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Last Updated: Wednesday, 15 October, 2003, 08:13 GMT 09:13 UK
Japan offers $1.5bn to Iraq
Water spews from a newly repaired pumping station in Iraq
Water and power are two key reconstruction priorities
Japan is giving $1.5bn (895m) to help pay for the rebuilding of Iraq.

The "near-term aid", as the Japanese government described it, will help with power, education, water and jobs.

The Japanese media has speculated that the grants are just the first instalment of what could be as much as $5bn over four years.

The commitment comes shortly before the arrival of US President George W Bush in Japan to discuss sending Japanese non-combat troops to Iraq.

"(Prime Minister Junichiro Koizumi) assured me he would work hard to develop a good package," Mr Bush told Fuji TV in an interview.

"It sounds like he has done so, and I'm grateful and thankful."

But the question of sending soldiers overseas, even in non-combat roles, is a sensitive one in Japan.

World Bank/UN estimate - $36bn: Covers administration, health, education, employment, infrastructure, water agriculture
US estimate - $19bn: Covers security, oil industry, foreign affairs, culture and religious affairs, environment
Total needs $55bn
The country relaxed its post-war ban on members of its Self-Defence Forces serving outside Japanese territory only in the early 1990s - and then only for United Nations-backed peacekeeping operations.

With an election due on 9 November, and many Japanese still opposed to deploying troops overseas, Prime Minister Junichiro Koizumi is having to tread warily on the issue.

In this he shares the concerns of South Korea, from whom the US has requested 5,000 combat troops but has receieved only 700 non-combatants.

Top of the list

Whether or not the troops are forthcoming, the Japanese contribution is the biggest package of financial aid to be offered by any country to date - even it it is still dwarfed by the $11bn Japan contributed to the cost of the 1991 Gulf War.

The money will come from government reserves, and will not require a fresh issue of bonds to finance, according to Chief Cabinet Secretary Yasuo Fukuda.

US administration asking Congress for $20.3bn emergency non-military spending
Other commitments:
Japan $1.5bn, UK $910m,
EU $233m, Canada $151m, Denmark $50m
Other positions:
Italy and Spain will donate but have not said how much;
Sweden and the Netherlands will donate only their share of EU total;
France and Germany's positions are unclear
"Stability in the region is directly linked to the interests of our country, which relies on the Middle East for almost 90% of its oil imports," Mr Fukuda said.

Earlier this week the UK raised its own contribution from 200m to 500m.

But the European Union came up with a pledge of only 200m euros ($233m; 139m).

The European Commission has said individual states will be able to make additional contributions at the donors' conference in Madrid scheduled to take place on 23-24 October.

Another key potential donor, Canada, has ruled out promising any new aid at the conference.

Last month, the Canadian Government said it would not consider offering extra money until it had worked out how exactly to spend the 200m Canadian dollars ($151m) in humanitarian aid for Iraq it unveiled in May.

The Bush administration has asked Congress for $20.3bn in emergency non-military spending for Iraq.

Vietnam, only three years ago a recipient of humanitarian aid, has shipped 1,467 tonnes of rice worth $500,000 to Iraq, due to be offloaded at the southern Iraq port of Umm Qasr on Wednesday or Thursday.

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