updated 8/3/2006 8:57:17 PM ET 2006-08-04T00:57:17

Japanese Foreign Minister Taro Aso arrived in Baghdad on a surprise visit Thursday, bringing with him a $29 million loan to jump-start Iraq's economic development.

Aso, who is the first Japanese minister to visit the Iraqi capital since the U.S.-led invasion in 2003, said his country will continue to support Iraq's reconstruction despite withdrawing its humanitarian troops.

"The Japanese government will continue to support the Iraqis in the reconstruction. Our support has entered the second phase," Aso told reporters at a news conference with Iraqi Foreign Minister Hoshyar Zebari.

Zebari said Japanese government has promised Iraq a soft loan of $29 million to help jump start the country's economy

"During this visit, we discussed the best ways to benefit from the 3.5 billion yen. This loan has been offered to the Iraqi government," he said.

Aso was also scheduled to meet with Iraqi Prime Minister Nouri al-Maliki and other senior officials, Kyodo News agency said.

Samawah reconstruction
Japan’s top diplomat also was expected to discuss Japan’s reconstruction efforts in the southern Iraqi city of Samawah, where it based 600 non-combat troops for 2 1/2 years until withdrawing them last month.

Speaking in Tokyo, Chief Cabinet spokesman Shinzo Abe described the security situation in Baghdad as “severe” but said it does not fit the definition of a combat zone under Japanese law, meaning Japan’s air force can continue its humanitarian operations there.

Tokyo dispatched its troops in support of the U.S.-led coalition in 2004 — the country’s largest military deployment since World War II. They were sent under a special law because Japan’s post World War II pacifist constitution bans the country from using force to settle international disputes, and restricts its military to a defensive role.

The troops focused on rebuilding roads, schools and hospitals and providing clean drinking water.

While the mission helped raise Japan’s international profile and strengthen ties with its biggest ally, the United States, it was widely criticized at home.

Aso, who is seen as a contender to succeed Prime Minister Junichiro Koizumi when he steps down in September, said last month that Japan is open to sending peacekeeping troops back to Iraq, but only if the security situation improves.

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