A. Southwest Asia

Southwest Asia is home to one-fifth of the world's population, many of whom live in poverty, as four countries in the region are classed as LDCs. In addition to its poverty and population problems, Southwest Asia is also plagued by low rates of primary school enrollment, inadequate healthcare, and infectious diseases. Along with Africa, it presents the international community with the greatest challenges regarding the achievement of the MDGs.

The escalation of military tension between India and Pakistan in 2001 continued into 2002, and the situation became particularly explosive in May and June. Southwest Asia has become the focus of major concern in the international community, in part because of the nuclear nonproliferation issue. In the wake of the September 11 terrorist attacks in the United States, moreover, there has also been considerable emphasis on the region's strategic importance in the "fight against terrorism."

With a view to strengthening relations with India as a global partner, Japan is reinforcing its support through ODA including by providing a yen loan for the Delhi Mass Rapid Transport System Project and technical assistance for the Integrated Pollution Abatement and River Basin Management Project for Ganga Basin. During her visit to India in early January 2003, Foreign Minister Kawaguchi announced Japan's offer of a loan package of ¥110 billion to the government of India. Future economic cooperation to India will center on four priority areas: health and medical care, agriculture and rural development, environmental consevation, and economic infrastructure. At the same time, Japan's Country Assistance Program for India is expected to be revised within the next two years to reflect changes in the environment concerning ODA to that country.

After lifting economic sanctions against India and Pakistan in October 2001, Japan announced it would provide $300 million in grant aid to support the Pakistani government's efforts to reduce poverty, including those in the areas of education and health, and which is now ongoing. In view of the seriousness of Pakistan's debt problems, Japan actively contributed to the discussions on debt rescheduling at the Paris Club, and agreement was reached on the rescheduling of debts totaling approximately ¥490 billion on exceptionally generous terms.

Since the February 2002 cease-fire agreement in Sri Lanka, the international community has been supporting the country's peace process and has begun providing reconstruction and development assistance. The Japanese government has appointed former UN Under Secretary General Yasushi Akashi as its representative on matters relating to peace building, rehabilitation, and reconstruction in Sri Lanka, and expressed its willingness to host a conference on reconstruction and development in Tokyo in June 2003. Through such initiatives, Japan is actively supporting the peace and reconstruction process with a view to consolidating peace in Sri Lanka. (See Section 3 [2] B for a description of the use of ODA in Sri Lanka from the perspective of the consolidation of peace.)

Japan's assistance to Bangladesh, Nepal, Bhutan, and the Maldives is mainly in the form of grant aid and technical cooperation considering their LDC status. In November 2002 Japan provided its first non-project grant aid to Nepal worth ¥1.3 billion.

B. Central Asia and the Caucasus

The Central Asia-Caucasus region surrounded by Russia, China, and the Middle East has great geopolitical importance and immense economic significance due to its energy resources, namely petroleum and natural gas. It also has historical and cultural links with Japan, and the region's importance to Japan was reflected in the "Eurasian diplomacy" concept proposed by then Prime Minister Ryutaro Hashimoto in July 1997, when he announced that Japan would adopt an active foreign policy stance toward the "Silk Road" region.

The countries of Central Asia and the Caucasus gained independence from the former Soviet Union in 1991. Since then they have been working toward democratization and the transition to market economies at various levels. Japan has supported these efforts by providing "soft" assistance, such as support in human resources development and providing know-how indispensible to the attainment of democracy and a market economy. It has also provided assistance for basic human needs, especially health and medical care. Furthermore, Japan hosted the consultative group meeting for Tajikistan in Tokyo in May 2001, emphasizing the importance of assistance to stabilize the region, which is plagued by conflict and activities of Islamic extremists. At this meeting, Japan announced a ¥2.5 billion aid package mainly to finance the international balance-of-payments gap once peace is achieved.

Moreover, since the September 11 terrorist attacks in the United States, the Central Asia-Caucasus region has become more important due to its proximity to Afghanistan. In October 2001 Japan provided approximately ¥240 million for refugee relief to Tajikistan as part of its support to Afghanistan's neighbors. In December it offered grant aid of up to ¥540 million to Uzbekistan and Tajikistan through the United Nations Children's Fund (UNICEF), and in 2002 it provided grant aid worth ¥1 billion each to Uzbekistan and Tajikistan.

There are high expectations of this region as a provider of energy resources to Japan in the future, and so the potential for cooperation in the energy sector is being studied. To promote such cooperation and thereby reinforce its energy security, Japan dispatched a Silk Road Energy Mission to Kazakhstan, Uzbekistan, Azerbaijan, and Turkmenistan in July 2002 headed by then Senior Vice-Minister for Foreign Affairs Seiken Sugiura. All four countries responded favorably to Japan's call for enhanced cooperation in the energy sector between the Silk Road and Asian regions from a long-term perspective. Japan also announced that it would provide continued support not only in the energy sector but also for nation building.

C. The Middle East

While Japan relies on Middle Eastern countries to meet approximately 88% of its crude oil needs, Japan is also one of the most important trading partners for these countries, and there is therefore a high level of interdependence. The region, though, contains a number of destabilizing factors relating to the Middle East Peace Process and the situation in Afghanistan and Iraq, and some nonoil-producer countries face economic difficulties like international balance-of-payments deficits and cumulative debt. Furthermore, since the September 11 terrorist attacks, it has become even more important than ever to avoid unrest and instability in this region, where Muslims make up the majority of the population. For these reasons, Japan attaches priority to assistance for maintaining harmonious trade relations and achieving social stability and peace in the region through ODA.

Although some Middle Eastern countries are relatively wealthy, among them are countries that have become reliant on oil revenues and have lagged behind in developing other industries, making their economic structures very fragile. Industrial diversification is therefore an urgent priority for these countries, and Japan offers job training and other forms of technical cooperation, to support the education of local engineers. It also assists in improving the foreign investment environment. For relatively low-income countries, Japan's assistance focuses on support for the improvement of economic and social infrastructure, including agriculture and water resources development. Moreover, Japan provides financial assistance and technical cooperation to address the region's environmental problems, such as the shortage of water resources.

Japan is also using its ODA to contribute to the Middle East Peace Process, which largely affects the peace and stability of the entire region. During her visit to Palestine in June 2002, Foreign Minister Kawaguchi presented the Palestinian Authority with the "Road-map for Japan's Assistance to Palestinians," which links support with progress in the peace process. At present Japan is encouraging efforts toward peace while providing support for nation building and reform efforts to improve the governance of the Palestinian Authority.

Regarding Iran, Japan is also supporting the reforms being undertaken by President Mohammad Khatami. With a view to encouraging Iran to play a constructive role in the international community, Japan is actively cooperating with Iran, especially in job training and technology transfer in energy conservation and water resources development.

Support for reconstruction and development in Afghanistan is discussed in Section 3 (2) A.

D. Latin America

Latin America is generally showing political stability following the democratization and economic reforms of the 1990s. There has also been progress toward regional economic integration through arrangements like MERCOSUR⁷ (the Common Market of the South) and CARICOM⁸ (the Caribbean Community), and negotiations are currently underway for the establishment of the Free Trade Area of the Americas (FTAA) in 2005, which would encompass all of North and South America. Furthermore, in recent years, some countries in the region like Brazil and Mexico have emerged as global players with considerable influence in the international community. However, the rapid pace of economic reforms has widened economic disparities within the region and within individual countries. In some cases, this has led to social problems, such as worsening poverty and the deterioration of law and order.

While there are some relatively developed countries in Latin America, such as Brazil, Argentina, and Chile, there are also countries with serious poverty issues, such as Central American countries, Bolivia, Guyana, and Haiti. Even in comparatively developed countries significant disparities exist among regions. The foundations for the stable development of regional economies need to be strengthened by correcting these disparities within regions and countries and by alleviating poverty. Japan is responding to this problem by supporting basic human needs, such as education and health and medical care, to alleviate poverty and reduce regional disparities.

The Latin American countries are striving to narrow regional disparities through increased efforts toward regional cooperation and integration. The more developed countries in the region, such as Brazil, Argentina, and Chile, have started to assist other developing countries as donors. Japan actively supports this type of assistance, called South-South cooperation, under Partnership Programs⁹ (framework documents) for cooperation with emerging donors.

In addition, Japan also provides ODA in consideration of the large number of migrants from Japan and their descendants who live in Latin America. For example, Japan accepts ethnic Japanese as trainees and also cooperates in developing the economic and social infrastructure of areas with ethnic Japanese communities.

As for relations with CARICOM countries, Japan held its first ministerial-level conference with Caribbean countries in Tokyo in November 2000, and a framework for cooperation was developed. The framework covers a broad range of areas for cooperation, including job creation and industrial diversification, human resources development, such as vocational training, healthcare and measures to fight HIV/AIDS, environmental conservation, strengthening capacities to respond to natural disasters, tourism, IT promotion, and fisheries development. The framework is being implemented steadily, and continuing efforts are expected to enhance friendly relations between Japan and CARICOM.

E. Oceania

Japan has traditionally enjoyed friendly ties with the Oceanian region and has gained its support for Japan's stance in international forums. The region is vital for Japan's deep-sea fishing industry and for maritime transportation. Regarding such circumstances, Japan has been providing support to this region as a good partner.

The countries of Oceania have a number of common features. They are small and geographically dispersed, they are at risk of losing territory, as global warming and other factors cause the sea level to rise, and they are vulnerable to natural disasters. Oceanian countries are also young independent states with economies reliant on primary industries. When providing assistance to the region, Japan considers both the common problems resulting from these shared characteristics and the specific circumstances confronting individual countries.

At the Japan-South Pacific Forum Summit Meeting, held in Miyazaki in April 2000, then Prime Minister Yoshiro Mori proposed the "Pacific Common Frontiers Initiative." To implement this initiative, he announced the Miyazaki Initiative, which cites cooperation in the three areas of sustainable development of the Pacific island countries, regional and global issues of common concern, and the strengthening of Japan-SPF partnership. Efforts to implement specific projects are now being undertaken ahead of the next summit meeting in May 2003.

Regional cooperation targeting multiple countries is an effective approach in the Oceanian region, where island countries are scattered across a vast area. Japan has undertaken various efforts designed to overcome common issues in the region and ensure the effective utilization of ODA. Grant aid and technical cooperation have been provided for a number of projects that benefit multiple countries, including the Project for Upgrade of USP (University of the South Pacific) Net Communications System, which involves 12 countries in the region. Other projects include the Establishment of the Palau International Coral Reef Center as a center for coral research in the Asia-Pacific region, and the Establishment of the Training Education Center for the South Pacific Regional Environment Programme (SPREP), which targets environmental and resource management issues in the South Pacific.

Support for democratization is also a priority. Japan sent an election monitoring mission and equipment for a general election in Fiji from August to September 2001 and for the general election in the Solomon Islands in December the same year.

F. Europe

Democratization in Central and East European countries and the consolidation of peace and reconstruction of former Yugoslavia are tasks that require the cooperation of the international community. Therefore Japan provides support for democratization in Eastern Europe and humanitarian assistance, including refugee relief, in former Yugoslavia. It also actively supports former Yugoslavia's reconstruction and development by building economic and social infrastructure and offering assistance for basic human needs. Japan has thus far donated humanitarian and reconstruction assistance worth $187 million to Kosovo, which was severely damaged by conflict, and has provided over $60 million to neighboring countries, such as Macedonia and Albania, whose economies were affected by inflows of Kosovar refugees.

Some East European countries are vigorously and successfully implementing political, economic, and social reforms in preparation for EU membership. However, others have lagged behind in addition to the abovementioned countries. Japan provides assistance according to actual conditions in prospective EU member countries that are experiencing economic difficulties, such as Bulgaria and Romania. Japan provided yen loans totaling approximately ¥12.9 billion to Bulgaria for the Sofia Metro Extension Project that will enhance the functionality of its capital city and has also dispatched to Poland experts in small business development, industrial technology, and industry promotion strategies. The aim of this program is to improve and strengthen Poland's industrial policy with a view to creating a competitive industrial structure.

7. MERCOSUR (Mercado Común del Sur) consists of Argentina, Brazil, Paraguay, and Uruguay (Chile and Bolivia are associate members) and was launched in January 1995 as a customs union that aims to remove tariffs, etc., within the region.

8. CARICOM, originally the Caribbean Free Trade Alliance (CARIFTA), was established in 1968 as a mechanism for regional trade liberalization. It was renamed CARICOM in 1973 to promote economic integration, coordination of foreign policy, and functional cooperation in such areas as health, medical care, and education. Its membership consists of 14 countries and one region. Since the second half of the 1980s, members have been working to establish a CARICOM Single Market and Economy (CSME) by 2005 to reinforce and expand economic integration.

9. This is a framework under which countries that have achieved a certain level of development work with Japan to provide technical cooperation to less developed neighboring countries or to countries and regions with which they have common characteristics, such as language, history, and culture. By the end of fiscal year 2001, Japan had established partnerships with eight countries, namely, Singapore, Thailand, Egypt, Tunisia, Chile, Brazil, Argentina, and the Philippines.