Russian President Vladimir Putin (L) meets with Japanese Prime Minister Shinzo Abe (R) in Sochi on Feb. 8.(MIKHAIL KLIMENTIEV/AFP/Getty Images)
Summary
The recent Russo-Japanese warming of relations has come under pressure during the Ukrainian crisis as Japan seeks to show solidarity with the West and Russia courts Chinese economic cooperation. But neither Tokyo nor Moscow wants to miss the rare opportunity to work together now that each has something the other needs.
Japanese Deputy Foreign Minister Akitaka Saiki denied that Japan would suspend negotiations with Russia over the disputed southern Kuril Islands and a peace treaty, Russia's Itar-Tass reported May 12. Previous rumors indicated that Tokyo would suspend talks temporarily amid the Ukrainian conflict, according to Kyodo News. The latest round of territorial and peace talks began in April 2013 and is part of the larger initiative between Moscow and Tokyo to improve relations for the sake of broader national security and economic interests.
Analysis
Russia is partly a Pacific power and always has a basic interest in defending its Far Eastern territories as well as maintaining a hand in East Asian relations. Japan is a sprawling Pacific power whose geographic position helps to explain the long animosity between the two -- Japan is wary of Russia's attempts to project power from Siberia, while Russia is wary of Japan's ability to block its maritime (and potentially overland) access to the rest of the region. Since the Cold War, Tokyo and Moscow have made various bids to remove institutional barriers to working together; Japanese investment in Sakhalin-2 liquefied natural gas, most of which is shipped to Japan, is an example of cooperation between the two. But the sovereignty and territorial disputes in the north, as well as the lack of a peace treaty to remove other political, legal and regulatory barriers, have always interfered.
In recent years, Russia has become more interested in the Far East because of the rising need to diversify away from Europe and attract foreign investment to modernize its economy (and invest in Asian growth). Japan has also become more interested in dealing with Russia because it needs access to diverse, affordable and reliable supplies of natural resources to fuel its advanced economy, especially after its nuclear shutdown in 2011. Japan's consumption is not growing as quickly as China's, but it is large and relatively stable, and Japanese companies have the cash and institutional knowledge to make business partnerships attractive to Russia.
To clinch the new opportunity for cooperation, the rise of China has crossed a threshold of concern for its neighbors -- Japan has a new impetus to settle a range of disputes with Russia, the Koreas and others so as to direct more attention to China. Russia seeks a variety of Asian energy routes and customers, and wants to maintain a military-strategic balance in the region -- not only between China and the U.S. alliance, but also increasingly between China and its neighbors. Russia has reached out to Japan, the Koreas, Vietnam, Indonesia and India, with other possibilities on the horizon.
Trade and Investment Are Not Booming Yet
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The two countries have good reason to set aside old grievances, but they still face limitations. Economically, the two start from a low level of relations due to decades of hostility and bilateral restrictions. Improved relations in recent years have not yet led to remarkable trade and investment returns. Aside from Japan's spiking oil imports as a result of the nuclear shutdown, trade was mostly stagnant in 2013. Moreover, by the end of 2012, the stock of Japan's direct investment in Russia was only $2.7 billion, comparable to its investments in Italy, South Africa and New Zealand but far lower than in Brazil at $35 billion, China at $93 billion or the United States at $287 billion. And last year's investment flows do not suggest a spike as a result of any Russo-Japanese detente -- Japanese investment in Russia actually fell from $757 million to $447 million. Russia's share of Japan's total outward investment, at one-third of a percentage point, has hardly changed at all over the years (thus putting Russia with most of the rest of Europe, whereas the ASEAN, Brazilian and Indian shares of Japanese investment have grown). So while Tokyo and Moscow have big plans for future trade and investment, especially in energy, these plans remain in an early state of negotiation.
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As the two negotiate new deals, existing business difficulties will continue. For example, Japanese companies recently pulled out of a long-troubled bid to buy a 10 percent stake in Yamal LNG after getting outbid by the Chinese, while other companies reportedly avoided making commitments to Rosneft during a March meeting covering upstream and downstream potential. Cash-strapped Russian Railways canceled its scheduled purchases of rail from abroad, including a deal to buy rail from Japan's Nippon Steel, to buttress domestic firms. Russian customs in Vladivostok also increased the number of Japanese cars and car parts they impounded because of radioactivity in the first quarter of 2014, a protectionist measure that Japan greatly fears. Clearing the way for more robust business ties will take time.
A Lingering Territorial Dispute
Deep-set strategic distrust and historic grievances cannot be easily overcome. Russia is continuing its 2011 plan to modernize the disputed southern Kuril Islands, which involves adding still more military vehicles and upgrading facilities in the coming years, according to the Russian Defense Ministry. The Russians cannot be expected to yield their military base on Iturup Island (known as Etorofu in Japan), though splitting the island is conceivable. Still, it remains to be seen whether the Japanese could tolerate a solution in which they receive less than the whole of the territory they claim, like the half-and-half territorial solution that Putin arranged with China over Yinlong and Heixiazi islands. Without settling sovereignty disputes, the peace treaty hangs in limbo.
Furthermore, hurdles to closer ties have recently begun popping up as a result of the Ukraine crisis. Japan joined the United States and European powers in imposing sanctions on Russia, albeit weak ones targeting 23 Russians' visa clearance to Japan. Japan's foreign minister canceled a visit, and negotiations over boosting joint investment and easing visa restrictions have been delayed. These hurdles have also interfered with closer security relations. Japanese defense officials have asked Russia to reduce what they call an "abnormal" uptick in bomber flights near Japanese territory (though the flights have not entered Japan's airspace). Until recently, Japan scrambled more jets every year against the Russians than the Chinese, and maintaining a high tempo on both fronts is not necessarily desirable. There is also the possibility that Russian naval drills with China in mid-May could irritate Tokyo by coming too close to islands it disputes with Beijing in the East China Sea.
Yet despite the inevitable false starts, delays and distrust, Russia and Japan do not yet appear to be reverting back to previous antagonisms. In dealing with Ukraine, both sides have suggested they do not want to provoke each other excessively. The Russians seem to have shifted the naval drills with China away from Japan's territory; the Japanese imposed weak sanctions and still plan to attend an investment forum in St. Petersburg. The two sides have also maintained communication, despite the Ukraine sanctions -- Japanese National Security Adviser Shotaro Yachi has visited Russian Security Council Secretary Nikolai Patrushev twice in as many months to discuss Ukraine, explaining that while Japan will coordinate with the G-7 in responding to Russia, it will not cut off official dialogue with Moscow. At a time when France and Germany remain hesitant to confront Russia, Japan knows it can avoid taking an overly aggressive stance.
Notably, the two sides have not immediately tried to solve their most contentious, World War II-era disagreements on sovereignty and peace, but rather have initiated open-ended dialogue while simultaneously pressing forward more quickly on practical lines of cooperation. Eventually, progress in these pragmatic areas may help smooth the way for resolving the deeper conflicts. As mentioned, the thaw has already led to more promising negotiations on enabling natural gas exports from Vladivostok LNG and potentially Sakhalin-3. The two sides also foresee greater cooperation on Siberian oil and gas production, rising Russian coal exports, better shipping and logistical ties, and a range of lesser manufacturing and agricultural projects.
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In the more distant future, Russia and Japan envision a 16 billion-20 billion cubic meter pipeline from Sakhalin through Hokkaido to the eastern Japanese seaboard. Both sides have entertained various routes for such a pipeline alongside ideas of extending the Trans-Siberian Railway to Japan. Russia's greater willingness to follow through on large East Asian infrastructure projects (such as the Power of Siberia pipeline it is likely to begin building after sealing a natural gas deal with the Chinese), combined with Japan's shifts in outward investment, disposition toward Russia and electricity sector restructuring, all may inject more optimism into some version of closer natural gas trade linkages. Meanwhile, launching regular talks between Russian and Japanese foreign and defense ministers in 2013 has led to promises of information exchange and joint drills to prepare against terrorism, piracy and cyber threats -- all potential ways to reduce distrust.
As long as Tokyo and Moscow remain willing to handle delays due to U.S.-Russian tensions and remain engaged in talks toward border settlements and a peace treaty at some unspecified future date, they appear to have a better chance of negotiating concrete advances in practical areas. Despite Russia's overt need for China's strategic partnership, its long-term interest in re-engaging the Asia-Pacific region has as much to do with hedging against China as it does with benefiting from China's growth. Russia's pursuit of a greater presence in East Asia is a firmly established strategic and economic trajectory -- as is Japan's need to maintain energy security and shift attention from its northern borders to China.
The one force most capable of derailing closer cooperation between the two is the United States, which remains the anchor of Japan's national security but is increasingly uncomfortable with Russia's actions in Europe. U.S.-Russian antagonism may ultimately pull Japan and Russia apart, but this is not a foregone conclusion -- it may instead add to latent tensions in the U.S.-Japanese relationship without stopping Tokyo and Moscow from realizing their shared interests. Barring a starker global realignment, Japan and Russia seem willing to work through delays and irritations in pursuit of shared long-term interests.
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