U.S. President George W. Bush on Friday thanked Prime Minister Junichiro Koizumi for Japan’s $1.5 billion pledge to help reconstruct Iraq.

In a meeting at the State Guesthouse in Tokyo, Koizumi took the opportunity to urge Bush to use the United Nations as a means to take into account other countries’ concerns over Iraq.

Koizumi’s comment was seen as an indirect reference against U.S. unilateralism.

However, Koizumi was met with a stern rebuff.

The “United Nations is old,” Bush told him, adding that the world body needs to reform its structure.

During their discussions, the contents of which were relayed by a Japanese official, the two leaders also discussed the foreign-exchange market, which has become a hot-button issue for each nation’s manufacturers.

Bush said the U.S. favors a strong dollar but that the market should ultimately decide its value against the yen.

The dollar has been falling precipitously against the yen this year, and Japan has spent more than 13 trillion yen attempting to arrest the skein.

A weak yen boosts the profits of Japan’s exporters and makes it difficult for U.S. manufacturers to compete.

There had been widespread speculation as to whether Bush would push Japan to stop meddling in the exchange market, but his comment appeared to soft-pedal the issue.

The two leaders seemed to have focused mostly on Iraq during their summit.

Japan announced its pledge, which will take the form of grants and cover 2004, on Wednesday. It was seen as an effort to mollify Washington, which has reportedly called on Japan to provide “billions of dollars” and send Self-Defense Forces troops to Iraq as early as possible.

But Koizumi did not give specifics on the financial support, nor did he fill in details on the possible dispatch of the SDF. This was apparently to soften the image that Tokyo is making the contribution due to pressure from Washington.

“Japan will do whatever is necessary for its national interest and to stabilize the region,” Koizumi told Bush. “That will lead to a stronger alliance.”

Bush expressed gratitude toward Japan’s support on the Iraq issue, saying the content and the timing was significant to encourage other nations to offer their share of support.

Bush’s visit comes after the U.N. Security Council unanimously adopted a U.S.-backed resolution Thursday aimed at attracting more troops and money to Iraq.

Bush and his wife, Laura, arrived at Haneda Airport in the afternoon for a one-night stopover in Tokyo. They are scheduled to leave Saturday morning for the Philippines.

The two leaders also emphasized the need to resolve Pyongyang’s nuclear standoff peacefully through six-way talks with North and South Korea, China and Russia.

“The U.S. cannot agree to a nonaggression pact, but we are willing to consider North Korea’s security concern,” Bush said.

Bush also expressed support for Japan over the abductions issue, while Koizumi thanked Bush for his understanding, saying that Japan will do its utmost to resolve the matter.

“Dialogue and pressure are both necessary but Japan and the U.S. should coordinate with each other to seek a peaceful resolution,” Koizumi said.

In addition, the two leaders brushed aside North Korea’s demand that Japan be excluded from the six-way talks, with Koizumi saying that is “out of the question” and Bush calling it “impossible.”

Bush and Koizumi also agreed on the need to continue talks on consolidating U.S. military bases in Okinawa and on missile defense.

On trade, Bush expressed worries over the growing U.S. trade deficit with with China, saying cheap Chinese imports are hurting the U.S. economy and keeping the unemployment rate high.

“Protectionist pressure is rising,” Bush was quoted as saying.

In fact, that pressure is rising in regards to the dollar-yen rate.

The dollar briefly touched a three-year low below 109 yen earlier this month. Many of Japan’s manufacturers made their fiscal 2003 earnings forecasts with an exchange rate of about 115 yen to the dollar in mind. They clearly favor a weaker yen.

Bush meanwhile will seek re-election in November 2004 and is under pressure from U.S. manufacturers, which want a weaker dollar.

Speculation that the United States might tell Japan to stop meddling in the market grew after Bush said earlier this week that “the market ought to decide the relative values of currencies based upon the fiscal policy of each government.”

According to the official, Koizumi told Bush that the government should take action against any fluctuations in the market.

Japanese financial authorities have repeatedly said they will intervene in the currency market when the exchange rate becomes “too volatile.”

This is Bush’s second visit to Japan as president. He last came to Tokyo in February 2002.

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