introduced the "Sky Marshal" system where police officers board commercial planes and have also started the operation of a system which electronically checks the list of passengers of international flights to identify suspicious individuals before their entry into Japan. The government will strengthen counterterrorism measures through such efforts as verification of the identity of all their foreign guests by hotel operators, starting this April.

Last year, the government has developed comprehensive national emergency legislation, which has been of concern for the nation for many years. Preparation and consideration will be made from all aspects possible for the operation of the system by determining the procedures to be taken by the central and local governments, including the issuance of warnings in times of emergency and evacuation and rescue of residents, so that the system will be implemented smoothly and without fail.

Amidst the dramatic changes in the environment surrounding Japan since the end of the Cold War, the Government has drawn up the new "National Defense Program Guideline" and the "Mid-Term Defense Build-up Plan." The government will thoroughly review the existing defense structure, which provides for equipment and personnel prepared for a so-called Cold War-type invasion, and in order to be able to deal with new threats, such as terrorism and ballistic missiles. At the same time, the Government will actively engage in international peace cooperation activities.

(Securing "Reassurance" for the People)

The population of Japan is anticipated to start decreasing from 2007. Approximately, 7 million baby-boom generations will reach their old age. Japan will face a decreasing birthrate together with an aging society progressing at a faster rate than ever experienced in any other part of the world. In order to realize a sustainable social security system while maintaining economic vitality, the ruling party and the opposition party, despite their respective differences in positions, must start working together in immediately reviewing the overall social security system, including the unification of public pension systems.

In order to attain stability in the long-term care insurance system, the government will focus on preventative measures so that people will not require long-term care as much as possible. In tandem with this change, the government will review the system in general and ask those people staying at long-term care facilities to bear the housing and food expenses, in order to achieve fair balance of burden between the elderly living at home and those using long-term care services provided at such facilities and the pension benefits.

The government will develop a system where municipalities, in total, will provide services for people with various kinds of disability so that they can live independently. Employment promotion measures for those people will be strengthened. The government will continue to promote the creation of a barrier-free society not only in public facilities but also both in terms of its system and people's awareness.

The government has decided to lift the ban on a mixed insurance system for medical care expenses in due consideration of the safety aspects so that patients may receive treatment that utilizes advanced medical technologies and medicine with as less burden as possible. This will allow people to receive a hundred different kinds of treatment at roughly 2000 medical institutions. As for the Central Social Insurance Medical Council, which deliberates annual medical expenses of over 30 trillion yen, the government will review its modality from the perspective of ensuring fairness, neutrality and transparency.

Aiming to create a society that will enjoy longevity, the government will promote measures against lifestyle-related diseases, such as cancer and cerebral stroke, based on the ten-year Health Frontier Strategy, which will start this year.

In order to promote sports activities, which are indispensable in leading healthy life, the government will nurture top-level athletes and develop an environment in which people can enjoy sports throughout their lives.

We must recover people's trust in the Social Insurance Agency. The Agency has started implementing urgent measures, such as provision of more client friendly services and elimination of wasteful used of budget. The government will drastically review its organizational modality.

In order to change the trend in decreasing birthrate, the government will continue promoting the Zero Waiting for Day Care Program based on the newly compiled "Child and Child Rearing Support Plan." Our goal is to spread the use of the child-care leave system from the current 60 percent to a 100 percent in five years. We will develop an environment in which parents can have children without worry and experience the joy of child rearing. The government will provide assistance so that women can exert their talents and take on challenges in various areas, including business or regional vitalization.

We have revised the modality of the judicial system in Japan for the first time in half a century, such as expediting the process of trial and adoption of a "Saiban-in (lay judge)" system in criminal trials so that civilians can take part in the process, as measures to realize a judicial system both close and answerable to the public. Government will now work for the steady implementation of the system.

We will work to ensure food safety by providing accurate and comprehensible information drawn from a scientific perspective to the public, while maintaining consumer protection as a top priority. As for resumption of beef imports from the United States (US), the government will hold discussions with a basic approach of requesting that measures equivalent to those in Japan be taken by the US.

(Implementation of "From the Public Sector to the Private Sector" and "From the State to the Region")

I have been endeavoring to materialize reform based on my conviction that the policy of "from the public sector to the private sector" and "from the state to the region" leads to the recovery of the economy and realization of a simple and efficient government.

As a means to boldly and effectively promote this policy, we must construct a system which allows a substantial sum of people's fund amounting to 350 trillion yen collected through the postal offices to be utilized most efficiently by allocating it to the private sector instead of the public sector. The funds collected at the postal savings and postal life insurance scheme, are channeled through the Fiscal Investment and Loan Program, and eventually allocated to special public corporations, at the end of the flow. We must change the overall structure of the flow of funds to "from public sector to private sector." I have been making progress into reform of this structure, but the big issue of the privatization of the postal services remains, which is at the heart of the structural reform. The government will submit a bill to the Diet, which will privatize the Japan Post in April 2007 based on the basic policy decided in September of last year, and I will make every effort towards its enactment.

Private corporations provide similar services to postal services, postal savings and postal life insurance. These operations are not services that must be operated by civil servants. Once the postal services are privatized, the employees of Japan Post will become non-civil servants. Tax payment by the privatized Japan Post which has been exempted so far and the sales of government-owned stocks will contribute to the restoration of the fiscal balance. The privatization of the postal services indeed means boldly carrying out the administrative and fiscal reforms indispensable for the realization of a small government. Opposing the privatization of the postal services while seeking to "leave to the private sector what it can do and carry out administrative and fiscal reforms" or "reduce the number of civil servants," is equivalent to demanding someone to swim with their hands and legs bound together.

In order to provide high-quality and diverse services, the government will refrain from involvement in operations upon privatization, which will enable liberal management under the same conditions as private corporations. The quality of the services provided by Japan National Railways and Nippon Telegraph and Telephone Public Corporation markedly improved after privatization. The government will take measures so that the employees will be more motivated and local postal offices, including those in under populated areas, may take on administrative tasks of cities and towns or handle private sector products, making postal offices more convenient. The government will also give consideration to contributing to society and the regions, such as reducing postage charges for persons with disability.

As long as privatization of the postal services are to be achieved, each function of Japan Post- over-the-counter services, postal services, postal savings and postal life insurance- must be independently managed and the profits and losses of each business sector should be made clear. Four separate companies by each function will be established under one holding company. As for the postal savings company and the postal insurance company, they will become private-owned private-run companies by selling their stocks, so that they will not be influenced by the business conditions of the other separate companies. During the transitional period, business will be expanded gradually under a monitoring organization comprised of experts so as not to oppress the businesses of the other private corporations. The government will continue to provide guarantees for the existing postal savings and postal life insurance policies by separating the account from new ones. Assets will be managed appropriately, while taking into account the impact on the government bond market.

I will devote all my efforts to realize the privatization of the postal services under the belief that this will open a new door for Japan.

The four highway-related public corporations will be privatized this October after separating the Japan Highway Public Corporation by region. Each company will compete with one another and provide services that best meet the needs of the users and all debt will be paid back within 45 years. As for the toll fee of the national expressways, it has been decreasing gradually since last November with the discount system utilizing electronic toll collection (ETC). The government will realize a decrease of over 10 percent discount on average by April of this year as scheduled.

We must transfer more authority and funding to local governments so that the localities can realize unique measures rich in local wisdom and ingenuity, and engage in efforts initiated by the residents themselves for the promotion of their region. Therefore, I have decided to simultaneously advance the reforms of the three issues: reduction of state subsidy, transfer of tax sources from the central to the local governments and review of local allocation tax together with rationalization of local expenditure, and thus instructed the formulation of the policy of the three-part reform package. The local governments, the main bodies of decentralization, have compiled the details of the subsidy reform. Based on discussions with local governments, the central government has compiled a reform plan while taking seriously into account the proposals by the local governments.

In addition to the one trillion yen of this fiscal year, the government will reform subsidies amounting to about three trillion over a two-year period from next fiscal year and will aim to transfer tax sources of approximately three trillion yen, including the amount transferred in fiscal year 2004. In fiscal year 2005, the government will abolish or reduce the provision of subsidies by about 1.7 trillion yen and transfer tax sources of about 1.1 trillion yen. At the same time, the government has secured allocation tax necessary for stable financing of local governments. Under the policy of maintaining responsibility by central government, the government will draw up a conclusion concerning the measure to utilize the proposal presented by the local governments on the modality of compulsory education and it's financing by the end of this year.

While continuing the promotion of mergers of municipalities, the government will provide assistance so that Hokkaido will become a model case towards the implementation of the Do-Shu local administration system.

As for incorporated administrative agencies, the government has decided to reorganize the 32 agencies into 22 and convert roughly 8,300 executives and regular employees into non-civil servants in compliance with the "Policy for Administrative Reform to be Advanced" adopted at the end of last year. The government will aim to reduce the number of government personnel by over 10 percent within five years starting next fiscal year and will place priority on allocation of personnel to the area concerning security. The government will advance reform of the civil service system by experimenting with competence and performance based personnel evaluation and providing appropriate after-retirement job hunting control.

The government has implemented drastic reviews, such as the abolition of direct financing by the Government Housing Loan Corporation that competes with the private sector and withdrawal of the Urban Renaissance Agency from new town projects. As a result, the government has cut the size of fiscal investments and loans, which was 40 trillion yen at its height, to less than half the amount, 17 trillion yen, in the plan for the next fiscal year.

Market testing is conducted in the interest of improving the efficiency of the administration and the quality of public services as well as to vitalize the private corporations that will provide alternative services to the public sector by realizing competition between the private and public sector on the same terms. Market testing will start in fiscal year 2005 in the areas of assistance provided by public employment centers for the re-employment of middle- and old-aged, requests for payment from those who have not paid their pension premium and provision of over the phone pension consultation service, both of which are now conducted by the Social Insurance Agency. The government will advance consideration towards its full-fledged introduction.

(Economic Revitalization)

Under a policy of "without reform there will be no growth," I have aimed to overcome deflation and achieve economic revitalization, implementing financial, taxation, regulatory and expenditure reforms. The total outstanding non-performing loans held by the major banks has fallen by 15 trillion yen over the last two and a half years and we have been able to reduce the non-performing loan ratio to the 4% range, towards the realization of the target. Now that we have reached the stage of clearing the negative equity created with the burst of the bubble, we must further accelerate efforts in structural reform.

The government will introduce the "pay-off" scheme as scheduled from April this year. Promoting sound competition and ensuring protection of users, the government will aim to achieve a "nation founded on financial services," in which people can find and use a variety of financial products and services conveniently.

The Japanese economy has recovered without relying on government fiscal expenditure such as public investment, but instead the recovery has been led by the private sector, through improvements in corporate profitability and increases in plant and equipment investment and personal consumption among others. At the same time, economic conditions remain different depending on the region. Together with the Bank of Japan, the government will aim to overcome deflation and nurture the "buds of reform" that have been seen into a "large tree", ensuring that the benefits should be spread widely to the regions and to small and medium enterprises.

The government will promote the reform of fiscal structure from both aspects of income and expenditure, in order for the government to finance its policy expenditures through tax revenues of that fiscal year without relying on new and additional loans, by the early 2010s. In the budget for next fiscal year, the government has effectively managed to contain general expenditure at below the level of the previous fiscal year, for the first time in three years, and the new issuance of government bonds has reduced for the first time in four years. The only areas that have received budget increases are social security and science and technology promotion. Budget allocation has been in a prioritized manner with defense expenditure going down for the third consecutive year and public projects expenditure down for the fourth consecutive year.

With regard to fixed-rate tax reductions that were introduced in 1999 as part of government's economy-boosting policy, the government will halve the reduction rate for income tax and individual resident's tax from January and June next year, respectively, this decision being made based on the economic situation. In combination with the three-part reform package and review of the social security system, the government will promote efforts towards the realization of drastic taxation reform.

The government will make every effort to obtain Diet approval for a bill, which is now being assessed, to make amendments to the Anti-Monopoly Law.

(Revitalization of Attractive Cities and Regions)

Japan's large cities such as Tokyo and Osaka are currently in a process of reinventing themselves. Through deregulation and financial support, the private sector has launched various projects in an attempt to comprehensively promote urban development in harmony with work, lifestyle and cultural functions.

Nationwide the number of plans for regional revitalization has now reached a total of 250. For regional revitalization public projects that are administrated by multiple government ministries and agencies, such as development of sewerage systems and septic tanks, the government will create a system whereby subsidies to the local government are distributed through a unified body. 475 special zones for structural reform have been born in the past two years. Among these, the government will extend the scope of 26 exceptional measures for deregulation to include every region nationwide.

Over the last year, the number of foreign visitors to Japan increased by 900,000 and for the first time ever surpassed 6 million visitors. Tourism is linked to the revival of regions and towns. The government will continue with its endeavor to reach the goal of achieving a figure of 10 million foreign visitors to Japan each year by 2010 by further strengthening the Visit Japan Campaign and expanding sister city exchanges. The government has implemented measures to provide a visitor-friendly environment for foreigners, such as exempting visa for students from the Republic of Korea (ROK) and China who visit Japan on school trips, and the numbering of subway lines and stations. The government will support the creation of areas for tourism that draw upon the unique characteristics of each region, such as beautiful nature and scenery or local industry.

Investment from abroad is not a threat to Japan, but rather leads to increases in employment opportunities by giving new stimulation to technology and management. As a result of the establishment of a general help desk two years ago in May, we have succeeded in attracting a total of approximately 140 companies to Japan to date. The government is setting a goal of doubling the cumulative amount of investment in five years by the end of next year.

Japanese agricultural products such as pears and apples are selling well in overseas markets as high-quality products. The government's agricultural policy will be transferred onto an "offensive" footing by aiming to increase exports of agricultural products, placing emphasis on support to motivated and capable agricultural management and promoting the introduction of private corporations into agricultural management.

The government will support small and medium enterprises that actively take on the challenge to develop new technologies and seek new sales channels, in cooperation with companies in other industries.

(Improving and Harnessing "Human Resources")

Children are a treasure in the community and likewise a treasure for the nation. It is incumbent upon us to nurture people with the toughness and richness of mind to define the new era throughout society, in schools, at home, and in the community.

The government will actively engage in the revision of the Fundamental Law of Education, based on nationwide discussions.

Taking most seriously a declining trend in academic ability in Japan, the government will endeavor to improve academic prowess through such measures as comprehensively revising the Course of Study.

Healthy eating is essential to nurture richness of mind and soundness of body. The government will develop "food education" as a national campaign to make adults and children alike aware of the importance of healthy eating.

As a means of strengthening young people's motivation to work and enhancing their own capabilities, the government will enhance vocational education in schools together with industrial circles and the community, and promote employment policies including the implementation of training camp for living pattern as well as work experience.

Universities are a "center of knowledge creation and knowledge inheritance." The government will endeavor to improve the quality of universities by prioritizing support for world-class research and introducing a third-party evaluation system for university management. The government will establish a corporate body for the creation of a Graduate School for Science and Technology in Okinawa Prefecture, where world-class researchers will gather to engage in education and research at the highest level.

This year marks the target year for the realization of our goal to become the "world's most advanced IT nation." The number of Internet users in Japan has now reached 80 million people, and almost all of some 13,000 applications and notifications to government can now be made from a home or office computer. In response to the accelerating pace of the IT age, the government will enhance measures for information security.

Japanese animation has caught the imagination and dreams of children around the world. The government will endeavor to promote a nation that utilizes our wealth of culture and arts by promoting businesses that capitalize on contents such as films and animation and strengthening Japan's appealing brand message in areas such as fashion and food.

With the aim of realizing a "nation founded on intellectual property" the government will tighten measures against counterfeit and pirated copies, which is increasingly becoming a serious issue overseas.

(Promotion of Science and Technology and Response to Global Environmental Issues)

It is our responsibility to leave a beautiful earth to the next generation. It is possible to pursue environmental protection and economic development in tandem and the key to achieving this is science and technology.

The government will aim to realize Japan as a "nation built on scientific and technological creativity," strategically promoting research and development that will contribute to new industry and job creation, improve the quality of the health and living standards of the people of Japan, and contribute to national security and disaster prevention. The government will prioritize support for research and development into key technologies, such as technology using human genetic information for medical applications. The number of venture firms initiated by universities has already reached over 900, bringing about achievements such as the world's first successful complete farming of tuna. The government will make further efforts to enhance cooperation between industry and academia.

From March 25 to September 25, the 2005 World Exposition (EXPO 2005) will be held in Aichi Prefecture as the first World Exposition in the 21st century, and will demonstrate a path to the future in which humanity and nature can coexist. At the government-sponsored pavilions, in addition to realizing energy conserving ventilation and air-conditioning using a "barred lattice of bamboo" and "water sprinkling," all power will be provided from clean energies, such as a fuel cell generator that uses kitchen waste. A restaurant that uses decomposable tableware made from plants that can be returned to the earth will also be providing meals at the pavilion.

The Kyoto Protocol to the United Nations Framework Convention on Climate Change will come into effect next month, aimed at preventing global warming. It will be no easy task for Japan to achieve its greenhouse gas reduction targets. We must swiftly formulate a new plan for target achievement and steadily implement with the cooperation of the public and private sectors. The government will endeavor to nurture and conserve forests, which absorb carbon dioxide. We will promote nuclear power generation, based on the overarching premise of ensuring its safety.

In the transportation sector, which has shown a startling increase in energy consumption, in addition to obliging business operators to engage in energy conservation, the government will support the development of logistics hubs along arterial roads and at ports, in order to achieve a transition to shared truck transportation and sea freight.

As I pledged at the time of my appointment as Prime Minister, the entire fleet of official vehicles will have been converted to low-emission vehicles (LEV) by this March. Similar measures are increasingly being undertaken in the private sector, such that one corporate group is advancing their plan to convert all of company-owned 14,000 vehicles to low-emission vehicles by fiscal year 2010.

Towards the realization of a "zero waste society", national and local governments will work as one to eliminate large-scale illegal disposal of waste within five years. At the G8 Sea Island Summit last year, I proposed that "we need to create a society that utilizes the three Rs: to reduce, reuse, and recycle waste." We have a leading technology manufacturer in Japan which, in addition to fully recycling factory effluent, is moving towards a zero-waste goal through thorough separation of waste materials and promotion of recycling. In Japan, every year 10 million home appliances, such as air conditioning units, are taken back for recycling, and the recycling rate for PET bottles is more than 60%, both of these figures being very high in comparison to countries in Europe and North America. Automobile recycling was newly launched from this month. In order to elicit specific actions towards the creation of a recycling-based society globally, Japan will host a ministerial-level international conference in April.

(Foreign Policy)

In the post-war period, Japan has become the world's second largest economic power. Never turning into a military power and always observing pacifism, Japan has played an active role in achieving world peace and prosperity by contributing financially such as through Official Development Assistance (ODA) and contributions to the United Nations (UN), and by personnel contributions such as participation in the UN peacekeeping operations (PKO).

At its sixtieth anniversary, the United Nations is expected to effectively address various international issues in the 21st century, but the framework of the Security Council remains unchanged since the end of World War II. Japan's record of international contribution to date, I believe, warrants a permanent seat of the Security Council. The Government will make further diplomatic efforts to achieve the goal by seizing the growing momentum for the United Nations reform.

The efforts of the Iraqi people to construct a peaceful and democratic nation by themselves will contribute to the peace and stability of not only Japan but the entire world. Japan has provided humanitarian and reconstruction assistance by means of personnel contribution in tandem with financial assistance. Over the past year, approximately 600 Self Defense Forces personnel have worked on a rotating basis in Samawah. Paying much attention to the friendly exchanges with the Iraqi people, they have implemented medical technical assistance in hospitals, water supply activities, and repair of schools and roads. The dedicated activities of the Self Defense Forces have earned the gratitude and high praise of many Iraqi people. Financial assistance has amounted to 1.4 billion dollars for the rehabilitation of power stations and hospitals, for port development and the provision of school supplies, among others, and Japan's assistance has reached to over two million people in water and sanitation and to six million students in education.

As Iraq's efforts towards reconstruction and the establishment of a democratic state gain pace, the elections for the National Assembly are scheduled to be held in Iraq on 30th of this month. The Government decided last month to extend the dispatch of the Self Defense Forces for another year. While taking appropriate measures in response to changes in the situation on site, the Government will make every effort to ensure the safety of the Self Defense Forces personnel. The Government will continue its activities that will be highly appreciated long into the future as Japan provided assistance necessary for its nation-building when Iraq was most in need.

In Afghanistan, the administration of President Hamid Karzai was established after the first democratic elections. In the Palestinian territories, after the death of Chairman Yasser Arafat, efforts are being promoted towards peace and prosperity, including the implementation of the election for the President (Ra'ees) of the Palestinian Interim Self-Government Authority. The Government will continue to support stability and development in the Middle East.

The relationship with the United States is the linchpin of Japan's foreign policy and the Japan-US alliance is the key to the security of Japan and the peace and stability of the world. Continuing our close partnership and dialogue in a wide range of areas including political and economic fields, the Government will work to strengthen the Japan-US bilateral relationship. With regard to US military realignment, the Government will advance consultations with the United States from a perspective of maintaining the deterrence provided by the presence of the US Forces, and reducing excessive burden on local communities including Okinawa. The Government will continue to make efforts for the early implementation of the Special Action Committee on Okinawa (SACO) Final Report, including the relocation and return of Futenma Air Station.

The issue of abduction by North Korea is a grave issue that concern the lives and safety of the Japanese citizens. Although the return to Japan of five abductees and their eight family members has been realized, the results of the reinvestigation concerning those whose whereabouts are still unknown that North Korea recently submitted were truly regrettable. The Government sent a severe protest to North Korea to provide a full account as soon as possible and return the surviving abdctees to Japan. The Government will continue to negotiate tenaciously in cooperation with the United States, the Republic of Korea, China and Russia, based on the policy of "dialogue and pressure", to resolve comprehensively the abduction, nuclear and missile issues to normalize the relations between Japan and North Korea.

This year marks the 150th anniversary of the establishment of diplomatic relations between Japan and Russia, and a visit to Japan by President Vladimir Putin is scheduled. The Government will promote exchanges in a wide range of areas and deepen relationship of trust between Japan and Russia. Our basic policy of concluding a peace treaty through the solution of the issue of where the four islands belong, remains unchanged.

The bilateral relations between Japan and China continue to deepen, as shown in China being one of Japan's largest trading partner along with the United States. In the recent Japan-China summit meeting, we shared our recognition that our bilateral relations are of the utmost importance not only for the two countries, but for the international community as a whole, and agreed to build future-oriented Japan-China relations. We will enhance the cooperation in a broad range of areas from a broader perspective, even if views on individual areas may differ.

I deepened the friendly relations with President Roh Moo Hyun of the Republic of Korea through the reciprocal visits last year. In the Japan-Korea Friendship Year 2005, which marks the 40th anniversary of the normalization of the relations, we will further expand exchanges in all areas.

Beginning with the agreement on the main points with the Philippines on the Economic Partnership Agreement, the Government will expeditiously promote negotiations towards the conclusion of such agreements with other Asian countries, including the Republic of Korea, Thailand and Malaysia. The Government will play an active role in the creation of an East Asian community (EAc), an open community that shares economic prosperity while embracing diversity.

By promoting liberalization of world trade, we must create a trade system that will benefit all the countries including developing countries. The Government will further advance towards a final agreement of the new round of World Trade Organization (WTO).

This year is designated as the "EU-Japan Year of People-to-People Exchanges" and the Government will endeavor to strengthen people's mutual understanding through the implementation of events such as those designed to deepen exchanges through music and culture with the people of the European Union expanded to 25 countries.

The Government will strategically utilize Official Development Assistance (ODA) to address the challenges faced by the international community, such as development issues and overcoming poverty in developing countries, including those in Africa.

As a maritime nation, the Government will make efforts to preserve marine interests, including investigations to demarcate continental shelves and the building of vessels designed to survey seabed resources in waters surrounding Japan.

By firmly recognizing the importance of the Japan-US alliance and international cooperation, the Government will make its utmost efforts in tackling diplomatic issues in a rapidly changing situation, not only in the areas of politics and economy, but also utilizing Japan's cultural assets.


Politics is only made possible with the support of the people, and without the trust of the people in politics, we could hardly hope to achieve reform. Each and every politician must follow a straight and narrow path, and it is incumbent upon us to develop legislation to ensure fairness in political activities and transparency in political funding.

In the sixtieth year since the end of the war, debate is continuing within the ruling and opposition parties concerning amendment to the Constitution. I believe that it is now time to actively engage in discussion on the modalities of the Constitution in a new era.

The government has recently established an advisory council on the issue of the Imperial Household Law. It will consider the modalities for a system that will maintain the Imperial succession in a stable manner.

It is three years and nine months since the birth of the Koizumi Cabinet. As a result of the structural reforms, signs of self-confidence are beginning to be seen in Japanese society, with a spirit of challenge in a new era and a sense of "if you do it, it will happen." Since my appointment as Prime Minister, I have worked night and day placing myself under great tension and pressure to fully acquit my duties as Prime Minister of Japan. When facing difficult issues, I have taken the words of the Chinese philosopher Mencius to heart, who said, "when about to place a great responsibility on a person, heaven may test one with hardship and frustrated efforts in order to toughen one's nature and shore up deficiencies." It is with these words in mind that I am endeavoring towards the realization of reform.

At the beginning of the Showa Period, Prime Minister Osachi Hamaguchi, who was steadfast with a series of stringent economic and fiscal policies and had also concluded the London Naval Treaty, faced the difficult situation of strong resistance from and intervention by the military, bureaucracy and economic circles. However he confronted this situation with the unwavering resolve and determination that if he could fulfill his responsibility, then true worth was to be found in sacrificing oneself for one's country.

Today as we face a number of issues at home and abroad, including humanitarian and reconstruction assistance to Iraq, the issue of North Korea, and the privatization of the postal services, if we do not ceaselessly and resolvedly push forward with reform, the foundations of prosperity that were created by our forebears will be shaken and the door will be closed to the possibility of development in the future. I believe that my "true worth" will be found in my resolve to ceaselessly push forward with reforms "fearlessly, unflinchingly and unquestioningly."

The engine for these reforms is each and everyone of the people of Japan and the success or failure of the reforms rests with the firm resolve and energy of the people. Believing in Japan's future, let us face the adversity with courage and hope.

In this, from my heart I ask for the cooperation of the people of Japan and the distinguished members of the Diet.