• Kyodo

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Japan is expected to reject an Iranian request for a yen loan to fund a 770-km railroad project in an apparent bid to avoid antagonizing the United States, diplomatic sources said Tuesday.

Japan and Iran have been working to finalize the requested loan in time for a first-ever visit to Japan by Iranian President Seyed Muhammad Khatami, slated for Oct. 31 to Nov. 3.

In Japan, however, proponents of the loan appear to have failed to muster the consent of the Foreign Ministry, which remains anxious about how Washington would respond, the sources said.

Washington has accused Tehran of backing terrorists and proceeding with a program to develop weapons of mass destruction.

The Iranian project involves building a railway linking the eastern city of Meshed, near the Russian border, and the strategic point of Bafq, in central Iran.

Iran says it asked Japan for the loan so the two countries can publicize an agreement as a sign of deepening ties before Khatami’s visit.

Previously, Tehran described Tokyo’s consent to the loan request as a “prerequisite” for the visit, which would be the first by an Iranian leader in four decades.

In August, Japan sent a team of 10 experts to Iran to gather information regarding the loan.

Earlier this month, Tokyo and Tehran signed an accord calling on Japan to loan 7.5 billion yen to help Iran build a dam on the Karun River in southwestern Iran, reviving intergovernment loans that had been frozen since 1993.

In that year, Japan loaned 38.6 billion yen to Iran as the first installment in a planned series of loans for the dam.

But at present Japan has no intention of providing additional installments, they said.

In view of the stance, some Japanese businesses have expressed a desire to see the government extend loans to help implement the railway project.

“It would be a strong stimulus to expand relations with oil-rich Iran, should Japan express willingness to help implement the railway project,” said an executive at a Japanese company.

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