Dmitry Streltsov, MGIMO University

On 7 September 2017, Japan’s Prime Minister Shinzo Abe and Russian President Vladimir Putin met on the sidelines of the Eastern Economic Forum.

For Abe, this latest summit with Putin — their 19th such meeting — is another milestone in his renewed strategy of signing a ‘peace treaty’ with Russia, which is itself a euphemism for the territorial dispute over the Northern Territories. This strategy is part of the ‘new approach’ in Japan’s Russia diplomacy — that is, to depart from the futile tactic of negotiations and concentrate on the aim of creating an atmosphere of ‘mutual trust’ in bilateral relations, which would in turn create the necessary emotional environment for resolving the dispute.

One step in this direction was taken during Putin’s 2016 visit to Japan. The leaders announced an initiative on joint economic activities in the South Kuril Islands under a ‘special legal regime’ which would neither damage nor be detrimental to the positions of either Japan or Russia. For Japan, joint economic activities are a step towards ensuring its economic presence in the South Kurils, which would provide additional support for its territorial claims over the islands. For Russia, it is an opportunity to attract foreign investment to this underdeveloped region.

Five promising areas for joint activities were set before the meeting between the two leaders: aquaculture, greenhouse farming, tourism, wind power and waste reduction. During the forum, the two sides decided to establish an intergovernmental channel at the working­­­­­ level on specific areas of cooperation and human exchanges and to send a new delegation of officials and businessmen to the islands.

But bringing about such a ‘special legal regime’ will likely  prove near impossible. Not only are there no historical precedents, but for Moscow it would also mean an absolutely unacceptable departure from its principle of the supremacy of Russian law on the islands. Accepting a special legal regime would imply Moscow’s abandonment of its position of immutable Russian sovereignty over the Kurils.

In August 2017, the Russian government designated the South Kurils as a ‘territory of accelerated development‘, providing tax incentives and reducing customs duties for both Russian and foreign businesses. This understandably aroused a negative reaction from Japan. The strongest criticism was caused not by the need to follow Russian laws, but by the opening of the region to other foreign investors. In Tokyo’s view, any preferential economic rights should be extended only to Japan.

Against this background, the key problem the Japanese government will have to tackle in the near future is whether to allow Japanese businesses to operate under the Russian legal regime, which regulates issues of taxation, administrative control and visas for Japanese citizens staying on the Islands.

Abe attached particular importance to the outcomes that could be measured as progress towards signing a bilateral peace treaty. This was clear in his speech to the Eastern Economic Forum where he called on both parties ‘to put an end to the abnormal situation’ around the Kuril Islands and called on the Russian President to fulfil the duty of concluding a peace treaty together.

Unlike Japan, in Russia this call has hardly received any noticeable response. Few in Russia believe that the gap in the two parties’ positions over the territorial dispute will ever be bridged and that a peace treaty — at least as envisaged by the Japanese side — will ever be signed. Moscow is evidently participating in talks on the territorial dispute for tactical reasons, following the lead of Tokyo for the sake of fair political relations with Japan, which are indispensable for economic cooperation.

In its future relations with Russia, Japan will find itself in a difficult position. On the one hand, contrary to Russian expectations, Japan will probably refrain from getting involved in large-scale bilateral infrastructure projects in the Russian Far East and Siberia. The main reason for this is not to facilitate concessions from Moscow on the territorial dispute. Instead, it is the understandable doubts over the commercial viability of such megaprojects and Tokyo’s sober-minded assessment of Russian sovereign risk, not to mention Japan’s duties under the US alliance and its participation in anti-Russian sanctions.

On the other hand, resolution of the territorial dispute remains a significant political issue domestically in Japan, so Tokyo will continue its efforts to sustain good political contacts with Moscow. Besides, within the G7, Japan is trying to assert its right to special connections with a ‘hostile’ Russia, arguing that good Russian–Japanese relations are an important element of international political stability in East Asia, especially in light of the current tensions on the Korean Peninsula.

Evolution of the growing Russian–Chinese strategic partnership towards a full-fledged military alliance would also be a nightmare for Tokyo and Washington. By forging links with Moscow, Japan can prevent an undesirable ‘pro-China roll’ in Russian foreign policy.

Regardless of the future outcomes of Tokyo’s strategy of peace treaty talks with Moscow, Russian–Japanese relations are bound to remain robust.

Dmitri V Streltsov is the Head of the Afro-Asian Department and Professor at Moscow State Institute of International Relations.

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