Russian and Japanese Overtures on Resolving Islands Dispute, Investment

      Last weekend, at the Russian-hosted Eastern Economic Forum in Vladivostok, Japan’s Prime Minister Shinzo Abe and Russian President Vladimir Putin met twice. On Friday they held closed bilateral talks, and on Saturday they appeared in a televised panel along with South Korean President Park Geun-hye. The economic forum, in its second year, is an effort by Moscow to encourage and facilitate investment in Russia’s vast and underdeveloped far east, a current priority for Putin as his economy struggles under western sanctions and low oil prices. Most of the discussion surrounding Putin and Abe’s two meetings concerns the now over 70-year-old dispute over 4 islands in the south of the Kuril chain. 
 
     Following the end of World War II, the Allies signed a peace treaty with Japan in San Francisco in 1951. The Soviet Union, however, did not sign onto the treaty because of the failure to resolve the ownership the southernmost Kuril Islands, a chain beginning to the north of Japan. This is not to say, as many have, that Russia is still technically at war with Japan. The two countries ended the state of war and restored diplomatic relations with their 1956 Joint Declaration (1). The two items left for future negotiation by the declaration were a formal peace treaty and resolution of the island dispute. The 4 contested islands: Iturup, Kunashir, Shikotan, and Habomai, were occupied by the Soviet Union after the Japanese surrender in 1945 (2). Included in the Joint Declaration is the stipulation that the USSR would hand over the smaller Shikotan and Habomai Islands, though they would not formally change hands until the conclusion of a peace treaty. Since then, little progress has been made, though both sides remain committed (at least publicly) to ultimately resolving the issue. 
 
     In 2004, Russian Foreign Minister Sergei Lavrov acknowledged while on a trip to Japan with President Putin that Russia was the Soviet Union’s successor in the declaration (3). But despite over a dozen meetings on the matter between Putin and Abe since they have both held office simultaneously, the status quo remains the same. As a former Indian diplomat mused, the main outcome of each meeting seems simply to be the scheduling of the next meeting (4).
    
     Prime Minister Abe changed tactics while intensifying his push for progress ahead of his meeting with President Putin in Vladivostok, taking a so-called “two-track” approach that was favored by then-Prime Minister Yoshiro Mori in the early 2000s. The approach involves asking for the return of Habomai and Shikotan while continuing talks on the two others, as opposed to insisting on Russian agreement to a comprehensive return. Russia, on the other hand, favors a peace treaty that would return the aforementioned two and allow Russia to retain Iturup and Kunashir indefinitely (2).  
    
     On the incentives front, Abe is untethering many economic benefits from the return of the islands, with the hope that increased investment and improved diplomatic ties will lead to progress in negotiations. Previously certain economic linkages were conditional on the beginnings of an agreement for the islands. For example, joint oil exploration in eastern Russia and cooperation in development of other forms of energy are all on the table. Such projects would leverage Russia’s resource endowments with Japanese companies’ high-tech capabilities. Also in the works is the purchase of a 10%, $9.6 billion stake in Rosneft by a government-backed Japanese oil company. The Russian SOE could use the capital injection after years of pain from U.S. and E.U.-led sanctions and perpetually low oil prices (5).
 
     In his televised discussion with Putin and President Geun-hye, Abe advocated greater friendship and cooperation between the two countries, saying the two should work together to improve the region’s infrastructure, education, and medical services, and an “end to the unnatural state of affairs that has continued these 70 years,” all of which Putin responded to amicably. The two will meet again in Abe’s home prefecture on December 15th to continue discussion on these issues (6).
 
     Despite all the enthusiasm, it is unrealistic to expect a breakthrough anytime soon. This is far from the first concerted effort to move the needle—in fact, Abe’s father tried to resolve the issue during his tenure as foreign minister in the 1980s (7). Now, like then, Russia has serious interest in retaining the islands. Not only do the islands offer valuable fishing territory, but they are populated by Russians, who moved there after the Soviet Union occupied the islands and expelled any Japanese (8). Expecting the same man who annexed Crimea in the name of the ethnic Russian population to give up territory populated by ethnic Russian citizens of the federation is quixotic. No matter the economic boon that might come with it, such an action would hurt Putin politically and run counter to his own ideals. Expect continued willingness by both sides to discuss the issue, but little progress towards a peace treaty that is in many ways unnecessary. 
(1) “Joint Declaration by the Union of Soviet Socialist Republics and Japan.” University of Tokyo. Web.
 
(2) “Tokyo returns to two-track approach over isle row with Russia.” The Japan Times. 2 September 2016. Web.
 
(3) Golovin, Vasily. “A Dispute between Neighbors.” Kommersant. 15 November 2004. Web.
 
(4) Bhadrakumar, M.K. “Russia wins poker game with Japan over Kuril Islands.” Asia Times. 4 September 2016. Web.
 
(5) Hille, Kathrin. “Japan’s Abe makes plea for friendship with Russia.”  Financial Times. 3 September 2016. Web.
 
(6) Rich, Motoko. “Onstage With Putin, Shinzo Abe of Japan Calls for Resolution of Island Dispute.” The New York Times. 3 September 2016. Web.
 
(7) Takenaka, Kiyoshi and Pinchuk, Denis. “Russian, Japanese leaders express new resolve to settle island row.” Reuters. 3 September 2016.
 
(8) Hill, Kathrin and Harding, Robin. “Putin and Abe make conciliatory noises over disputed
islands." Financial Times. 2 September 2016. Web.

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Image: © Igor Dolgov | Dreamstime.com - Tsuneo Kitamura