Statement by H. E. Yoriko Kawaguchi
Minister for Foreign Affairs of Japan
at the International Donors' Conference on Reconstruction in Iraq

Excellencies, Ladies and Gentlemen,

As one of the Co-Chairs of this conference, I would like to welcome the President of the Iraqi Governing Council, the Ministers of the Iraqi Interim Cabinet and all the delegates from countries and international organizations. I would also like to express my heartfelt appreciation to the Government of Spain for hosting this conference. I highly appreciate the efforts made under extremely difficult conditions by the relevant international organizations, including UN agencies and the World Bank, in order to conduct the reconstruction needs assessment that will serve as the basis for discussion in this conference.

Iraq is the birthplace of the Mesopotamian civilization - one of the world's oldest civilizations. It is also the crossroads of Eastern and Western civilization. Thus, Japan is proud to be able to contribute to the national reconstruction efforts by the people of Iraq, who have passed on the major heritages of mankind in the course of their long history.

At present, Iraq is plagued by the deterioration of lifelines as well as of economic and social systems as the result of a quarter century under an oppressive dictatorship that showed no regard for the wellbeing of the country's citizens. In addition, it is confronted by remnants of the former regime, extremists and criminals who are eager to obstruct the reconstruction process. We must terminate the vicious circle of deteriorating security leading to delays in the reconstruction. By supporting the people of Iraq, we demonstrate that the will of people seeking freedom and reconstruction cannot be defeated through violence and terrorism. From this standpoint, I welcome the unanimous adoption of UN Security Council resolution 1511, which recognizes that the international community is united in undertaking the task of reconstructing Iraq and ensuring security in that country.

In order to overcome the current difficulties, it is vital to provide the Iraqi people with a concrete vision as well as hope for the future. That is exactly why this conference must be a success. The reconstruction of Iraq is extremely important, not only for the people of Iraq, but also for the peace and stability of the Middle East region and the international community as a whole. Unless we succeed in the reconstruction of Iraq, together with substantial progress to be made in the Middle East Peace Process, stability in the Middle East cannot be achieved.

Up until the Gulf Crisis in 1990, Japan had been providing assistance to Iraq with a view to improving the social infrastructure and to developing the human resources of Iraq. These efforts included assistance for thirteen general hospitals in Iraq, infrastructure development projects in areas such as power generation, road and bridge construction, and the construction of communication facilities. In the past, about five thousand Japanese nationals resided in Baghdad, and a direct flight connected the city with Japan. However, after the invasion of Kuwait by Iraq, economic relations between Japan and Iraq were virtually severed.

After the collapse of Saddam Hussein's regime, Japan was among the first to begin providing humanitarian and reconstruction assistance. For example, Japan provided assistance to dredge the port of Um Qasar in order to facilitate transportation of humanitarian supplies. We also created thirty-five thousand employment opportunities in Baghdad through debris removal and building repair activities. About $86 million have already been committed or disbursed since last March.

And now, having examined the outcome of the needs assessment conducted by the UN, the World Bank and other organizations, the Government of Japan pledges to provide the following assistance.

First, Japan will provide grant assistance totaling $1.5 billion through various channels for the immediate reconstruction needs of Iraq. This chiefly corresponds to the reconstruction needs anticipated through 2004. In this effort, Japan will give priority to areas related to the revitalization of lifelines for the Iraqi people, including power generation, education, water and sanitation, health and employment, as well as those related to improvement of the security situation in Iraq.

Second, in order to meet the medium-term reconstruction needs, Japan will provide assistance of up to $ 3.5 billion, for a period extending approximately through the year 2007. For this purpose, the Government of Japan will basically utilize concessional yen loans. Thus, together with the grant assistance of $1.5 billion, Japan will provide assistance of up to $ 5 billion. In addition to the high-priority items I have just indicated, we will focus our assistance activities on infrastructure development, including telecommunications and transportation.

In implementing these assistance measures, Japan will work closely with the World Bank, the IMF and other organizations providing financial assistance. As one of the major creditor countries, Japan will also participate actively in the discussions in the Paris Club and other fora, with a view to achieving an early and appropriate resolution of Iraq's debt problems. This will include efforts to complete the restructuring of Iraq's debt by the end of 2004.

Pursuant to UN Security Council resolution 1483, Japan has transferred approximately $98 million of previously frozen assets to the Development Fund for Iraq.

As a response to the recent establishment of the Trade Bank of Iraq, Japan also plans to start accepting trade insurance for exports from Japan in which the Trade Bank plays a part.

Furthermore, taking into account the fact that Iraq up to this point has been left behind by global technological progress, Japan will provide assistance for human resources development not only for officials of the central and local governments but also in a broad range of sectors - both public and private. As the first step, Japan is carrying out Japan-Egypt joint medical assistance to Iraq, which is part of the assistance that Japan is providing in collaboration with Arab countries. Only a few days ago, I had the pleasure of meeting the Director-General of Baghdad University Hospital who visited Japan together with Egyptian and Iraqi medical personnel.

In addition, Japan established the Law Concerning the Special Measures on Humanitarian and Reconstruction Assistance in Iraq in late July. This law authorizes the Government of Japan to dispatch its Self-Defense Forces as well as civilians to Iraq in order to assist reconstruction of Iraq. We would like to make an appropriate contribution at an early stage by utilizing the capabilities of the Self-Defense Forces and others.

Finally, it is an urgent task to create employment opportunities through rehabilitation and reconstruction of Iraq's key industries. Thus, Japan will take advantage of the vitality of its private sector together with our governmental assistance.

We need to address some additional issues when we set out to provide assistance to Iraq.

First, security is the precondition for ensuring the safety of the personnel who will do the actual work, and is prerequisite for the creation of a robust implementation apparatus on the ground. A stronger implementation structure will serve to increase Iraq's aid absorption capacity.

While commending the efforts by various countries to improve the security situation, Japan will do its part in supporting the efforts by the Iraqis themselves towards that end.

Second, I welcome the plans of the World Bank and the UN to establish trust funds to serve as channels for providing assistance to reconstruction projects in Iraq. I reiterate Japan's request to the World Bank and the UN to continue to strive for the prompt establishment of the funds - by the end of this year at the latest. Prior to the establishment of these funds, a framework must be created which ensures sufficient donor participation in decision-making and implementation, as well as transparency in the procedures, activities and achievements of the funds. We will participate actively in the administration of the funds, amongst others, by sending our personnel to a coordinating body. We also believe it important to ensure that the funds are capable of responding to a broad range of reconstruction needs in Iraq, including security.

Third, we need to begin utilizing Iraq's abundant oil resources effectively and as early as possible in order to ensure economic recovery. From this standpoint, we deem it important that the mandates of the Development Fund for Iraq and the World Bank and UN trust funds be clearly differentiated, and that transparency of the Development Fund be ensured.

Fourth, in order for the international community to successfully implement reconstruction assistance, the establishment of a representative government is essential, in addition to the improvement of Iraq's aid absorption capacity. Such a government must be capable of guaranteeing that Iraq's international obligations will be fulfilled in the future. To that end, the political process in Iraq must move forward quickly.

Comprehensive reforms towards the establishment of a free and open market economy are necessary to ensure the mid- to long-term economic development of Iraq. These reforms should not run contrary to the particularities of Iraq, such as its social and cultural background, and its national character. Unless these reforms are accepted by the people of Iraq, they will not endure very long. The basic structure of Iraqi society should be decided by a government that represents the will of the Iraqi people.

Today, there is a flicker of hope in the heart of each and every Iraqi. The international community should be united in sending a strong message of friendship to the Iraqi people, so that hope can be realized in a bright future for Iraq. After the devastation that Japan experienced in World War II, a warm helping hand was extended to us by the international community. Words cannot express how much spiritual support and courage were imparted to the Japanese people through the international assistance provided at the time.

Japan firmly believes that Iraq's true potential, as demonstrated through its long history, will soon be realized once again.