The Daily Update - Japan and Russia turning over a new leaf for 2017?

After 77 years could 2016/17 be the year World War II finally ends? For since 1945 Japan and Russia have yet to formally settle the dispute over some ambiguities in the Yalta Agreement concerning a string of islands stretching from Hokkaido to the Russian Kamchatka Peninsula (in particular 4 of them known to Russia as the southern Kuril Islands and to Japan as the Northern Territories). Japan first took control of the nearmost islands in 1855 (and seized the entire string encompassing the Sea of Okhotsk by 1875 and through the 1905 Russo-Japanese War) but the Red Army seized them back in the final moments of WWII.

Next week, as Russian President Putin plans to join Japanese PM Abe in Nagato for an ‘onsen’ (hot spring bath), expectations are that a formal peace treaty might eventually be signed and they can leave the hot water behind them and embark on projects to develop the islands together and further economic ties and major business projects. The Yomiuri newspaper quote Putin saying, ‘As regards the southern Kuril Islands… We are ready to consider joint efforts on one, two, three, or four islands.’ and stressed their enthusiasm for ‘full-scale normalization of relations’ between the two countries.

What makes the current endeavour more likely than previous failed talks from 1956 and failed attempts in the 80s and 00s is the increasing importance for Japan in allying itself with the interconnecting mass of Russia in an effort to remain competitive and significant in the face of a dominant China. This meeting should build on recent good intentions with Putin who wrote to Japan to reignite talks in 2008 after his negotiations failed in 2000 and Abe who has risked much political capital meeting Putin well over a dozen times since taking office.

With the stars aligning for Putin in recent months including a schismatic Europe, US President-Elect Trump, Moscow-friendly French Presidential Candidate Fillon Russia is now in a much less needy position to deepen ties with just another Asian partner; whereas Japan looks ever more likely to benefit from making minor territorial concessions to keep abreast with China’s increasing influence and global engagement. Yet for both sides a compromise remains hard to pallet and for Japan to strengthen its international position by conceding territory whilst China continues to garner influence whilst expanding in the South China Sea is an obvious anathema.

Yet regardless of whether this overcooked dispute gets resolved at this summit or goes on for another few decades the economic centre of the world continues to shift eastwards and Russia look increasingly well set to capitalise on being the middleman for global energy and trade for older and newer superpowers alike. Foreign Policy expects increasing ‘economic proposals… beyond traditional energy interests, including health care, urban development, industrial production, and technology’ with deals already in the pipeline with Gazprom, a major LNG project in northern Yamal with Novatek, and even the prospect of a Sakhalin-Tokyo pipeline. In the words of executive director of the Russian-Japanese Business Council Igor Dyachenko, ‘Now business is forming a positive agenda.’