Japan is considering lifting economic sanctions on India, imposed in 1998 to protest nuclear tests by New Delhi, before the end of the year in order to get bilateral relations back on a normal footing, government sources said Saturday.

The move, which marks a significant shift in Japan’s officially stated policy of refusing to lift economic sanctions until India signs an international nuclear-test ban treaty, comes ahead of Indian Prime Minister Atal Bihari Vajpayee’s planned first official visit to Tokyo in early December.

Vajpayee’s trip, which was originally set for February, was postponed after a major earthquake hit western India, killing tens of thousand of people.

The timing of the trip by the Indian leader will be significant for bilateral ties because next year will mark the 50th anniversary of the two countries’ establishment of diplomatic ties in 1952.

As early as this month, the government will begin to explain the reversal in its policy to the ruling Liberal Democratic Party so that it can receive the party’s approval and make a final decision on the normalization of official economic relations with India before Vajpayee’s arrival, the source said.

The sources acknowledged, however, that it remains unclear whether the government will be able to overcome the expected strong objections of some LDP lawmakers, who are adamant that sanctions should be kept in place, at least until India signs the 1996 Comprehensive (nuclear) Test Ban Treaty, or CTBT.

Customarily, the government only finalizes important policy decisions after getting the approval of the LDP.

The reversal of Japan’s policy toward India apparently reflects a strong desire to forge closer relations with the world’s most-populous democracy. India’s 1 billion population is the world’s second largest; communist-ruled China has nearly 1.3 billion citizens.

India’s geographical location is strategically important because it shares a border with China, a rapidly ascending military and economic power in the Asia-Pacific region. The economic might of India has also grown in recent years, in tandem with rapid growth in its information-technology industry, supported by an abundant pool of software engineers.

Many other industrialized countries have already lifted or are planning to lift their economic sanctions on India. The U.S. administration of President George W. Bush is also expected to announce the lifting of U.S. sanctions against India as early as this month.

India conducted nuclear tests in May 1998, the first such tests by the South Asian country in nearly 25 years.

Pakistan, India’s neighbor and longtime archrival, responded by detonating its own nuclear devices.

The tit-for-tat nuclear tests caused deep international concerns about the possible escalation of a nuclear arms race — and even a possible nuclear war — in the volatile South Asian region.

Japan, the only nation to have been the target of atomic bombs, quickly condemned the two countries and froze fresh official development assistance, including huge amounts of yen loans. Relatively small amounts of humanitarian aid were exempt from the ban.

Before the sanctions were imposed, India was among the five largest recipients of Japanese ODA, receiving well over 100 billion yen a year in low-interest yen loans alone. Japan was the largest single aid donor to both India and Pakistan.

Japan has retained the status as the world’s biggest single aid donor for the past decade. Its ODA consists of yen loans, grants-in-aid and technical cooperation.

The Japanese government is not expected to lift the economic sanctions against Pakistan, however, given the fact that President Gen. Perez Musharraf rose to power in a military coup in October 1999. Although Musharraf has promised to return Pakistan to civilian rule by October next year, few believe that he will restore full democracy.

While refusing to fully normalize official economic relations with India, Japan has gradually eased the sanctions in an apparent bid to keep overall bilateral ties from deteriorating further.

In August last year, then Prime Minister Yoshiro Mori visited New Delhi and promised Vajpayee that 19 billion yen in yen loans would be disbursed for a thermal power plant in the southern province of Simhadri and a subway project in the Indian capital.

The pledge came after Vajpayee promised to adhere to a moratorium on nuclear tests until the CTBT takes effect. The two projects had already begun with Japanese aid before India conducted its nuclear tests.

The Japanese government explained at the time that the extension of new loans did not represent any change in its basic policy toward India because the government’s position after the 1998 nuclear tests has been not to finance any new projects while considering — on a case-by-case basis — additional yen loans for projects that had already been started with Japanese aid.

India and Pakistan have often said they will sign the CTBT sometime in the future, but they have not yet done so. For the CTBT to be put in place, 44 declared and potential nuclear powers must sign and ratify the treaty. So far, only 31 nations have done so.

North Korea has not expressed any intention of even signing the CTBT, while China has signed the treaty, but has yet to ratify it.

Hopes that the CTBT would be in place at an early date have been dashed by the Bush administration’s declaration earlier this year that it will not seek the ratification of the treaty by the U.S. Congress, where objections to the agreement remain strong.

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