With China rising in the Pacific and Japan increasingly frozen out of the Korean Peninsula, Tokyo is hoping for a win with Russia. Warming ties with Moscow would serve Japan's interests well, giving it a greater foothold on the Eurasian landmass and helping it to counterbalance the tentative alignment between China and Russia. In fact, this has been a key goal for Japanese Prime Minister Shinzo Abe since his most recent term as prime minister began in 2012. With Abe's political fortunes in jeopardy and his continued tenure as prime minister in question after September, he will meet with Russian President Vladimir Putin on May 25 and attend numerous events marking the start of what's being called the "Year of Japan-Russia." Domestically, this is an opportunity for Abe to show he has the ability to score a diplomatic victory at a fragile time in his political career. However, Japan has made little progress in recent years toward achieving closer ties with Russia — and circumstances today don't bode well for a breakthrough.
Stratfor's upcoming third-quarter forecast notes that Japan's renewed pursuit of warming ties with Russia could give Russia greater leverage as it seeks to balance its relationship with China. The forecast also notes that Japanese Prime Minister Shinzo Abe will face an uphill political battle in retaining his post in September's party leadership elections.
Abe has been here before, having met with Putin 20 times in the past six years. The prize is a peace deal officially ending World War II, which would resolve a long-standing contradiction in Japan-Russia relations. The sticking point is sovereignty over a string of islands that Japan calls the Northern Territories and Russia, which holds de facto control over the islands, calls the Southern Kurils.
What Japan and Russia Want
Japan's motivations are clear: To regain lost territory and foster a closer relationship with Russia, which is a potential Chinese ally and major Eurasian power. Russia's Far East offers the additional enticement of energy and natural resources to resource-poor Japan. Russia's reasons for striking a bargain, however, are equally rooted in geopolitics. Japan is a stalwart U.S. ally that holds a key geopolitical position off Russia's Pacific coast as well as along the coasts of China and the Korean Peninsula. This position gives Japan the potential to hem in the Russian fleet in a time of war — a key contingency throughout the Cold War. Gaining leverage over Japan would help Russia in its efforts to balance against the United States in the Pacific. And as the world's third-largest economy, Japan offers Moscow a deep pool of foreign investment that could shore up Russia's ailing economy and help it to further develop Siberia and the Far East.
Tokyo's Unambitious Plan
Time is running out for Japan as the period of Japanese control over the islands fades into history and the Japanese nationals who lived on them before Russian rule pass away. With this time frame in mind, for the past two years Abe has pursued a strategy of stepping back from Japan's longtime push for a wholesale return of the islands. Rather, he has pivoted toward reaching a workable agreement that would front-load Japanese economic concessions while holding regular bilateral security and economic dialogue. Abe's hope is to foster trust with Russia and incentivize Moscow to compromise on sovereignty. The objective is to establish Japanese access to the islands by first persuading Russia to let former Japanese residents easily visit the islands — for example, by pushing for more regular sea and air traffic — and then by fostering economic cooperation with an eye toward laying a foundation for resolving the issue. Japan is seeking to establish a special legal framework over the islands that would allow projects to operate separately from Russian law. Such a framework would preserve Tokyo's sovereignty claim and maintain its long-term goal to regain control over the islands.
Japan has made little progress toward achieving this goal in the past two years, however, with its lack of success most dramatically demonstrated by a December 2016 Putin-Abe meeting that was laden with expectations for a breakthrough but which produced lackluster results. Since then, Tokyo has carried out a great deal of outreach with slow forward movement on the economic deals that were supposed to be easy wins for Japan. Japan has also made little headway on its hoped-for "special system" that would put such economic cooperation under a special legal framework separate from the laws of Japan and Russia. Russia has undermined Japan's strategy by pushing for economic cooperation that could not possibly pave the way for resolving questions of Russian sovereignty over the islands. Instead, Russia has pushed for special economic zones that operate under Russian law or terms that clearly uphold its territorial claims.
Why There's Been No Progress
Japan has not managed to deliver on many of its economic sweeteners. Unlike China, Japan has a hard time directing its corporations and investors toward state goals. For example, concerns about profitability prompted Japanese companies to balk at participating in the renovation of the Khabarovsk Novy Airport in the Russian Far East, which was supposed to be a flagship project. Instead, the project went to a Turkish consortium. For this reason, Japanese economic ties with Russia have not panned out, overshadowed by those of China. Japanese trade with Russia totaled $18.3 billion in 2017, or around 3 percent of Russia's total trade. Chinese trade, by comparison, amounted to $87.2 billion, or nearly 15 percent of Russia's total trade. Since 2007, Chinese investment in Russia has amounted to $48.4 billion, with $15 billion coming in 2017 alone. In 2016, China's investment in Russia accounted for 9 percent of all foreign direct investment in Russia. Japan, by comparison, has accounted for a small share of Russian foreign direct investment, around 0.2 percent of the total in 2016. This makes it harder for Japan to make the case that Russia should make concessions given that the economic incentives have not played out.
The barriers limiting outreach between Russia and Japan are clear — and enduring. First and foremost is Japan's deeply rooted alliance with the United States. In fact, during the Cold War, U.S. pressure on Tokyo thwarted Moscow's attempts to strike a compromise on the islands by dividing them between Russia and Japan. Since Russia's annexation of Crimea in 2014, the United States and its allies have been embroiled in an escalating sanctions battle against Russia to try to change Russian behavior on the world stage. The standoff between Russia and the West shows little sign of abating. Japan has adhered to many of these sanctions, albeit reluctantly and slowly given its interest in fostering long-term good relations with Russia. Because Tokyo would side with the United States regardless of any Russian concessions, concerns that any compromise with a key U.S. ally have far outweighed Moscow's hope for balancing Japan against Russia and avoid being bottled up to the east. Moscow has been particularly sensitive about ceding any ground on sovereignty since the political upheaval in Ukraine compelled it to annex Crimea. In fact, Russia has extended its military footprint in the islands and also has expressed concerns that any concessions would be a slippery slope leading toward the extension of U.S. basing and missile architecture.
How It Will Play Out
This does not mean that Russia will slam the door shut. The Japan-Russia meeting on May 25 and the following months might see the two countries make progress on certain aspects of cooperation, albeit on unambitious timescales and in ways that do not fortify Japan's territorial claims. Knowing that Japan sees it as a route toward reclaiming territory, Russia will continue to play with outreach, blockage and economic cooperation to keep Japan on the hook and create friction between Japan and the United States. However, Russia will prioritize its own sovereignty above this leverage and will avoid making concessions that could jeopardize its long-term territorial integrity. Tokyo, for its part, is limited in how boldly it can pursue concessions to Russia, particularly given Abe's tenuous political position. Instead, the two sides will be unlikely to reach any sort of bunker-busting agreement beyond the slow incremental gains of the past years. The problem is, time may be running out for Abe.