TOKYO (AFP) -Japan on Monday lent some 850 million dollars to visiting Iraqi Prime Minister Nuri al-Maliki’s government as the oil-hungry Asian power looks to boost output from the war-torn country.
The Japanese low-interest loans will fund the construction of an oil export facility in Iraq, whose production has tumbled since the US-led invasion that toppled Saddam Hussein four years ago.
Maliki received a ceremonial audience from Emperor Akihito and Empress Michiko at their palace in central Tokyo before holding a series of meetings which will culminate in a summit with Prime Minister Shinzo Abe.
“The reason I have come here is to express thanks for Japan’s contributions to Iraq,” Maliki told reporters as he met with Defence Minister Fumio Kyuma.
Maliki was making his first visit to Japan and South Korea, two key economic partners of Iraq, which have both sent troops to help reconstruction of the nation.
Japan announced it had signed an agreement lending 102.8 billion yen (862 million dollars) to Iraq, repayable over 40 years with a 10-year grace period at an interest rate of 0.75 percent a year.
The money will go to build the oil facility connecting pipelines in the southern province of Basra. It will also fund fertiliser and oil refinery plants and help improve electricity, a Japanese foreign ministry statement said.
The loan is part of six billion dollars in debt waivers and 1.5 billion dollars in aid which Japan announced for Iraq in 2003. Much of the aid is on hold due to concerns about instability.
“Iraq is important for us in terms of securing stable supply of crude oil. In that context, we would like to form a long-term partnership with Iraq,” a Japanese foreign ministry official said.
Japan, the world’s second-largest economy, has few natural resources and is almost entirely dependent on the Middle East for its oil.
“We have so far offered humanitarian assistance through the Self-Defence Forces, development assistance and debt waivers. Now we want to shift our relations to become a strategic partner of Iraq, which has the world’s third largest oil reserves,” the official said.
Japan, which has been officially pacifist since defeat in World War II, took the landmark step of sending 600 troops there on a reconstruction mission.
It marked the first time since 1945 that Japan sent its soldiers — which it calls the Self-Defence Forces due to the pacifist constitution — to a country where fighting was under way.
Japan ended the troop deployment last year. But Abe last month decided to extend by two years an air mission flying goods and personnel into Iraq on behalf of the United Nations and the US-led coalition.
The Iraq war has also faced opposition in Japan. Kyuma, the defence minister, caused a stir in January when he said the US decision to invade Iraq was “wrong.”
Kyuma stayed away from the controversy in his remarks with Maliki, telling him he hoped that more Japanese firms would invest in Iraq as soon as it is feasible, according to a defence ministry official.