Lack of trust hampers Russia-Japan economic cooperation progress

2017-09-06 16:37:36Xinhua Gu Liping ECNS App Download

Although Japanese Prime Minister Shinzo Abe will personally travel to Russia to attend the third Eastern Economic Forum scheduled for Sept. 6-7, a lack of trust still hampers progress in economic cooperation between Russia and Japan.

During the Russia visit, Abe will meet Russian President Vladimir Putin.

Experts said the legal framework for joint economic activities in the disputed islands known as the Southern Kurils in Russia and the Northern Territories in Japan will be a key issue in the talks between the leaders.

During Putin's official visit to Japan last December, the leaders of the two countries announced the beginning of consultations by experts on joint economic activities in the Southern Kurils as an important step toward the conclusion of a peace treaty after World War II.

However, legal issues have become a stumbling block to the implementation of the reached agreements, experts said.

Russia has repeatedly stated that joint economic activities will be conducted on the basis of the Russian legislative framework, since the islands belong to Russia, while Japan said it contradicts its principled position that the islands are "illegally occupied."

"The main issue at the meeting in Vladivostok will be the ability of the parties to agree on the legal basis on which the joint development of the Southern Kurils will be conducted," said Valery Kistanov, head of the Japanese Studies Center at the Far Eastern Studies Institute of the Russian Academy of Sciences.

In March, Moscow said Russia would not wait long and would propose creating a Priority Development Area (PDA) in the Kurils if Tokyo did not take concrete steps on joint economic activities, and in July, the Development Corporation of the Far East announced the receipt of the first application for a new PDA.

Kistanov believes that the decision to create a PDA proves the existence of difficulties in the negotiations on joint economic activities.

Currently, trade and economic relations between Russia and Japan, according to Kistanov, are at a low level and do not meet their potential. Trade between the countries decreased by almost a quarter and amounted to 16 billion U.S. dollars in 2016.

Russia is interested in involving Japan in projects in the Far East, but experts said there are factors hindering economic cooperation, including insufficient development of the Russian infrastructure, low attractiveness of investment in Russia, and stagnation of the Japanese economy.

"Japanese businesses are wary of trade and economic cooperation with Russia, especially in the face of sanctions imposed by the West," Kistanov said.

Viktor Kuzminkov, senior research fellow at the Japanese Studies Center at the Far Eastern Studies Institute of the Russian Academy of Sciences, also stressed the need to take into account Japan's economic dependence on the United States, especially in view of the continuing confrontation between Moscow and Washington.

The agreements signed during Putin's visit to Japan in December cover the agro-industrial complex, pharmaceuticals, banking and investment spheres. Experts call the energy sector the most promising direction for the coming years.

The two economies are complementary in the energy sector, as Japan needs more diversified imports of energy resources other than those from the Middle East while Russia is ready to export its energy products.

But Washington, as Bloomberg news agency reported in July, objected to joint plans by Japan and Russia's oil giant Rosneft for oil prospecting in the Far East under an agreement the parties signed in December.

In addition, the Countering America's Adversaries Through Sanctions Act secures the U.S. president the right to impose sanctions on individuals and companies that invested in construction of export pipelines from Russia for 1 million dollars per time or more than 5 million dollars per year.

It may scare off Japanese investors from participating in Russia's oil and gas projects, including the construction of the Sakhalin-Hokkaido gas pipeline, in which the parties confirmed their interests in December.

Meanwhile, Kuzminkov noted that Japan depends on the United States not only in the economy, but also in defense and security issues.

"The United States and Japan have such close ties that they work as partners. And the American point of view not always prevails, because Japan also uses the United States in its own interests to ensure its security," Kuzminkov said.

According to Japanese news media, Japan has completed the deployment of the U.S. PAC-3 air defense systems in the southwestern regions, announced plans to send to the Pacific ships equipped with the U.S. Aegis tracking and guidance system, and admitted the potential deployment of U.S. military bases on the disputed islands in case of their transfer to Japan.

Russia, in its turn, cannot allow all this to happen, especially in the face of growing contradictions in the Asia-Pacific region, where the United States has been trying to strengthen its position.

Security is just one of the issues generating Moscow's distrust of Tokyo. It takes time to establish a trustful dialogue at all levels. Therefore, breakthrough agreements on the issue of Southern Kurils at the forthcoming negotiations between Putin and Abe at the Eastern Economic Forum are highly unlikely.

"To develop economic cooperation and to resolve the territorial issue, Moscow and Tokyo need to raise the level of trust," said Kuzminkov.


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