A long-standing territorial dispute continues to disrupt relations between Japan and Russia. This is negatively impacting economic cooperation between the two countries, with the potential to be detrimental for both parties.
It was reported in February 2018 that the Russian Air Force had taken control of a civilian airport on Iturup Island, known as Etorofu Island in Japan, paving the way for further militarisation and the deployment of Russian warplanes.
Japan is no stranger to maritime sovereignty disputes, having a well-publicised clash with China over disputed territory in the East China Sea. Perhaps less well known, but of equal interest, is Japan’s dispute with Russia over the sovereignty of four islands, called the Kuril Islands in Russia and the Northern Territories in Japan.
What is at stake?
The long-standing dispute dates back to the Second World War when Russia occupied the islands, forcing the 17,000 Japanese residents to flee. The dispute has remained a sticking point in Japan-Russia relations ever since, preventing the signing of a formal post-war peace treaty.
The dispute is complicated by the island chain’s rich natural resources, including fishing and oil and gas reserves, which both countries wish to control. Japan has made attempts to break the stalemate by suggesting joint economic projects, with the potential for joint administration of the islands. These have largely fallen flat however, with neither country agreeing on how joint economic activity should be implemented, and with Russia refusing to cede territory to the Japanese.
Japan struggles against Russian militarisation
Now, relations have been strained further by Russia’s military build-up in the disputed islands.
Nor is this the first instance of Russian militarisation of the islands. Since 2016, Russia has upgraded its military infrastructure in the region, constructed military compounds, and deployed anti-ship missiles to the islands. The Russian Navy has also announced plans to build a large naval port somewhere on the Kuril Islands that could house warships and nuclear submarines.
The benefits of improved Japan-Russia relations
Russia’s continued militarisation of the disputed islands will come as a blow to Japan, which has hoped to foster closer ties with Russia to help balance China’s rapidly rising power in the region.
Russia too stands to gain from improved relations with Japan. Russia’s economy has faced a number of challenges in recent years, including western sanctions and a drop in the price of crude oil. Despite recent signs that the Russian economy is beginning to recover, forecasts by the World Bank predict only 1.7 percent growth in 2018. By comparison, Japan has embarked on its longest continuous economic growth streak since the 1980s.
Japan-Russia economic cooperation
As it stands, economic cooperation between the two countries is relatively low. However, there is potential for improvement, which could benefit both parties. It was announced in September 2017 that the Russian Direct Investment Fund (RDIF) and Japan Bank for International Cooperation (JBIC) had launched The Russian-Japan Investment Fund (RJIF), a venture designed to pursue joint investment projects in a variety of sectors, including healthcare, energy and technology. This is in addition to a number of economic deals announced in late-2016 worth $2.5 billion.
This upward trend in economic cooperation has the potential for further growth. But only if Japan and Russia can overcome a number of complicating factors, including Japan’s continued dependence on the United States and the ‘latters strained relations with Russia, and the continuation of sanctions against Russian individuals and entities.
Russia’s militarisation of the Northern Territories is an additional factor, which Japan is unlikely to be willing to overlook. In sum, economic cooperation is going to continue to lag behind until progress is made over the on-going sovereignty dispute.
