Japan to loan Iraq $750 million

Prime Minister Yoshihiko Noda said Japan will offer Iraq $750 million in his meeting with visiting Iraqi leader Nouri al-Maliki Tuesday. The loans will go toward refurbishing oil refineries and other infrastructure and health care projects.

Noda said: “We are proud of having contributed to the development of Iraq through yen loans and technical cooperation. I am hoping to move up our countries’ partnership to a new level.”

Japan’s move to provide these loans underscores the level of dependence Japan has on Middle Eastern oil. Japan consumed 4.4 million barrels of oil per day in 2010, third in the world behind the U.S. (19 million barrels) and China (8.2 million barrels). Japan imports 99 percent of its oil, 77 percent of which came from the Middle East in 2009. The U.S., by comparison, imports 18 percent of its oil from the region. The U.S. imports Persian Gulf oil to keep down the price of oil on domestic markets, and therefore is not as vulnerable to unrest in the Middle East as Japan is.

Japan’s dependence on foreign oil has affected both its domestic policy–in reducing its dependence on foreign energy by utilizing nuclear power–and its foreign policy–as seen in its reluctance to aid the U.S. in the latter’s military adventures in Iraq for fear of disrupting the oil flow.