24 July 2021, NIICE Commentary 7132
Dr. Elena A. Goriacheva

For more than 70 years after the end of the Second World War, Russia and Japan have an unsolved problem – the peace treaty between two countries has not yet been concluded. Japan’s official position on the conclusion of the bilateral peace treaty with Russia is first the resolution of territorial dispute over the Southern Kuril Islands

During the Soviet era, after the World War II, USSR refused to recognize the existence of its territorial dispute with Japan. Mikhail Gorbachev, last USSR leader, General Secretary of the Communist Party of the Soviet Union, later recognized the territorial problem and started talks with Japan in 1991. Although, In the year 2008-2012, Putin’s successor President Medvedev likewise was not able to make serious political solutions, due to ‘tandem regime’, with the requirement to gain approval for every decision from Putin. Several frail democratic party leaders in Japan were replaced at that point of time. Medvedev had taken several trips to Kurils as first leader of Russia in the history, and that made negotiation process even more complicated. In 2012-2020 both Russia and Japan were under administration of strong and popular leaders, experienced politicians – Abe and Putin. However, it became difficult for Japan to negotiate with Russia, because Japan couldn’t afford any significant compensation of territorial loss for the well-developing economics of Russia, neither could Japan offer any other acceptable solution.

In July of 2020, with the constitutional reform in Russia several amendments were made. The Article 67 of the Russian constitution now stipulates “The Russian Federation ensures the protection of its sovereignty and territorial integrity. Actions aimed at alienating part of the territory of the Russian Federation, as well as calls for such actions are not allowed”. Thus, most of the Russian and Japanese experts now envisage that it could be more and more difficult for Japan to create a basis for the future negotiations on the problem. Now that Russian government has approved amendments to the Constitution, and the long-term tenure of PM Abe’s Cabinet is over in Japan, it becomes imperative under these circumstances for both states to create and discuss predictive model of Japanese-Russian bilateral cooperation

In fact, economic cooperation between Russia and Japan gained new impulse by the announcement of “The Eight-Point Cooperation Plan” (8項目の日ロ経済協力プラン) by Japan’s Premier Minister Shinzo Abe in May, 2016. It aimed to establish more mutual economic ties between Japan and Russia, including development of the Far East and Siberia regions of Russia. The implementation of this “Plan of eight points” was specified in a number of agreements signed during the EEF-2016, and the visit of V.V. Putin to Japan on December 15-16, 2016.

Japanese media called this plan aimed at strengthening economic cooperation with Russia, on  one hand, a “breakthrough” (突破口, and on other, “only the first step” (序 の 口 に 過 ぎ な い) in resolving the territorial issue. This strategy for the implementation of joint projects was aimed at creating a comfortable environment for cooperation in Russia based on mutual trust, and the goal of this strategy was to promote a positive response from Russia in the longer run during negotiations on the South Kurils.

The Eight Points Plan of Japan-Russia Economic Cooperation included the following areas:

  1. Increasing the duration of a healthy life.
  2. Creation of a comfortable and clean urban environment, conducive to living and working
  3. Strengthening cooperation in the field of small and medium-sized businesses.
  4. Cooperation in the field of energy.
  5. Diversification of industry and increasing its productivity in Russia.
  6. Development of industry in the Far East and the transformation of this region into an export base.
  7. Cooperation in the field of advanced technologies.
  8. Substantial development of humanitarian exchanges.

In connection with the advancement of Japanese enterprises to the Russian market, the work of the expert community of Japan (Nomura Research Institute, the Economic Research Institute for Northeast Asia (ERINA), etc.), which analyses the Russian market in an applied manner, has also intensified. The views and recommendations of the Japanese expert community does seem worthy of careful acquaintance both for the Russian scientific and business communities. Recommendations for Japanese enterprises apply to both the all-Russian and regional markets. Their analysis of the possibilities of the Russian market, made using the SWOT analysis method, is as follows in Table.

Russian-Japanese economic relations in the second decade of the 21st century has persisted to develop; however, the dynamics of this development has continued to remain insignificant. Over the past few years, Japanese business in Russia in general, and in Pacific Russia, in particular, has received a positive impetus for development in the form of support from the Russian government (preferential taxation regimes and attracting foreign investors – Priority Social and Economic Development Areas (PSEDA), the Free Port of Vladivostok) and the Japanese government (informational support of enterprises wishing to enter the Russian market, as well as promotion activities of the Japan Centres and Japanese Consulates General in Russian cities). Nonetheless, the Japanese business circles side took these initiatives with caution.

In terms of the development of cooperation after 2016, economic dialogue between Japan and Russia has intensified among small and medium-sized enterprises. This is especially obvious against the background of comparing the situation with bilateral cooperation in the field of large-scale projects. It seems that cooperation is more successfully carried out between enterprises of the regional level, with minimum approvals and administrative barriers. In general, the course announced by the Japanese government to build the foundation for future, better-neighbourly relations with Russia through the development of economic interaction can theoretically be implemented. And this will indeed contribute to the solution of political problems in bilateral relations, however, in practice, the implementation aspect could be more challenging and yet requires to be resolved for the effective implementation of this policy.

Dr. Elena A. Goriacheva is a Research fellow at Global and Regional Studies Centre, Institute of History, Archaeology and Ethnology of the Peoples of the Far East, Far Eastern Branch of Russian Academy of Sciences, Vladivostok, Russia.