Japan woos Pacific states with sharp aid rise

NAGO, Japan, May 27 (Reuters) Japan promised Pacific island nations a sharp rise in financial aid at a leaders' summit that ended today, an effort to boost its regional influence just one month after China pledged a sweeping aid package.

The Pacific island states offer little economically to Japan, but their support as a bloc is sought in international forums such as the United Nations where Tokyo has been campaigning, with scant success, for a permanent seat on the Security Council.

Japan promised fresh aid of 45 billion yen to the region over the next three years, most of it in grants. Aid over the past three fiscal years was 32 billion yen.

During a similar gathering in Fiji last month, Chinese Premier Wen Jiabao offered a sweeping package of economic aid to nations that support a one-China policy. Measures included zero-tariff agreements and 3 billion yuan in loans.

Japanese Prime Minister Junichiro Koizumi said his country's support package, which also included training for 4,000 people to combat under-employment described as a ''time bomb'', had nothing to do with China or Japan's UN Security Council bid.

''This expresses our commitment to the Pacific, which we hope will lead to a more robust and prosperous region,'' Koizumi told a news conference.

''There is no need to link this with the assistance China is providing.'' The two-day summit on Japan's southern island of Okinawa brought together leaders of most of the 14 member nations of the Pacific Islands Forum for talks on issues including global warming, the economy, and security.

In a final statement, the leaders touched on the recent turmoil in the Solomon Islands and reaffirmed their resolve to cooperate for regional stability. Japan also pledged technical assistance for disaster prevention and fisheries development.

CHILLED TIES, REGIONAL RIVALRY Sino-Japanese ties have chilled due to a range of issues including a territorial row and Koizumi's visits to a Tokyo shrine for war dead seen as a symbol of Japan's past militarism.

Pacific island leaders renewed their support for Japan's bid for a permanent seat on the UN Security Council, which China opposes.

''The United Nations needs to be expanded,'' said Papua New Guinea Prime Minister Sir Michael Somare, co-chairman of the summit.

''The world has grown, the population has grown, economies have grown. And Japan generates a very big influence on the economy of the world today.'' The Pacific region has long been a hotbed of rivalry between China and Taiwan, with seven island nations currently recognising the Beijing government and six Taipei.

A few, such as Kiribati, Vanuatu and Papua New Guinea, have switched back and forth, seeking to gain the best aid.

Analysts say Japan is unwilling to allow China to gain an upper hand in the region, but Koizumi denied any rivalry.

''I don't think that China's aid to the Pacific island nations should be taken as a threat. The more assistance, the better,'' he said.

Somare echoed this, saying: ''I don't think it should be seen as competing for influence in the region.'' ''Pacific island people are capable of making their own decision and being able to say what is right and what is wrong.'' The Pacific Islands Forum, established in 1971, consists of 14 Pacific Island nations including Australia and New Zealand. Japan has sponsored regional gatherings every three years since 1997.

REUTERS DKS BD1006