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No Peace Deal for Russia and Japan, But Slow Progress

 
 

The much-heralded visit of Russia’s President Vladimir Putin to Japan on December 15 and 16 facilitated a great deal of bonding and camaraderie between the two leaders. The Russian president was invited to a hot spring with Japanese Prime Minister Shinzo Abe in his hometown in southwest Japan. However, there was nothing in the way of diplomatic breakthroughs on key issues, including sovereignty over the disputed Kuril Islands and a long-awaited peace treaty formally ending the Japan-Russia conflict of World War II.

The visit did launch cooperation in economic areas including investments by Japan in industries ranging from Russia’s energy to healthcare, which could serve as a platform for developing mutual trust and cooperation – principles which both leaders acknowledged to be crucial in the goal of reaching political consensus on the Kuril Islands and a peace treaty. In the meantime, both leaders agreed to start talks on joint economic cooperation on the disputed islands, reportedly to be conducted through a special economic zone, regulated under Russian law, involving sectors such as tourism, culture, fishing, and medicine.

On the political front, there was also an agreement to re-start talks under the so-called “2-plus-2” formula, involving both sides’ ministers of defense and security. On this matter, both Japan and Russia claimed common ground on security issues in Northeast Asia, including shared concerns over North Korea’s nuclear program and the need to formulate a joint response – potentially indicating a gradual development in bilateral diplomacy, for Japan, that may go beyond foreign policy directions set by U.S. administrations.

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Warming Personal Ties Can’t Thaw Icy Dispute

Prior to Putin’s visit, the Japanese side was optimistic about signs of movement toward concluding a formal peace treaty, in addition to resolving the issues of sovereignty concerning the Russian-controlled Kuril Islands. This group of four islands, formerly part of Japan’s Northern Territories, were occupied by the Soviet Union at the end of WWII. Since the collapse of the Soviet Union, the Kuril Islands have become Russian governed-territory, although Tokyo has been attempting to reclaim sovereignty over the islands.

Perhaps the omens for a lack of breakthrough were self-evident following Moscow’s rejection, a few weeks earlier, of Tokyo’s offer of a Japanese-bred male Akita dog to complement Yume, a female dog of the same breed, which Abe had gifted to Putin in 2011.

Realistically, though, the prospects of achieving any diplomatic advances were always likely to be a long shot at this stage of a relationship still in the process of being revitalized. When Abe sided with U.S.-led sanctions following Russia’s annexation of Crimea and the conflict in southeast Ukraine, Japan also cut most bilateral talks with Russia for over two years, from mid-2014 to mid-2016. That setback was going to require more than a hot springs “cleansing” away of strained relations or gift offerings, as far as Moscow was concerned.

Moreover, since that time, during which Russia was squeezed by U.S. and EU financial sanctions and political isolation amid a protracted economic recession, the global geopolitical situation has shifted dramatically in Putin’s favor. Conversely, Abe’s geopolitical position has become somewhat less certain given the ascendancy of China across the East Asian region and beyond, markedly strengthening China-Russia ties, and the likelihood of a shift in the U.S. president-elect’s foreign policy, which seems poised to place less emphasis on traditional allies, such as Japan, while favoring rapprochement with Russia. Reacting to these changes, Tokyo began reaching out to Moscow, reportedly over U.S. disapproval.

Abe’s Foreign Policy Break With Washington

Arguably, the most significant geopolitical driver impacting Tokyo’s break with the outgoing U.S. administration over the conduct of relations with Moscow has been Russia’s rapidly developing political and economic partnership, including increasingly closer military ties, with China. Indeed, the visibly strengthening coordination of relations between Putin and China’s President Xi Jinping, most especially involving a significant pick up in Chinese state-sector investment activities in the Russian Far East region, overlooking the Kuril Islands, may have prompted the Abe administration to re-establish direct talks with Russia in early 2016.

The first direct high-level talks between Japan and Russia was marked when Abe visited Putin in Sochi, Russia, in May 2016. Since that time, the two leaders have met on the sidelines of the Asia-Europe Meeting (ASEM) summit in Ulaanbaatar, Mongolia in July 2016; the Eastern Economic Forum (EEF) held in Vladivostok, Russia in September 2016; and the G20 summit in Hangzhou, China, in October 2016.

At lower levels of public administration, both sides have engaged in intensive intergovernmental committee talks on resolving their historic differences.  There have also been several meetings by their respective cabinet ministers in advancing economic, political, and social relations. Notably, Abe appointed Hiroshige Seko, currently the minister of economy, trade and industry (METI), to also assume the newly-created role of minister of economic cooperation with Russia – testimony to the elevated importance Abe now places on developing relations with Russia.

Even so, Putin has consistently stated that political relations between the two governments need to be resolved first before any diplomatic breakthroughs could be achieved. In this regard, Putin has placed the emphasis for a resolution of political relations on the issues surrounding Japan’s alliance obligations, citing the example of Japan’s sanctions on Russia in relation to events in Ukraine, which he has asserted should have no bearing on their bilateral relations.

Certainly, despite Abe’s initiation of bilateral talks with Moscow, Japan has not broken with its U.S. ally in maintaining sanctions on Russia. Such a policy approach is probably a reflection of Abe’s hopes for maintaining Japan’s overall longstanding alliance with the United States. At the same time, Abe looks to be intent on pursuing a bilateral foreign policy with Russia (and maybe China, in the future) that may not always be in tune with every aspect of U.S. foreign policy.

If so, such alternative policy positions could also explain Abe’s eagerness to be the first national leader to personally meet with President-elect Donald Trump at his New York residence in mid-November 2016.  To this end, Abe may have wanted to ascertain how the president-elect would view closer Japanese ties with Moscow, not to mention Beijing, outside of American foreign policy directions.

Russia’s Far East: The New Gateway for Improving Japan-Russia Ties

At the EEF summit, Abe’s references to Akiro Kurosawa’s classic movie, Dersu Uzala, a Japan-Soviet 1970s co-production about the tale of a native, nomadic trapper living in the vast forested wilderness of Eastern Siberia at the turn of the 20th century, can be claimed as one of the highlights of the Japan PM’s invocations for revitalizing his country’s ties with Russia. Abe addressed Putin, saying, “Let us occasionally enter the virgin taiga forest, get enveloped in the sunlight filtering through the trees that appeared in Akira Kurosawa’s Dersu Uzula, and together consider what kind of relations Japan and Russia must have 20 or 30 years into the future.”

Taking aside some of the rather strange double entendres implicit in this speech, Abe’s choice of an almost forgotten but highly-regarded film of the Soviet-era, involving a partnership between a native of Far East Russia and a Russian military officer, from European Russia, neatly summed up Putin’s flagship economic projects – the development of Russia’s Far East region and the country’s overall swing toward Asia.

From Abe’s perspective, the two principal policy issues surrounding the development of this region would be, first, the extent of Japan’s involvement in developing the Russian Far East – where Chinese state and private sector investors have been expanding at an accelerating rate – and, second, how Japanese investment would be managed in the Kuril Islands, being part of the Russian Far East, leading to some kind of eventual political breakthrough.

The first stage, therefore, in the rapprochement between the two sides has been led by mutual economic cooperation in Russia’s Far East regions. According to the outcomes of Putin’s two-day visit to Japan, the main elements of this cooperation involved the conclusion of about 70 commercial agreements, among others covering culture, sports, people-to-people exchanges, and the like.

A number of the business deals announced involved private sector investments, including an agreement on the Arctic LNG-2 project between Russia’s Novatek, currently under U.S. sanctions, and Japan’s Marubeni, Mitsubishi, and Mitsui corporations. Otherwise the commercial agreements cover a variety of sectors, including nuclear energy, natural gas and coal infrastructure, agriculture, the environment, and healthcare. The energy deals also involved some of Russia’s largest state-owned companies in this sector including Rosneft and Gazprom, both of which are currently under various forms of U.S. sanctions, and Tokyo Electric Power, Japan’s largest utility enterprise.

Additionally, the Russia Direct Investment Fund (a Russian sovereign wealth fund also under U.S. sanctions) and the Japan Bank for International Cooperation agreed to establish a $1 billion investment fund that will serve as a platform in financing joint investment projects in Russia, including energy and infrastructure over the next five years.

It should be pointed out that while these aforementioned Russian energy and investment entities are under U.S. sanctions, the deals announced may not in of themselves necessarily break the specific sanctions criteria.  Nevertheless, the principle is that Japanese political and corporate interests have signaled their willingness to pursue business deals not wholly in line with the outgoing U.S. administration’s policy outlook, as reflected in its sanctions and diplomatic isolation of Russia.

Conclusion

While the Abe-Putin meeting in Japan did not result in the conclusion of a peace treaty and resolution of disputes over sovereignty of the Kuril Islands, the two sides seem to have established the key principles of “mutual trust” and “mutual cooperation” as cornerstones in determining their bilateral relations going forward. As Putin stated in an interview to Japanese media prior to his Japan visit, these principles, among others, are also the building blocks of the fast-developing strategic partnership between China and Russia – a relationship which Japan views with a great deal of interest and concern.

In this context, developments in the supply of East Siberian energy and other economic deals, including the start of talks for joint economic cooperation on the Kuril Islands, are also likely to push forward Japan-Russia ties. According to both leaders, this cooperation should contribute toward significantly enhancing their mutual political and security relations.

What impact Japan’s twist, if not exactly a pivot, toward Russia may have for Japan-U.S. relations remains to be seen, but most likely the pattern of bilateral relations will become a more complex patchwork across the Asia-Pacific than has been the case over the last quarter century.

Bob Savic is a Senior Research Fellow at Global Policy Institute, London Metropolitan University and a Partner in Eurasia Corporate Services, St. Petersburg Capital Management LLP.

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