Japan to offer $5 billion over four years to Iraq

by Sayuri Daimon

The government is considering a plan to provide around $5 billion, or about 550 billion yen, to help reconstruct Iraq in the four years beginning in fiscal 2004, government sources said Saturday.

The amount accounts for about 10 percent of the total cost of reconstruction, set at $55 billion for the period between 2004 an 2007, according to the World Bank.

The government’s plan is likely to be conveyed to the U.S. when Prime Minister Junichiro Koizumi meets U.S. President George W. Bush in Tokyo on Oct. 17.

As well as financial support, Japan is also considering giving patrol cars to the Iraqi police and power generators to the U.S. led-Coalition Provisional Authority, the sources said.

According to the sources, a senior U.S. government official has asked Japan to send 100 patrol vehicles to Iraq, saying such a step would encourage U.S. forces in Iraq.

Of the $5 billion, Japan plans to pledge between $1 billion and $2 billion for 2004 and, starting in 2005, the government intends to provide yen loans as Iraq will be able to secure revenues from oil by that time, the sources said.

According to the World Bank estimate, Iraq will be able to earn about $1 billion in 2004 from oil revenues that will be spent on rebuilding the country.

But in the short term, the government will provide other types of support as this will be easy to achieve in the next few months, they said.

An international donors conference for Iraq is scheduled to begin on Oct. 23 in Madrid.

Despite the government’s plan, it currently faces a problem of securing the necessary funds as Japan’s soaring bond issuance problem has been strongly criticized by many fiscal experts at home.