* Merkel faces public scepticism over arms decision
* Admits risk that some arms could fall into enemy hands
* Plays down minister's comment on Qatari financing
By Madeline Chambers
BERLIN, Aug 24 (Reuters) - Germany's decision to send weapons to Kurdish forces in Iraq is a significant, if risky, step for a country slowly taking on a bigger role on the world stage, Chancellor Angela Merkel said on Sunday.
Germany, which since World War Two has been reluctant to get involved in military missions abroad, last week broke a taboo by saying it would arm Iraqi Kurdish forces fighting Islamic State militants in northern Iraq.
The move sends a signal that Berlin may be ready to make good on talk of a more muscular foreign policy which Merkel's foreign and defence ministers have vocalised this year.
"It is certainly a significant step that we decided on this after much consideration," Merkel told ARD television.
She compared it to other "qualitatively new steps" since German reunification in 1990, including in former Yugoslavia and sending troops to Afghanistan as part of an international force after the Sept. 11, 2001 attacks on the United States.
German governments have in the past held to a principle of not sending arms to conflict zones but the government has said there is some room for manoeuvre that it will exploit.
This makes the move controversial in Germany. Some 63 percent of Germans are against supplying weapons to the Kurds, according to a Forsa poll published on Wednesday.
Merkel argued that the situation in northern Iraq was exceptional "where a genocide is being carried out before everyone's eyes by Islamic State militants".
"If we are asked, we cannot just say: you won't get a certain amount of weapons and munitions from us."
Opposition parties have argued that the weapons may end up in the wrong hands, something Merkel conceded was a possibility.
"We have intensively looked at this question. There is no 100 percent guarantee but we have only two options," she said. "The reasons for acting were prevalent," she said.
She ruled out, however, that the PKK, which has spent decades fighting for autonomy for Turkey's Kurds, would get hold of the arms. "The PKK does not come into question as a recipient of our weapons." The PKK is listed as a terrorist organisation by the European Union and the United States.
Merkel said there were limits to Germany's role. It would not send troops to Iraq, although it was unclear if some individuals would have to be sent, along with equipment, for training purposes.
Germany is due to decide this week exactly what weapons it will send. After pressure from opposition parties, the Bundestag lower house will debate the issue on Sept. 1 but no vote is needed.
After her development minister caused a stir last week by suggesting that Qatar might be financing Islamic State, Merkel said the militants were financially very well off "without, as far as I know, being supported by any state directly".
However, Merkel said she was worried about Qatar's role in the Gaza crisis and this fed into decisions about arms exports to the Gulf state that has close business ties to Germany.
"I call on Qatar to support these efforts (to bring about a ceasefire between Israel and Hamas in Gaza) and not to work in the opposite direction," said Merkel.
"The leader of Hamas, Khaled Meshaal, is in Qatar and therefore Qatar has the possibility to have some influence." (Editing by Robin Pomeroy)