On Tuesday, Japan announced that it will contribute $60 billion in loans to the International Monetary Fund (IMF). This represents the first commitment of money by a non-European nation to the fund.
According to Reuters, the commitment will be announced at this week’s Group of 20 meeting for financial leaders. With Japan’s contribution, its Finance Minister Jun Azumi said that he hoped other countries will also make commitment to the fund, which is looking t0 increase by $600 billion.
He added after a news conference, “Following a series of euro zone’s policy responses, it is important to strengthen IMF funding and pave the way for ensuring an end to the crisis not only for the euro zone but also for Japan and Asian countries.”
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Azumi noted that his country’s position is for Europe to do more in its fight against the debt crisis. He said, “I don’t think Europe has made enough efforts on their own. I must urge them to beef up their firewall further. At the same time the world is in need of strengthening IMF lending, so Japan has been taking the lead in coordinating opinions with other countries concerned.”
Countries not expected to add to the fund includes the United States, while China, Brazil and Russia are yet to step up. Should they do so, they are looking for something in return: more voting power.
Battle Over the Kuril Islands
While Japan has given $60 billion in loans to the IMF in an attempt to set an example and spur some activity, it still battles with its own problems on the home front. One is its decades-long dispute is with Russia over the Kuril Islands.
Why give money to IMF when you won’t solve matters with Russia?
The two countries have fought over the islands referred to as the Northern Territories by Japan while the Russians call it the Southern Kurils. History can support both countries on this argument but it continues because of national interests not allowing comprise thanks to national pride, different priorities, and public opinion.
Because of the tensions, Russia and Japan can’t form an alliance to further their security and economic concerns. Many of their interests overlap globally. With the Japan’s contribution to the IMF, does this deter Russian from doing so?
The island disagreement also has Japan unable to expand access to Russia’s natural resources, including oil and natural gas. For the Russians, a Japanese investment could help modernize the country’s energy industry as well as other ones.
Did Japan make a statement to Russia with its IMF contribution? Has this set things back for the islands?