Japan tightens financial squeeze on Russian borrowers after definitive ‘no’ over Kuril issue

Kunashir Island of the Greater Kuril Ridge © Ekaterina Chesnokova
The government-backed Japan Bank for International Cooperation (JBIC) has extended restrictions on independent financing to Russian companies and financial institutions.

JBIC said the restrictions are aimed at avoiding contravening US and EU sanctions against Moscow. However, the announcement comes a day after Russia reasserted its sovereignty over the Kuril Islands.

During an official visit to Tokyo on Tuesday, the head of Russia’s Federation Council Valentina Matviyenko said Moscow was not going to give up any of the disputed Pacific islands to Japan, adding that Russia is considering projects with Japan on the territory.

The territorial dispute remains the biggest unresolved issue between Russia and Japan. The countries have not reached a compromise over the four southern Kuril Islands and did not sign a peace treaty after World War II.

JBIC have set criteria for the selection of enterprises in which it will become the sole lender. The bank said it will withdraw financing projects from which EU and US companies had pulled out due to sanctions.

The state lender also plans to pressure private sector banks in order to stop funding of sanctioned Russian borrowers, meanwhile ensuring adequate fund transfer mechanisms are in place to provide financing.

The Japanese government has promised to focus on economic cooperation with Russia in various areas including technology, energy, development of industries and ports in Russia's Far East, as well as better personal contact.

However, Tokyo says it needs also to accommodate fellow G7 nations.