(Recasts with Merkel on German insurgents in Iraq)
PRAGUE, Aug 27 (Reuters) - Germany will decide on Sunday what specific military aid it will send to Kurdish forces in Iraq to help them fight Islamic State insurgents, with Chancellor Angela Merkel arguing Berlin had to act because hundreds of Germans had joined the insurgents.
"The Islamic State has about 20,000 fighters according to our estimates, 2,000 of them from Europe ... of whom probably 400 are from Germany," Merkel said on Wednesday. "So we can't just say it has nothing to do with us - we are implicated."
Other EU countries are also concerned about evidence of their citizens, usually those with an Islamic immigrant background, joining Islamist insurgents in Iraq and Syria and then returning home radicalised and posing a security threat.
German Foreign Minister Frank-Walter Steinmeier said during a visit to Prague that his country should provide supplies to the Kurds "so they can fight and prevent ISIS from taking over the whole region and creating a caliphate.
"The German government has not reached a decision yet today but I believe that a decision should be made on Sunday on concretely what should be supplied," said the German minister.
Kurdish forces are allied with the weak Baghdad central government against Islamic State, whose advances have menaced the semi-autonomous Kurdistan region and put in question the survival of oil-producing Iraq as a state.
In Prague, meanwhile, the Czech government approved supplying ammunition and hand grenades to Kurdish forces. Czech news agency CTK said the ammunition, worth about $2 million, would be transported to Iraq by U.S. forces.
On Wednesday, U.S. Defense Secretary Chuck Hagel said Britain, France, Germany, Italy, Croatia, Canada and Albania had committed to providing "arms and equipment" to Kurdistan.
Germany's decision last week to help the Kurds signalled a break with a post-World War Two principle of not sending arms to conflict zones. Merkel has said that what she describes as "genocide" in northern Iraq justifies exceptional measures.
German intelligence agencies estimate about 400 people have travelled from Germany to Syria to join the Islamist fighters there, but so far they have not released an estimate of how many Germans are fighting with the Islamic State insurgents in Iraq.
Opinion polls suggest the German public has no appetite for getting involved in Iraq's conflict and Merkel has made clear she would not send combat troops there. In a poll by Forsa last week, 63 percent said they were against arming the Kurds.
The German opposition has warned that any weapons sent could end up in the wrong hands and demanded a debate in parliament, which is scheduled for Monday.
No vote is required but a source in the coalition government, speaking on condition of anonymity, said there might be a non-binding ballot in the Bundestag (lower house). (Reporting by Jan Lopatka and Robert Muller in Prague, Thorsten Severin and Andreas Rinke in Berlin; Writing by Stephen Brown; Editing by Mark Heinrich)