Mori's visit may revitalise Indo-Japan ties

George Iype in Bangalore

Bilateral ties between India and Japan, which have been in limbo ever since the former conducted the nuclear blasts in May 1998, are expected to get a fresh lease of life during Japanese Prime Minister Yoshiro Mori's five-day visit to the country beginning Monday night.

In the wake of the nuclear blasts, Japan, which was India's biggest bilateral foreign donor, had frozen its Official Development Assistance to the country, except for a tiny amount of grants-in-aid for humanitarian purposes.

In 1997, the Japanese ODA to India was worth $1.16 billion, consisting of low-interest yen loans, grants-in-aid and technical co-operation. Since 1991, Japan had been maintaining its status as the single-largest aid donor for India.

But Japan which harshly criticised India for the nuclear blasts has insisted that it will lift the economic sanctions and resume the ODA only after India formally signs the Comprehensive Test Ban Treaty.

In a desperate attempt to repair the bilateral damage, Defence Minister George Fernandes and External Affairs Minister Jaswant Singh visited Japan in the last one year pleading for the resumption of the ODA as well as opening up a gamut of issues related to security and policy matters.

Officials preparing for Mori's India visit disclosed that Japan is now considering resuming the large-scale economic aid to India. They cite two reasons for the fresh Japanese approach to India.

First, Prime Minister Mori is said to be under tremendous pressure within his ruling Liberal Democratic Party to fully lift economic sanctions against India and to put back on the right track the strained bilateral relations.

Secondly, Japan -- which admires India's growing influence in the information technology -- wants to enter into a series of IT initiatives with India.

"There has been a sudden shift in the Japanese approach to India. It augurs well for India because we are eager to get the continued economic assistance from the Japanese ODA," a senior government official co-ordinating Mori's meeting with the Indian industrialists in Bangalore told rediff.com.

However, he said, it is still uncertain whether Mori will announce the resumption of the ODA. "It will depend on how Mori's meeting with Prime Minister Vajpayee goes," he said. The official added that trade ties between the two countries are "intricately linked to security and political dialogue."

But not many believe that Japan will completely lift the economic sanctions against India and enter into fresh trade and economic ties without a few conditions that would include India's signing of the CTBT.

Japan is said to be keen to initiate a dialogue with India on security and defence issues. Official sources said that there is a possibility that Mori and Vajpayee will decide to set up a high-powered panel for strategic dialogue on defence and policy matters.

China could be one of the important topics of discussion if Japan and India agree to set up the strategic dialogue panel, the source added.

Like on India, Japan has also placed under review its ODA on China saying that Beijing has been sharply increasing its spending on military matters.

As a precursor to the proposed security dialogue, Defence Minister George Fernandes had early this year conducted extensive talks with the Japanese leaders, including minister of state for foreign affairs Yuki Yamamoto and defence minister Tsumoto Kawara.

In an attempt to continue the new Indo-Japan bilateral relationship in the offing, Mori is likely to invite Vajpayee to visit Japan later this.

On the trade front, in the wake of Mori's trip many Japanese companies are expected to announce increased investment in the country in areas ranging from information technology, infrastructure development, automobiles and sericulture.

Over the years, only a few Japanese firms have invested in India. But Japanese electronics and automobile manufacturers have invested billions of dollars in many South-East Asian countries. Japanese companies have insisted that India needs to improve its infrastructure for them to make the country a production base. Japan accounted for only 4.3 per cent of the cumulative director overseas investment in India.

Mori's visit is expected to pave the way for improving the nearly sluggish Indo-Japanese trade ties. Towards this end, officials said, Mori and Vajpayee will announce the establishment of at least two high-powered joint trade and economic committees. The committees could consist of top officials and business leaders.

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