Japan extended Pakistan new yen loans worth 16.4 billion yen, the two countries said on Saturday in a joint statement issued during a visit to Pakistan by Japanese Prime Minister Junichiro Koizumi. Koizumi, who arrived in Islamabad from India, held talks with both President Pervez Musharraf and Prime Minister Shaukat Aziz on a 24-hour visit that Japan said would put relations back on track.

?In line with our plans to boost our economic aid for Pakistan, we want to resume yen loans,? a Japanese government official quoted Koizumi as telling Musharraf. Japan, the only country ever to suffer a nuclear attack, froze all new loans and grants except for humanitarian aid, to both Pakistan and its neighbour and rival India after their 1998 tit-for-tat nuclear tests.

While Japan had since resumed loans to India, fresh yen loans for Pakistan were put on hold as Islamabad worked out a deal to restructure $12.5 billion of debt with international creditors. Musharraf told Koizumi Pakistan wanted economic aid to fight unemployment and poverty, which he said were main causes of terrorism, the Japanese official said.

In 1997, the year before the sanctions, Japan gave Pakistan 32.0 billion yen ($298 million) in yen loans. Last year it gave 6.3 billion yen in grant aid and 1.8 billion yen in technological cooperation. ?Today we decided to resume yen loans to Pakistan... This is a reflection of our will to forge closer and more friendly relations between the two countries,? Koizumi told reporters after holding talks with the Pakistani leaders. Japan also agreed on Saturday to extend a total of 8.39 billion yen ($79.24 million) in grant aid for two water projects.

This was part of a $300 million grant aid Japan pledged in 2001. In a March 2003 agreement that covered Pakistan?s largest borrowing from a single bilateral creditor, Japan signed a deal to reschedule $4.5 billion of debt. ?Our discussions today have been very fruitful,? Aziz, standing next to Koizumi, told reporters. ?We hope to get more investment from Japan, more technical assistance from Japan...?

<B>New start </B>

A Japanese official said Koizumi?s visit signalled a fresh start in relations with Pakistan. ?Pakistan and Japan have common interest in the future of Asia with special focus on counter-terrorism, non-proliferation, economic cooperation and the propagation of democratic values,? the countries said in their statement.

Earlier, Koizumi expressed concern to Musharraf about a network run by Abdul Qadeer Khan, the disgraced father of Pakistan?s atomic bomb, who last year admitted passing nuclear technology to Iran, North Korea and Libya.

Japan is especially interested in information related to its neighbour, North Korea. Musharraf said the proliferation had been done by individuals not the government. His government would prevent it from happening again and would provide Japan with any information on Khan?s network, the Japanese official cited Musharraf as saying. Another Japanese official said Pakistan should be supported in its fight against militancy. ?We should give encouragement and support to Pakistan which stands on the front line in the war on terror,? the official said.

<B>Teruaki UENO</B>

<B>Japan and India pledge support for UN seats</B>

Japan and India agreed to help each other?s bids for a place on the UN Security Council, as Prime Minister Junichiro Koizumi wound up talks with Indian leaders aimed at building a new partnership. His trip to India, the first by a Japanese prime minister in five years, came weeks after a landmark visit by Chinese Premier Wen Jiabao and is part of Tokyo?s ?strategic diplomacy? to compete with Beijing. ?They reiterated their support for each other?s candidature, based on the firmly shared recognition that Japan and India are legitimate candidates for permanent membership in an expanded Security Council,? the two sides said in a joint statement. China steadfastly opposes a permanent seat for Japan on the Security Council and thousands of people went on violent protests in China this month over school textbooks that critics say sugarcoat Japan?s war-time history. But India and Japan said they would ?strengthen their cooperation? to push to make the Security Council ?more credible and more effective? and consult ?like-minded? nations. The joint statement also said both countries? navies and coast guard ships would increase cooperation in Asian waters and would work to deepen economic and strategic ties. At the bilateral level, Japan was unabashed in courting India, seen by analysts as important in Tokyo?s ?strategic diplomacy? to cope with a rising China. ?Japan and India need each other as strong and prospering countries. Japan and India share strategic interests,? Koizumi said. Analysts said the building blocks of a future strategic relationship between the two powers were being laid. ?Japan is now becoming cognisant of India?s strategic profile in the coming 10 to 15 years and wants to build a foundation for long-term strategic ties,? said Uday Bhaskar, director of the New Delhi-based Institute of Defence Studies and Analyses. Koizumi told Indian Prime Minister Manmohan Singh that Tokyo attaches importance to its relations with both New Delhi and Beijing. ?I feel certain that relations between Japan and India will become more and more important strategically.