The purchase of a stake in Arctic LNG 2 by a Japanese consortium is certainly a significant step in the development of economic ties between Russia and Japan, but if the Russian government doesn’t quickly begin work on improving the country’s investment climate, this deal will not be the start of a torrent of Japanese investment, but rather a small island of success in a vast sea of missed opportunities.
Despite Russia’s limited toolkit, growing alignment with China, and its broken relationship with the U.S., Moscow will not be written off by Washington and its allies when it comes to the diplomatic process on North Korea.
The Kremlin needs to understand clearly that it is up against not just Japan but also the Russian public—and based on public opinion surveys, two-thirds of Russians do not want to hand over the Kuril Islands. The Kremlin will not be able to coerce the people into accepting its point of view.
In theory, the seizure of a greater share of Sakhalin’s resource wealth by the federal authorities could lead to a fairer distribution of wealth throughout the Russian Far East. The fear, however, is that further centralization of budgetary revenues will merely encourage the pursuit of vanity projects that will not come to fruition for over a decade, if ever.
The window of opportunity for improving Russo-Japanese relations is still open, at least for now. Russia’s main objectives are to attract Japanese investment into its national economic development programs and to continue to diversify its policies in the Asia-Pacific and on the international stage, where Japan plays an important and increasingly independent role.
The Kremlin’s new development program for the Kuril Islands is as generous and extensive as its predecessors. The key difference, however, is that now the military—the one area seemingly immune to cutbacks—will be responsible for making sure the program is implemented.
Russia has finally hit on a security agenda of interest to its Asian partners. Buoyed by its success in Syria, Moscow is presenting itself as a standard-bearer in the war on Islamic terrorism and a source of cutting-edge practices for ASEAN countries that are facing this problem. The Syrian campaign is also helping to promote Russian military technology on Asian markets.
Twenty years after Russia was first declared a partner of ASEAN, its economic role in Southeast Asia is still limited. Moscow’s position in the region is largely guided by its strong relationships with Vietnam and China.
After an uncharacteristically friendly Japanese-Russian high-level meeting in Sochi, there is speculation about new efforts to solve the two countries’ dispute over the Kuril Islands.
