When Mohammad Ali-Hassan, the governor of Al-Muthanna Province in southern Iraq, visited Tokyo last week, he thanked Japan for the aid it has given to his province, where Ground Self-Defense Force troops have been deployed.
But Ali-Hassan did not forget to ask for more.
“The time has come to carry out bigger projects in the public service sector that will outlast Japan’s presence,” Ali-Hassan told a news conference Friday through an interpreter.
The remark apparently reflects Iraq’s impatience with the glacial implementation of large-scale, basic infrastructure projects such as roads and power plants.
Japanese officials say reconstruction efforts by Japan and other countries that have pledged aid are suffering under the security threat.
Foreigners engaged in reconstruction projects are targeted for attack by anti-U.S. forces, and Japanese businessmen — who normally serve as the catalyst for government aid projects — are advised not to enter Iraq.
Japan hopes the two-day donors’ meeting for the International Reconstruction Fund Facility for Iraq, which opens Wednesday in Tokyo, will add momentum to international efforts to fund Iraq’s reconstruction.
In October 2003, Japan pledged $5 billion to help rebuild Iraq, of which $1.5 billion will be disbursed in the form of grant aid by the end of this year and the remaining $3.5 billion to be offered in yen loans from 2005 to 2007.
Of the $1.5 billion earmarked for 2004, $1.3 billion has been disbursed. However, feasibility studies and other preliminary work for the yen-loan projects are lagging.
Japan’s aid has so far focused on smaller projects, such as supplying police patrol cars and water-supply trucks, or rebuilding war-damaged power plants and hospitals.
Akio Shirota, Japan’s ambassador in charge of reconstruction assistance to Iraq, admitted that the security situation has prevented Japan from speeding up implementation of big projects.
But Shirota defended Japan’s performance, saying Iraq first needs to map out a policy on how it wants to rebuild before Japan or any government sends officials to assess aid needs.
“The Iraqi government is expected to provide us with a rough report at the donors’ meeting,” he said.
But Iraq’s political system, which is still unstable after the handover of sovereignty in late June from the U.S.-led occupation authority, is also a big reason why Japan is hesitant to move forward on big infrastructure-related projects, another government official said.
“Iraqi bureaucrats and regional chiefs come to the Japanese Embassy in Amman one after another with uncoordinated proposals for various projects,” said the official, who asked not to be named.
Japan’s aid money could end up being wasted if Tokyo starts offering large-scale aid at this point, he said.
The U.S.-led coalition coordinated reconstruction projects before sovereignty was transferred to the current interim government in June, but now each Iraqi ministry has the power to set priorities over projects under its jurisdiction, according to Kotaro Kodama, chief of Middle East and African division at Japan External Trade Organization, or JETRO.
“Donor countries have to talk to officials at each ministry to find out details of the projects,” Kodama said.
There are several essential steps before Japan can disburse aid for a specific ODA project.
The recipient nation conducts a feasibility study of a potential aid project before formally requesting Japan’s assistance. Tokyo examines the plan and carries out further research if there are financial or technical problems.
Japan and the recipient nation exchange diplomatic notes after a Cabinet endorsement. The project is then tendered — usually an international public tender.
According to ministry sources, Japan has received about 400 ideas for yen-loan projects in Iraq from Iraqi bureaucrats — some of them working together with Japanese trading companies — but only around 50 are considered sufficiently feasible to survive Tokyo’s screening process.
When extending aid to countries under normal conditions, it takes about a year to carry out a feasibility study for each project and another few months for the tendering process before construction begins, they say.
But given the current situation in Iraq, Japan is not likely to launch the process for the yen-loan aid at the beginning of next year, one official said.
Japanese businesses, wary of the precarious security situation, do not send their people into Iraq. Instead, they send them to Amman or Dubai to gather information from Iraqi bureaucrats or hire Iraqis to assess potential ODA projects.
Osamu Mitsui, a senior researcher at the Japanese Institute of Middle Eastern Economies, says major trading companies Mitsubishi Corp, Sumitomo Corp. and Marubeni Corp., which have large amounts of outstanding credit to Iraq, are the top three striving to get a piece of the pie.
“Company workers in charge (of Iraq) are making frantic efforts to gather information,” Mitsui said. “But at the same time most are watching how things will go until local security becomes stable.”
Mitsui noted that January’s elections to choose a transitional government in Iraq is likely to be the turning point in whether security will improve or deteriorate.
“Yen-loan projects will not be carried out unless the security situation improves and Japanese officials can travel freely in the nation,” he said.
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