Checkbook Diplomacy
Japan Throws Money Around its Neighborhood

It’s sometimes easy to forget that, when ranked by nominal GDP, Japan is still the world’s third-largest economy. The Land of the Rising Sun may be stagnating, but it has plenty of financial weight to throw around. And, as officials in Myanmar are seeing firsthand, Japanese money is a useful geopolitical tool. The Japan Times reports:

Japan will give Myanmar ¥100 billion in loans for infrastructure development, a Japanese government source said Friday as Tokyo seeks to counter China’s influence in the country.

The yen loans will be used for projects such as the repair of railways connecting the cities of Yangon and Mandalay, the source said.

It is the first such offer by Tokyo since the opposition party led by Aung San Suu Kyi took office in March and comes at a time when other nations are courting Myanmar.

U.S. sanctions have made it difficult for American companies (many of which are eager to enter the Burmese market) to counter Chinese investment. Japan doesn’t have the same restrictions, and Tokyo puts a high priority on countering Beijing’s influence in Southeast Asia. We’ve already seen large Japanese investments in Thailand and Indonesia, and Tokyo recently promised low-interest financing for Japanese firms that make investments overseas.

Japan isn’t just going toe-to-toe with China in Southeast Asia, either. Also from the Japan Times:

Japan plans to dispatch a team to Sri Lanka in the coming months to inquire about the potential for infrastructure investment in the key port of Trincomalee, a government source said.

The move is aimed at strengthening bilateral cooperation through infrastructure and helping Sri Lanka achieve its goal of reducing its dependence on Chinese assistance, the source said.

For Japan, closer cooperation with Sri Lanka could help secure vital sea lanes used to import oil from the Middle East.

The two countries are also expected to improve cooperation on maritime security in light of China’s expansionary activities in the Indian Ocean, the source said.

China has been building a $1.4 billion port in Columbo, part of what New Delhi fears is a “string of pearls” strategy to encircle India. A strategic Japanese investment could put a knot in that string.

If Japan does invest in Sri Lankan shipping, it will be interesting to see how and if India reacts. Abe and Modi are on good terms, and there’s some deep-seated affection between the two countries. India and Japan are the only two decidedly non-Abrahamic great powers (China gets its Abraham in a secular form: Marxism). Moreover, there’s a history of friendship between the two countries dating back to the eighth century when Indian monks brought Buddhism to Japan. Does this mean New Delhi will be happy to have another great power playing in its backyard? Time will tell.

Editor’s note: An earlier version of this post suggested that Buddhism came to Japan from India. That is false; Buddhism first spread to Japan from Korea. Only later did Indian monks like Bodhisena arrive (often via China) and establish themselves in the country. Thanks to Martin W. Lewis in the comments section for pointing out our mistake.

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