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Whenever the government or Diet discusses the security situation in Iraq, it is usually related to the safety of the Ground Self-Defense Force troops deployed to the southern Iraqi city of Samawah.

But unstable security elsewhere in Iraq is also troubling Foreign Ministry officials who handle the huge budget for grant aid projects and official development assistance.

During an international donors’ conference in Madrid in October, Japan vowed to provide $1.5 billion in grant aid by the end of 2004 and another $3.5 billion by the end of 2007.

Of the $1.5 billion, $500 million will be given to trust funds managed by the World Bank and the United Nations, and $76 million will go to other international organizations.

The government in addition decided to provide $27 million to nongovernmental organizations working in Iraq and offered Iraq $29 million to purchase police vehicles.

The government is also exploring the possibility of various specific aid projects in Iraq, officials say.

“Given that many other donors are not taking action (to look for potential projects in Iraq), Japan’s work should stand out,” said a ministry official who asked not to be named.

But security concerns have prevented Japanese officials from traveling freely in Iraq to inspect the sites of potential aid projects, especially since the assassination of two Japanese diplomats traveling in northern Iraq in late November.

Feasibility studies for aid projects are therefore not being carried out as stringently as under normal circumstances, the official said.

Japan plans to provide police cars and water supply vehicles to the Iraqi government in the form of direct aid. Japanese officials or technical experts will not need to visit Iraq for inspections before or after the provision of such aid, a senior ministry official said.

Motohiro Ono, a senior fellow at the Middle East Research Institute of Japan, said Tokyo should map out a long-term design for its aid projects to ensure that once they are completed, the Iraqi people will be able to stand on their own.

He said Japan should put more emphasis on providing Iraqis with technical training and education instead of just looking for projects that can be implemented quickly.

Aid projects, one of Japan’s key diplomatic tools, provide new business opportunities for Japanese firms, especially when a large amount of money is earmarked for one country.

Officials at the Foreign Ministry and the Ministry of Economy, Trade and Industry asked a gathering of more than 100 Japanese firms in October to come up with potential business projects that could be undertaken in Iraq.

The firms responded with project ideas worth several trillion yen, Foreign Ministry sources said.

The security situation is preventing employees of Japanese firms from entering Iraq. Instead, they are sending staff to neighboring countries, including Jordan and Kuwait, to gather information from local Japanese embassy staff and Iraqi bureaucrats.

“They must be eager to build a foothold in Iraq,” said a senior Foreign Ministry official, also declining to be named.

The ministry was surprised by the low contract price on the successful bids by trading firms Sumitomo Corp. and Mitsubishi Corp. for the government’s grant aid project to provide 620 police cars to Iraq.

The two companies apparently hoped to earn publicity, and the government was able to purchase 1,150 cars, nearly twice the number it had expected, ministry officials say.

The government will begin mapping out bigger ODA projects in the coming months for yen loans to Iraq.

Japan cannot provide ODA until the formation of a legitimate Iraqi government. The Foreign Ministry said the formation of a transitional government after a general election by the end of January will fulfill this need.

In December, Prime Minister Junichiro Koizumi told James Baker, the U.S. government’s special envoy, that Japan is ready to waive a “vast majority” of its Iraqi debt.

Although it is usually difficult to provide fresh loans to a country that has had its debts written off, officials say Japan must still provide what it pledged at the Madrid conference.

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