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Of all major countries, Japan has been the only one to pursue relations with Russia on a generally positive trajectory since the 2014 Ukraine crisis. Recently, the pace of exchanges has accelerated, and the scope and depth of Russo-Japanese discussions have been growing quickly. From May 2016, Moscow and Tokyo have entered a period of intense diplomacy aimed at achieving a breakthrough in their relations, which continue to suffer from a dearth of economic links, weak societal ties, and the lingering territorial dispute dating back to World War II. Whether Japan and Russia can manage to resolve their outstanding issues and put their relationship on a solid economic foundation secured with a modicum of trust is still a question to be answered, possibly within the next two years.

From Sochi to Vladivostok

In May 2016, Prime Minister Abe Shinzo traveled to Sochi for a meeting with President Vladimir Putin, thus ending a two-year pause in substantive top-level contacts with the Kremlin. In September 2016, Abe came to the Eastern Economic Forum in Vladivostok to continue exchanges with the Russian leader. In December 2016, Abe will host Putin in Yamaguchi prefecture, where his home is, an unprecedented gesture for a Japanese prime minister. Before that, the two leaders will be seeing each other briefly in November at the APEC summit in Peru. Their aides will have an even busier schedule, with not just foreign ministers, but deputy premiers and other officials in charge of economics as well as national security council chiefs conferring frequently to help prepare the ground for what might become a historic compromise.

It is easy to see that it is Prime Minister Abe who is the main driving force behind this rapprochement. Russia has been on his agenda ever since he became Japan’s leader for a second time in December 2012. In February 2014, just before the outbreak of the Ukraine crisis, Abe came to Sochi for the Winter Olympics that Putin was hosting—in spite of the de facto boycott of the games by the United States and most other Western leaders. In the subsequent months, Japan duly joined its allies and partners in expelling Russia from the G8, which thus reverted to its original G7 format, and in leveling economic sanctions on Russia for its policies in Ukraine. Japan, however, never demonstrated particular fervor in its condemnation of Russia, creating and then cultivating an impression in Moscow that it was doing all this essentially out of solidarity with its key ally, the United States.

When Abe came back to Sochi two years after his Olympic visit, he brought with him an eight-point plan of cooperation with Russia. The plan had been developed by his trusted aide, and coordinated with all relevant ministries. The Abe plan, not coincidentally, echoed the main socio-economic priorities named by President Putin in several of his annual state of the nation addresses to the Russian parliament. At the top of the list came demographic issues, including health; this was followed by housing and environment and small and-medium-sized business exchanges. Energy cooperation, usually the main area of interest for foreigners dealing with Russia, featured only fourth, followed by economic diversification and raising productivity, developing export-oriented industries in Russia’s Far East, high-technology cooperation, and humanitarian exchanges.

A Russian journalist quipped that Abe’s plan would have made an excellent election platform for Putin’s United Russia party, which was then precisely in the midst of an election campaign for a new Duma. No wonder that when Abe provided specific details on his plan in Vladivostok, Putin took his partner’s “homework” positively: it was clearly geared to Putin’s own priorities. Abe also took the remarkable step of setting up a special ministry for economic cooperation with Russia. This move, of course, stood in stark contrast to the recent sharp decline in the rather modest volume of bilateral trade between the two countries, but it demonstrated the prime minister’s decision to use economic incentives as a major instrument in his overture to Russia.

It helps that Putin and Abe have long established an excellent personal rapport. The Russian leader appreciates foreign partners who know where they stand, act out of their countries’ national interests, and can deliver what they promise. In Vladivostok, Abe sought to strengthen that personal relationship and link it to his political agenda. He publicly addressed Putin by his first name, using the more intimate form of you common among close friends, and called upon the Russian president to engage in a joint effort to “put an end to the abnormal situation which has lasted for 70 years, and begin building a new epoch in Japan-Russia relations for the next 70 years.”¹

Abe is nothing if not an ambitious politician. He clearly wants to achieve something that has eluded all his predecessors since even before he was born: to restore the full integrity of Japan’s national territory. This means solving the issue of what the Japanese call their Northern Territories, and the Russians refer to as the South Kuriles, a string of islands in the Sea of Okhotsk, just north of Hokkaido that have been controlled by Russia since the end of World War II. To succeed where others have failed, Abe announced in Sochi “a new approach” toward negotiations with Russia. What it means, in a nutshell, is that instead of trying to justify the “correctness” of one’s own position in front of the other party, and demand the return of all four islands—Tokyo from now on would squarely aim at striking the best possible deal with Russia.

This dual approach—a package of economic cooperation projects coupled, importantly, with a palpable willingness to compromise over territory—found an echo in the Kremlin. Putin firmly stated that “Russia (was) not selling its territories,”² but he also said that, in a climate of better trust, compromise solutions may become possible, and cited as an example the Sino-Russian border agreement of 2004, under which Moscow handed over several river islands—a few hundred square kilometers in total area—that it had previously controlled to Beijing. The comment was not lost on the Japanese. After Vladivostok, Abe and Putin have been moving step by step, as they seek to achieve their respective goals, and both are moving with utmost care.

From Vladivostok to Yamaguchi and Beyond

As they continue this rapprochement, the Japanese prime minister and Russian president are each guided by national interests. Abe’s main goal in reaching out to Russia—beyond satisfying his ambition of resolving the long-standing territorial issue—is to prevent a too intimate strategic engagement between Russia and China. As a result of the Ukraine crisis, Russia’s relations with the United States have become confrontational, and its ties with Europe have badly frayed. By contrast, China features as one major economy in the world that has not joined the sanctions regime against Russia, and whose links with Russia have visibly strengthened. Japan sees this clearer than anyone. Given China’s growing might and influence, and the US drive to isolate Russia in the West, Japanese officials fear that Moscow may have to become Beijing’s follower, changing adversely the geopolitical and strategic environment for Japan.

What Abe seeks to prevent in particular is Moscow accepting parts of the Beijing political agenda in its relations with Japan. Russian leaders have already joined with their Chinese partners in calling for the defense of the legacy of their countries’ victory in WWII. In 2015, Putin and President Xi Jinping were star guests at each other’s military parade to mark the 70th anniversary of that victory, in Europe and in the Asia-Pacific. In 2016, their navies conducted joint drills in the Black Sea and the Eastern Mediterranean, and in the South China Sea. Since 2014, Russia has relaxed export restrictions on the transfer of high technology weapons, which it sells to China. Closer Sino-Russian collaboration on an anti-Japan platform, however, would be a nightmare for Tokyo. In particular, Japan is terrified of Russia giving support to China’s claims on the Senkaku Islands in the East China Sea, and its other claims in the South China Sea; and it would want Russia not to supply China’s People’s Liberation Army with advanced air force, air defense, and naval systems, which Tokyo finds destabilizing and threatening.

By contrast, a Russia that has good relations with China, but is not its junior partner; and that is generally friendly toward Japan, and linked to it by strong economic ties, would be a major asset to Tokyo’s diplomacy in Eurasia. Such a Russia would be a restraining factor with respect to China’s anti-Japan instincts; a principal supporter of the continental balance in Asia; and a potential partner to Japan in a number of regions, from the Korean Peninsula to Central Asia. What Tokyo has been trying to achieve through its rapprochement with Delhi, and more, it can accomplish by means of a stronger relationship with Moscow. 

Anchoring Japan’s foreign policy more firmly in Asia and Eurasia is also a means to hedge against possible changes in Washington’s global stance as the United States embarks on a difficult journey from unparalleled post-Cold War world hegemony to something more like pre-eminence, with inevitable long-term downsizing of US international commitments. As China’s military power and geopolitical ambitions rise, so will questions about the means of keeping Japan out of Beijing’s orbit. In the foreseeable future, the security alliance with the United States will remain the cornerstone of Japan’s foreign policy, of course, but it would need to be supported by new ties to continental powers in Asia. India alone would not do.

Unlike Abe, Putin does not appear to be a demandeur in the current rapprochement. Russia, of course, is going through a particularly rough patch, a painful economic recession at home and a confrontation with the United States abroad, replete with sanctions. Putin, however, is under no pressure at home to solve the territorial issue with Japan, which, to most Russians, simply does not exist. In the event of a solution, whatever its actual terms, Putin knows he will have to give territory, even as Japan, thanks to Abe, will gain it: not a palatable prospect. Putin also understands that he will need to tread carefully with China, in order not to undermine Moscow’s crucially important friendship with Beijing. Yet, having sized up his Japanese counterpart, Putin has apparently decided to move ahead.

What Putin is looking for as he is responding to Abe’s opening is, above all, investment and technology. The dual goal of his “turn to the East” policy—which predates the Ukraine crisis—is integrating the Russian Far East with the rest of Russia in the post-Soviet reality of open borders; and using the Far East as Russia’s gateway to the Asia-Pacific, which he sees as a vehicle for national economic development, similar to what Europe traditionally has been to Russia. Performing that dual feat with China as Russia’s sole partner is hardly possible, for China lacks many advanced technologies, and could even be dangerous in the sense of creating an undesirable dependency on an increasingly powerful neighbor. Japan, in this scheme of things, can furnish advanced technology, bring in investments, and be a bridge to other parts of the Asia-Pacific. An opening to Japan would meet another key objective of Moscow’s policy: to diversify Russia’s relations in Asia, away from overreliance on one major partner, China. 

Beyond Yamaguchi: Can the new approach work?

It is possible that the Yamaguchi summit could provide a tentative answer to the question, whether a deal between Russia and Japan is realistic under the leadership of Putin and Abe. Not that the deal itself will be made or even sketched out in the Japanese countryside, but whether it is achievable in principle within the next 18 months or so, given Japan’s political calendar—while assuming that Putin will remain Russia’s leader for the foreseeable future. A negative answer to the question would send the issue far into the future, and probably leave the relationship between the two countries in worse shape than where it was at the beginning of the rapprochement. Even a positive answer, however, would come with many important caveats, which can become deal-breakers. 

The parameters of a possible Russo-Japanese deal include two principal elements: an economic cooperation package and a solution to the territorial issue. This, however, is not all there is to it. The glue linking the two needs to be that modicum of trust to which Putin referred when discussing the possibility of a compromise.  Prospects for Russo-Japanese economic cooperation are limited by a number of factors: Russia’s famously unattractive business climate; the Japanese business community’s generally weak interest in Russia; and the US-led sanctions against Russia. There is no quick fix to the business climate issue. The way forward, however, is for the Kremlin to extend informal political protection to the Japanese companies encouraged by their government to come to Russia or to expand their presence there. Not everything, of course, can be done by the Kremlin, and a measure of support would have to be provided at the regional level by the territorial administrations and by the relevant government agencies. In principle, this can be done. Russia’s business climate clearly does not match America’s or Europe’s, but it can be compared to a number of other places where Japanese companies are doing business.

Russia could also become a more interesting place for the Japanese as new areas of potential cooperation are opening. One is space projects. Russia is building its new spaceport at Vostochny, in the Amur region, relatively close to Japan. Another one is the Northern Sea Route, linking East Asia to Western Europe across the Arctic, much of it in Russia’s territorial waters or in its exclusive economic zone. The melting of the Arctic ice makes this route more navigable, and the shipping more profitable. Yet another one is health care. From medicine to doctors, Japan’s health care system could become to Russia a source of best products and best practices.

The US-led sanctions are not such a big issue by themselves, but their implications are enormous. Essentially, the message that Washington is sending to all economic agents around the world reads: if you want to do business in/with Russia, you may have to deal with the United States. There are very few companies brave enough to risk putting their interests in the United States in jeopardy by engaging more closely with Russia. In the wake of the failure in October 2016 of the US-Russian joint efforts in Syria, easing of the US sanctions or, even more, their complete lifting, is unlikely in the short term and very problematic in the medium term. US attitudes toward Russia will probably stay highly negative for a very long time, and its policies could become even tougher than under the Obama administration. This means that the United States will watch very closely how its allies do business with Russia. 

In Vladivostok, Putin referred several times to the 1956 Moscow Declaration, the only document signed and ratified by both Moscow and Tokyo that deals with the peace treaty and its associated territorial arrangements. The declaration states that after the signing of the treaty Moscow would transfer two smaller island groups, Shikotan and Habomai, to Japan. Historically, Tokyo, with US urging, had claimed four islands, not just two, making the implementation of the deal unlikely; after which Moscow, citing closer Japan-US military ties, considered the 1956 document overtaken by events. To Putin, however, the 1956 agreement has long been the only compromise solution to the Russo-Japanese dispute he has ever mentioned.

Before that solution becomes possible, in Putin’s view, Japan and Russia need to develop a degree of trust and mutual understanding, which is considerably above the current level of their bilateral relations. Progress in the economic cooperation area should be a key indicator of the quality of relations. This should be backed by an expansion of cultural and other societal contacts. Ordinary Russians’ attitude toward Japan and its people are markedly more positive than Japanese attitudes toward Russia. Yet, ironically, since they do not view Japan as a threat, most Russians do not consider a peace treaty with Japan as essential, and 56 percent consider keeping the islands under Russian jurisdiction to be more important than concluding a peace treaty.³

Putin, of course, is not focused on the peace treaty per se. He simply realizes that no breakthrough in Russo-Japanese relations is possible without a compromise on the territorial issues. It is fully clear, however, that not only will reaching a diplomatic accord with the Abe government be difficult; presenting the solution to the Russian public and getting “ratification” of the agreement in Russia will also be difficult. 78 percent of Russians are negative on transfer of sovereignty over the four islands of the South Kuriles chain to Japan. Even transfer of the two smaller islands mentioned in the Moscow Declaration is rejected by 71 percent of respondents. Around a third (32%) believe that public trust in Putin would suffer if he were to reach a compromise with Japan.

Putin’s answer to this conundrum is that as a result of a potential Russo-Japanese territorial deal neither Russia nor Japan should see itself as a loser. Indeed, both should feel they have gained and communicate that feeling to their people. Putin has dealt with territorial concessions before. Apart from the 2004 China border delimitation, he permitted, in 2010, splitting the disputed area in the Barents Sea between Russia and Norway, thus ending a dispute that had lasted for almost four decades. The Kurile Islands, however, are different as they belong to the category of territories that were assigned to the Soviet Union as a result of its victory in World War II, alongside Kaliningrad. As the Great Patriotic War enjoys a de facto sacred status among the Russian people, giving up even a piece of its legacy will not be easy.

Yet, it appears that Putin has already started a public campaign in favor of a potential compromise. He has referred positively to the 1956 agreement several times. Putin can credibly claim that the accord was not a product of Moscow’s weakness—the Soviet Union was near the peak of its power back then, and certainly in a very strong position in Asia, thanks to the Sino-Soviet alliance, which was alive and still visibly well in 1956. Also, unlike Nikita Khrushchev’s 1954 decision to transfer Crimea from the Soviet Russian republic to the Soviet Ukrainian republic, which was legally wanting under the terms of the USSR Constitution, the Moscow declaration was properly ratified by the USSR parliament.

Much more important, of course, is that Putin has unique moral authority among Russia’s leaders, including when it comes to border changes. The man who returned Crimea to Russia can reach a deal that neither his predecessor Boris Yeltsin nor a potential successor would be able to get away with. Courage and responsibility in resolving the contentious issue, as Abe put it, is a sine qua non requirement for beginning the process; retaining the confidence of one’s fellow citizens is decisive in the end. This fully applies to Putin. However, Abe would have to do his own homework winning the Japanese people’s support for a deal which gives Japan far less (just 7% of the “Northern Territories”) than what its leaders have long claimed as part of the country’s national patrimony.     

The potential Russo-Japanese agreement would also have to be defended internationally. There, Abe will have a harder job. It was one thing to get a grudging and non-committal we-will-not-stand-in-the-way nod from the Obama administration for resuming the Tokyo-Moscow dialogue. Barack Obama in early 2016 was a lame duck president, nearing the end of his second term; he saw Russia more as an irritant to Washington than a serious strategic challenge to the United States. A new US president could take an even tougher line on Russia and demand far stricter discipline from America’s allies. Also, Obama’s skeptical calculus was that Abe would gain nothing anyway from his engagement with Putin, and so it was arguably safe to allow the Japanese prime minister a chance to become disappointed with the Kremlin in his own right. But what if Obama were wrong and Tokyo and Moscow did come close to an accord?

In a positive scenario, the new US president would see some benefit in helping Japan keep Russia and China at some distance from each other and not try to exercise a veto on Abe’s overtures to Putin. Thus, the United States would not obstruct a Tokyo-Moscow deal, but it would insist on the Japanese maintaining their economic sanctions on Russia, in line with alliance discipline. Here may be the snag, however. Western sanctions on Russia can become harsher as a result of developments in Syria and elsewhere, and if, as a result, the economic package that Japan would be able to offer to Russia were to shrink considerably, Moscow might lose interest.

Putin’s job of explaining the treaty to his partner, Xi Jinping, is much easier. China is not Russia’s protector. The two major powers are not even formal allies, and Moscow does not need to seek permission from Beijing for its actions. In the good spirit of partnership, of course, Putin would reassure his counterpart that fixing borders along Russia’s long perimeter is Moscow’s long-term strategy; that removal of a source of tension between Russia and Japan would improve security in Northeast Asia; that Russia is making no strategic concessions to Japan, but is instead winning Japan to Moscow’s national mega-project of spurring the economic development of Siberia and Pacific Russia. In other words, Russia is doing now what China had been doing for decades: harnessing Japan’s economic and technological power to one’s national development agenda.

Besides economics and territory, a Russo-Japanese rapprochement has other important aspects. It certainly has bearing on the security situation on the Korean Peninsula. Even though this is a relatively minor element compared to the roles of China, the United States, and South Korea on the peninsula, it should not be ignored. Both Moscow and Tokyo understand the dangers coming out of the region, even if they disagree about some ways of dealing with them. In particular, the Russians oppose the deployment of the US THAAD missile defense systems in Japan and South Korea, which they see as part of a global US missile defense shield designed to blunt the effectiveness of the Russian nuclear deterrent. The US missile defense in Northeast Asia also happens to be an area where Moscow and Beijing’s security interests coincide, even though the Chinese strategic assets are much more affected by the deployments than Russia’s.

Even though the Russian and Japanese positions on missile defense differ greatly, North Korea is not necessarily an obstacle to Moscow-Tokyo security cooperation. Pyongyang’s nuclear and missile programs can hardly be stopped by foreign military deployments or economic sanctions. The real threat to regional security resides not in the North Korean weapons per se, but in the reclusive and prickly regime wielding them. Managing the situation and preventing war on the Korean Peninsula is in the interests of both. A candid dialogue between Japan and Russia on how best to deal with the DPRK on security issues could lead to better mutual understanding and even to the emergence of precious elements of trust.

Particularly important would be closer and regular interaction between senior military and security officials from both countries. They would share their views on the strategic environment and engage in joint training exercises on a range of issues, from search and rescue and dealing with natural disasters to responding to nuclear emergencies. It is important that the senior military and security officers of both countries establish personal rapport and maintain reliable communications with each other.

This cooperation and dialogue could be expanded to include issues related to terrorism. To Russia, Islamist extremism, from Al Qaeda to Daesh to local and regional groups in the North Caucasus and Central Asia, is a clear and present danger. Japan’s evolving Eurasian strategy pushes Tokyo toward addressing these issues. One area where cooperation between Moscow and Tokyo could be particularly fruitful is Central Asia, where Japan seeks to invest in regional stability and prosperity. Nearby Afghanistan, which with the drawdown and eventual withdrawal of US-led coalition forces is becoming more of a cause for concern among its neighbors, is another area for Japan-Russia dialogue and policy coordination.

From the Russian perspective, this is how it should be in the emerging Greater Eurasia. With the passing of a quarter-century long period of unparalleled and unchallenged global hegemony of the United States, a new security complex is taking shape on the Eurasian continent, particularly in its eastern, southern, and central departments. China is rising, economically, politically, and militarily; India is growing, its ambitions are expanding; Russia is again an active power; Iran, Turkey, Saudi Arabia, and Egypt are vying for regional dominance; Pakistan seeks to assert its role as a key player, to be taken seriously by others; and South Korea is looking way beyond the peninsula and is developing its own continental strategy in Eurasia.

Other countries will certainly be joining the search for a new equilibrium. The United States is certainly not out of the equation; it is very much present across Eurasia, but its power has passed its high-water mark. America remains a key part of the equation, but the equation is getting ever more complex. It cannot be reduced to the US-China relationship, no matter how vitally important that relationship is or will be. Japan and other countries feel this and are working to diversify their foreign policies, embedding them in a much broader—Eurasian—framework. What happens in Ukraine is of much relevance for East Asia, and what transpires in the South China Sea can affect the balance in the Black Sea and in the Baltic. What develops in Syria and more broadly in the Middle East, of course, concerns everyone.

This is why the fresh attempt by Russia and Japan to normalize their relations matters. If successful, it can provide a more stable equilibrium in Northeast Asia, strengthen security in East Asia, and expand cooperation in other key regions across the continent and in some important functional areas. Eurasia would be a more stable place for it. A Russia that is reliably friendly toward Japan, across a border that is mutually recognized and serves as an interface for cooperation, would be a net gain for Tokyo. A Japan that helps Russia develop its Pacific and Siberian territories would be a major outside source of technological progress and economic modernization and a unique boon for Moscow. If the effort fails, however, it will add to the existing divides and tensions in Asia and the world, extending them to Northeast Asia, and leave both countries much worse off. Sooner rather than later, we will know which way things will develop.