THE AFTERMATH OF THE ONSEN SUMMIT: JAPAN AND RUSSIA INK BILLIONS IN ...December 28, 2016
After the Onsen summit between Japanese Prime Minister Shinzo Abe and Russian Federation President Vladimir Putin, I made a basic prediction that the issue of the Kuril islands would not be a stumbling block for Russia and Japan moving forward with lucrative trade deals. There is a simple geopolitical reality driving these events: as US power declines, Japan needs other strong allies, and a secure supply of energy, and Russia is ready to hand with energy resources in Siberia that are close to hand. Russia, in turn, needs Japan as a counter-balance to growing Chinese influence, and also as a financial and technological ally in its long term plans to develop the region. For the foreseeable future, Japan's and Russia's geopolitical and financial interests coincide to an amazing degree, and to a degree completely unimaginable just a half a century ago.
What I did not expect were for so many details and deals to be worked out so quickly; I was thinking in terms of a few weeks or perhaps months, but Moscow and Tokyo are apparently on a much faster clock than I am, according to this story from Russia Insider shared by Ms. B. and Mr. V.K.:
There's two basic points in this article that I want to bring to your attention.
Firstly, note the size and extent of the recently inked deals, and note the contextual template in which they are made:
Vladimir Putin's recent visit to Japan has proven quite lucrative. The two countries have closed 23 deals on offshore oil and LNG that are worth billions of dollars.
The deals included Russian state-owned oil giant Rosneft and a consortium of Japanese companies comprising Marubeni Corporation, Japan Oil, Gas and Metals National Corporation (JOGMEC) and INPEX Corp. signing a Heads of Agreement for joint exploration, development and production offshore Russia, according to Rosneft.
Russia has gradually been shifting its focus east following the implementation of sanctions against the country by the West over its annexation of Crimea. Prior to this weekend’s deals, the focus had been on China and India, with ties between Russia and Japan complicated by the territorial dispute over the islands, which Russia refers to as the Kuril Islands, and Japan calls the Northern Territories.
While not much is being said here about the possible role the Kuril islands have played in these negotiations, I strong suspect that they played some, for recall that in my News and Views from the Nefarium that discussed the Onsen summit, and in subsequent blogs, it appears that Japan and Russia are pursuing a different way of resolving the territorial dispute by making the disputed islands the centerpiece of a kind of "free trade zone", operating under Russian law but with full Japanese access. While time will tell if this speculation proves to be true, as I suspect it is, it is a natural solution to the needs of both countries and geopolitically, the islands are situated to be the physical "port of entry" for the flow of goods, capital, services, technology and human exchange for the long-term plans of both countries represented by these deals. The fact that Russia Insider would mention the Kuril islands in the context of these deals is a subtle way of admitting that they were indeed the context in which these deals were made. Russia is, in short, sending messages, though subtle ones. Again, time will tell if this reading is correct, but I suspect it is because this paragraph from the article strongly suggests it:
The new deals signed with Japan could yield billions for companies from both countries in the Kuril Islands, which Russia annexed following World War II, but which are still claimed by the Japanese.
But there a second point here, and a second message. The article concludes with a self-evident bit of propaganda and posturing:
Ever since the European Union decided to hitch its wagon to the falling star of US transatlantic hegemony and impose self-destructive economic sanctions on Russia, Moscow has increasingly turned East, toward Asia, for trade and investment.
Not only is the United States poised to lose its influence in Europe if continues pressing the EU to maintain sanctions, but it may even lose Asian allies as countries like Japan and the Philippines realize there(sic) economic interests lie in Asia and not in North America.
Looking more deeply behind these rather blunt statements - indeed, they recall the tone of the "Radio Moscow" and TASS and Pravda of the Cold War - what these deals also suggest is that they allow, via Japan, a deeper Russian financial penetration into the Pacific rim, and for Japan, a similar opportunity for more independent foreign policy maneuvering room via its growing financial ties with Russia. Putting this high octane speculation a bit more crudely, perhaps we are witnessing the emergence of a Russo-Japanese "interest" within the wider context of the Shanghai accord nations and BRICSA bloc. Indeed, the wording of that last paragraph in the article, using the word "ally" and Japan in the same context, and pointing out that financial interests are driving new geopolitical realities, suggests that perhaps much more was discussed privately between the Russian and Japanese delegations than simply trade deals.
If so, the dance between the major powers of the region - the USA, India, China, Russia, and Japan - will become increasingly delicate and intricate, with up and coming economies like Indonesia playing increasingly important roles. What to look for? With trade inevitably comes joint and mutual political interests. Watch for Russia and Japan to start making joint political statements on regional geopolitical matters. It will start as a slow trickle, but it will come. It will come because Russia's "Pacific pivot" appears to be happening much more quickly than the USA's, perhaps because Russia is offering something other than aircraft carrier battle groups, bases, and drones...
See you on the flip side...