Japan on Tuesday cancelled nearly five million dollars in aid to Myanmar in its first action to protest against the junta's bloody crackdown on demonstrations in which a Japanese journalist was shot dead.
Japan, however, stopped short of saying it would end all assistance to Myanmar, keeping its position at odds with its Western allies who have demanded global action to isolate the military regime.
Foreign Minister Masahiko Komura said Japan was cancelling grants of up to 552 million yen (4.7 million dollars), equivalent to around 18 percent of the total grants and technical assistance Tokyo gave Myanmar last year.
"The Japanese government needs to show our stance. We cannot take action that would effectively support the military regime at this moment," Komura told reporters.
Japan, in a rare break with the United States and the European Union, has been one of the largest donors to Myanmar, although since 2003 it has said it only provides humanitarian aid to the country.
Japanese officials had earlier expressed caution about punishing Myanmar, fearing it would push the junta further into the arms of China, which has close economic and political ties with the military regime.
Japan and China have increasingly jostled for influence overseas, particularly in Southeast Asia.
The cancelled grants had been intended to finance the construction of a human resources centre in Myanmar. It was the only concrete grant aid project for which Japan was exchanging notes with the Myanmar government.
It was unclear whether Japan would stop aid to future projects.
"We presume there will be some requests in the future. We will make a judgement on each case by looking at the situation at that point of time," said a government official who declined to be named.
Buddhist monks led last month's protests, which posed the biggest challenge to the regime in nearly 20 years. Troops and riot police unleashed force to end the demonstrations, leaving at least 13 people dead and more than 2,000 locked up.
The dead included Kenji Nagai, a video journalist for Tokyo-based APF News, who was killed on September 27 as he filmed the crackdown in Myanmar's commercial hub Yangon.
Television footage showed him apparently being shot at close range by security forces.
The state-run New Light of Myanmar on Monday said Nagai's death was an accident but complained that Nagai "dishonestly" entered the country on a tourist visa.
"He met his tragic end due to the fact that he was together with the protesters at an improper site at an improper time," it said, adding that Myanmar had a "magnanimous" attitude towards Japan.
Japan occupied the country formerly known as Burma in World War II but has carefully distanced itself from Western nations, including former colonial power Britain, demanding a tough line on the regime.
"At a time when even China and South Korea are demanding an apology for atrocities of Japan during the war, we Myanmar people have been in a position of forgiving it," the newspaper said.
It said foreign media alleged Nagai was killed on purpose "with the intention of undermining Japan-Myanmar relations, of terminating the aid provided by Japan and of getting foreign countries to impose sanctions on Myanmar."
Japan in 2003 suspended low-interest loans for Myanmar's infrastructure projects to protest the continued detention of Nobel laureate and opposition leader Aung San Suu Kyi.
But it has continued what it calls humanitarian aid.
Japan's grants to Myanmar totalled 1.353 billion yen in the last fiscal year to March 2007. The sum reached three billion yen including technical assistance, such as dispatches of engineers.