Koizumi's policy of visiting Yasukuni shrine annually "hasn't helped" Japan's chances, Annan said at a news conference in Tokyo. "I don't think this is only limited to the Council issue. It has raised some tensions in the region to which I think we need to make some gestures to put behind us."

U.N. Secretary General Kofi Annan (L) shakes hands with Japanese Prime Minister Junichiro Koizumi as he is presented with a framed picture of a Japanese commemorative stamp marking the 50th years of Japan's association to the United Nations during their meeting at the prime minister's official residence in Tokyo, May 17, 2006. Annan flew from Seoul on Tuesday as part of his Asia tour. [Reuters]

The visits to the shrine have prompted outrage from China and South Korea, who view Yasukuni as a symbol of Japan's military occupation of Asia 60 years ago. There are 14 Class A war criminals enshrined among the more than 2 million dead commemorated.

Japan, Germany, India and Brazil are seeking permanent seats on the UN's most powerful panel. The 15-member Security Council, including the five permanent members -- the US, China, Russia, the UK and France -- was established at the end of World War II and has the power to order economic sanctions or military action against nations deemed aggressors.

'Stupid' Strategy

Koizumi's UN strategy "is really stupid," said Koichi Nakano, professor of political science at Sophia University in Tokyo. The Prime Minister "goes to Yasukuni while saying we also want a seat on the Security Council. That's not going to work."

Last week, Japan's biggest executive lobby group urged Koizumi to stop visiting Yasukuni to improve relations with China.

China and South Korea canceled planned summits after the most recent of Koizumi's five visits as prime minister on October 17. Koizumi, who became prime minister in 2001, says the purpose of the visits is to mourn the country's war dead and to pledge Japan will never again wage a war of aggression.

The arguments over Japan's wartime past have impeded progress in other talks between Japan and China, such as resolving a dispute over gas drilling rights in the seas between the countries. Japan needs to resolve the issue before relations can be restored to normal, China's government has said.

South Korea and Japan are also arguing over the ownership of islands that lie between the two countries that have been controlled by South Korea for the past five decades.

New Textbooks

Japan's neighbors also objected to the education ministry's approval of new school textbooks last April that they say gloss over Japanese wartime atrocities. The textbooks sparked three weekends of violent protests in Beijing and other Chinese cities with protesters attacking Japanese stores, restaurants and other businesses. Japan and China are Asia's biggest trading partners.

"The countries in the region know each other well and they have been observing each other and they share a certain history," said Annan. "They are all aware of what irritates, worries, or provokes the other side and they will have to assess the situation for themselves and determine what changes one has to make to smooth relationships."