provided ¥958 million of grant aid to Bangladesh for disaster prevention and disaster reconstruction measures. This includes construction of multipurpose cyclone shelters in the affected regions. $ ^{77} $ At the same time, Japan implemented an ODA loan and joint financing with ADB for infrastructure revival projects.

In Nepal, in 2007 an interim government was inaugurated, as it reached a comprehensive peace accord with the Maoists in 2006. In 2008, holding the National Constituent Assembly election in April indicates mounting hope among the people. With a goal of promoting the move toward democratization and development of the peace process, Japan has been providing support focusing on the reduction of rural poverty, democratization, and infrastructural improvement.

In Sri Lanka, progress can be seen in the process of political resolution of the ethnic issue; the provincial elections held in the Eastern Provinces in March 2008, for instance. Japan has been providing support for socioeconomic development from the perspective of “peace dividends,” for local communities that have been impoverished by conflict. Also, it continues to pay due consideration to the regional and ethnic balance.

In regard to relations with Pakistan, then Foreign Minister Koumura visited the country in May 2008. There, he declared his intention to provide Pakistan, as a Peace Fostering Nation, with as much support as possible for the

(Source: PANA)

efforts of the newly established Pakistani administration, extending an ODA loan to the sum of ¥48 billion. Pakistan expressed its deep gratitude for the Japanese support including development of social infrastructure, such as education and healthcare in the tribal areas. It also conveyed its hope for continued cooperation by Japan.

In the South Asian Region, efforts aimed at aid coordination in the various countries are moving forward. Progressive measures are being implemented in Bangladesh in particular. In March 2005, Japan enacted the Joint Country Strategy for Bangladesh along with the World Bank, ADB and the UK's Department for International Development (DFID), all of which are working toward collaboration in assistance under this strategy. In addition, the major traditional donor countries and agencies are promoting coordination and collaboration in order to assist the poverty reduction strategy paper enacted by the government of Bangladesh effectively.

### 3. Central Asia and the Caucasus

Japan’s bilateral assistance to Central Asia and the Caucasus in 2007 was approximately US$228.15 million, 3.9% of total bilateral ODA.

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Under the new international circumstances that have emerged since the collapse of the Soviet Union, Central Asia and the Caucasus regions have taken on geopolitical strategic importance by dint of their proximity to Russia, China, South Asia and the Middle East. The regions are also of considerable significance to Japan in its foreign policy on natural resources and energy since this region produces natural resources including oil, natural gas, uranium, and rare metals. Although the Soviet Union built economic and social infrastructures, subsequently they have deteriorated seriously. Therefore, Japan is providing nation-building support to each country in order to establish long term stability and sustained development in the regions, hoping to help install basic values such as human rights, democracy, market economies, and rule of law, which will take root in the societies.

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## Central Asia

In order to facilitate the transition from a planned economy to a market economy, Japan assisted in establishing legal