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“Worst” Russia-U.S. relations since Cold War may affect Japan-Russia negotiations

By Taisuke Abiru, research fellow at the Tokyo Foundation

 

With Russian President Vladimir Putin’s visit to Japan scheduled for December this year, there is growing hope in Japan that bilateral negotiations between the two countries for a peace treaty may move forward. The reason why Russia is trying to improve and enhance its relations with Japan is that Moscow has shifted the focus of its diplomacy to the Asia-Pacific region based on its “eastward rebalance” policy. There are other reasons as well, including Russia’s deteriorating relations with the U.S. and European countries over Ukraine and Syria as well as stalled economic cooperation between Russia and China. Especially, U.S.-Russia relations are said to be the worst since the end of the Cold War, and the future course of U.S.-Russia relations might significantly impact the progress of negotiations between Japan and Russia.

 

In retrospect, signs of Russia’s intention to improve and enhance its relations with Japan date back to March 2012, shortly before Putin’s return to power as president, when he referred to “hikiwake” in Japanese, meaning a draw, at a meeting with journalists from major foreign newspapers, including then Asahi Shimbun chief editor Yoshibumi Wakamiya. Afterward, Russian Security Council Secretary Nikolai Patrushev came to Japan in October for the first time and made an agreement with the Ministry of Foreign Affairs (MOFA) to create a framework for strategic dialogue. Later, the National Security Secretariat under the Abe administration took over the framework.

 

Coincident with such a course of action, Putin launched the eastward rebalance policy by announcing in his state of the nation address in December 2012 that “Russia will focus on the development of the east region for its growth in the 21st century.” At that time, the European economy, in which Russia used to hold political and economic stakes, remained stagnant after the Lehman financial crisis in 2008. On the other hand, China, which had quickly recovered from the crisis with a huge investment in public works, continued its economic growth. This was also the time China became aggressive in its maritime policy.

 

In the meantime, the Obama administration announced its “rebalance policy” in November 2011, focusing more on the Asia-Pacific region and reducing excessive engagement in the Middle East, a negative legacy from the previous Bush administration. In this way, as the center of the global politics and economy shifted to the Asia-Pacific region, it was imperative for Russia, which had excessively relied on Europe, to move its political and economic basis to the Asia-Pacific region.

 

Rift between Russia and the West over the Ukraine issue

 

The central pillar of Putin’s eastward rebalance policy is the development of the Far East and Siberia regions. China, the second largest economic power and sharing a long border with Russia, is obviously the most important partner for this project. However, heavily relying on China for the development of these regions could become a political risk in the future. Consequently, Putin decided to improve and enhance relations with Japan, which is economically as strong as China in the Asia-Pacific region. In this way, Putin aimed to build multilateral diplomatic relations both politically and economically in the region.

 

At the end of December 2012, the Abe administration was inaugurated, and diplomatic relations between the top leaders of Japan and Russia were accelerated. Abe made a state visit to Moscow in April 2013. In February 2014, Abe visited Russia again to attend the opening ceremony of the Sochi Winter Olympics and met with Putin. This was their fifth summit meeting since April 2013. In this meeting, the two leaders agreed that Putin will visit Japan in fall 2014.

 

In the fall of 2013, however, the political situation in Ukraine became unstable. As a result, the pro-Russia Yanukovich administration collapsed in February 2014. In March, the Crimean Autonomous Republic in the south of Ukraine declared independence, and Russia announced that it would annex Crimea. A civil war broke out in the eastern part of Ukraine between the Kiev administration and a pro-Russia group. The Obama administration, denouncing Russia’s annexation of Crimea and its involvement in the civil war, imposed economic sanctions on Russia and the EU followed America. Russia countered by imposing economic sanctions on the U.S. and the EU; thus, their relations went from bad to worse.

 

Rapid China-Russia rapprochement

 

Japan, attaching importance to the unity of the Group of Seven (G-7) nations, joined the U.S. and the EU in imposing economic sanctions against Russia. However, unlike U.S.- and EU-imposed sanctions, such as prohibiting Russian government officials and business leaders from entering the western countries and banning the provision of energy technology and funding to major Russian companies, Japan’s sanctions were not as strong and remained moderate. The Abe administration, which had already begun taking measures to enhance relations with Russia, intended to minimize the negative impact of Japan’s economic sanctions against Russia. However, Putin’s visit to Japan scheduled for fall 2014 had to be postponed.

 

Under such circumstances, Russia rapidly formed close ties with China, which had distanced itself from the west and western economic sanctions on Russia. This was symbolized by two events: 1) In May 2014, after negotiations lasting as long as eight years, the two countries signed an agreement for Russia’s provision of natural gas to China for 30 years and for the construction of “Power of Siberia” pipelines from Russia to China; and 2) in May 2015, Putin and Xi Jinping agreed to discuss a medium- and long-term project for combining the “Eurasian Economic Union” led by Russia that covers the Central Asian region with the “Belt and Road” initiative led by China.

 

Russia and China have also enhanced their bilateral relations in the security area. They conducted joint military exercises in the Mediterranean Sea in May 2015 and in the South China Sea in September this year. The former was reportedly proposed by Russia and the latter by China. Undoubtedly, the Abe administration became wary of closer relations between Russia and China. In February 2015, Germany, France, Ukraine and Russia concluded “Minsk II,” which included a ceasefire in eastern Ukraine. Then the Abe administration notified the U.S., which was also seeking ways to improve relations with Russia, that Tokyo would resume the process for realizing Putin’s visit to Japan.

 

Although the Obama administration responded negatively to Japan’s notification by saying, “It is still premature to return to normal business with Russia,” the Abe administration pushed ahead with Foreign Minister Fumio Kishida’s visit to Moscow in September 2015 and with Abe’s visit to Sochi in May this year. In a meeting with Putin, Abe proposed an 8-point economic cooperation plan. Putin and Abe met again in September in Vladivostok where the two leaders officially announced that Putin will visit Japan on Dec. 15.

 

As a result of Abe’s persistent approach to Putin, the Russian president decided to visit Japan in December this year. Given the fact that the economic sanctions by the U.S. and the European countries are still in place and Russian companies have not received as much financial assistance from China as Moscow expected, Russia strongly welcomes the 8-point economic cooperation plan proposed by the Abe administration. How Japan will be able to concretize the eight points in the plan will strongly impact bilateral negotiations on a peace treaty to settle the Northern Territories issue, which the Abe administration is aiming for.

 

Financial sanctions by the U.S. as a bargaining chip

 

What will likely stand in the way of economic cooperation between Japan and Russia are U.S.-Russia relations. When Abe visited the U.S. in September this year to meet with former Secretary of State Clinton, then the Democratic presidential candidate, Abe reportedly elicited from Clinton the remark that she will “accept” the Abe administration’s diplomacy toward Russia. However, since then U.S.-Russia relations have deteriorated over the Ukraine and Syrian issues, especially with the repeated collapse of ceasefire agreements. The U.S. State Department announced in October that it will suspend bilateral talks between the U.S. and Russia–talks intended to resolve the Syrian civil war. Tensions reached a new height.

 

The U.S.’s bargaining chip is its imposing of financial sanctions on Russia. As long as Washington imposes financial sanctions on Russia, financing Russia-related businesses in dollars is impossible. For this reason, as part of Japan’s economic cooperation with Russia, Tokyo plans to have Japanese companies fund Russia-related businesses in yen and rubles through the Japan Bank for International Cooperation (JBIC), but it will be indispensable for Japan to make policy coordination with the U.S. to move forward with this plan.

 

On Oct. 27, Putin met with a group of Russian and foreign experts in Sochi. In reply to a question I asked there, Putin implied that it will take some time to build strategic relations between Japan and Russia, including the enhancement of economic relations. As bilateral economic cooperation between Japan and Russia becomes concrete, Japan will likely have to go beyond the U.S. financial sanctions on Russia. Depending on how U.S.-Russia relations develop in the future, Japan may have to make a difficult decision as it might face the dilemma of choosing between the development of Japan-Russia economic cooperation and the Japan-U.S. alliance.

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