Let economic impetus drive a deal in territorial dispute

by Andrey Borodaevskiy

Judging by the latest events in the seemingly endless territorial dispute between Japan and Russia over the “Northern Territories,” the Japanese side has decided to confirm its steadfast stance by presenting strong historical and judicial arguments — some traditional, some rather new.

However, it looks like now is not a very favorable moment to discuss with Russia such sensitive matters in the usual trivial manner. Both the ruling “tandem” and the modern Russian elite are facing a series of important domestic events and are obviously not ready to give away the nationalist and populist card. To them, this doubtful card seems to be so all-important in the short run that the strategic interests get unnoticed and thus ignored.

Regretfully, it is a fact that eventually very considerable economic and social gains which may stem from large-scale economic cooperation between Russia and Japan hardly look guaranteed and are shimmering somewhere only in the future. Obviously, geopolitical factors dominate Russia’s agenda, while the geoeconomic approach gets no social backing whatsoever.

From judicial and historical points of view, Japan’s position is strong — even too strong to guarantee success, because it’s exactly this strength that makes it difficult for Russia’s leadership to meet a compromise. There are many “Asian” features in Russian culture, especially in its political component that are pushing negotiators to disagree with the obvious in order to “save face.”

It appears that, in Russia’s position, the strongest point is the appeal to the results of the World War II. Yet, it is well known that the Yalta document dealing with the defeat of Japan was not much more than a “declaration of intentions.”

Besides, from a moral point of view, the world order forged at Yalta and Potsdam is far from perfect and has some faults in common with the results of the notorious 1919 Versailles Treaty, which was plainly vengeful and, in some ways, paved the way for Adolf Hitler.

At the same time, one of the weakest points in the Russian position is the absence of the signature of Soviet Deputy Foreign Minister Andrei Gromyko, who was heading the Soviet delegation during the 1951 peace conference in San Francisco, from which a peace treaty with Japan was signed by 49 out of 52 participating countries.

It seems that there is practically no hope of signing the long-overdue peace treaty between the two countries and definitely resolve the territorial dispute on the grounds of historic and judicial arguments only and ignoring the all-important humane aspect and the objective perspective of fruitful mutual cooperation.

Actually, the principle ruling the behavior of both negotiating sides should be “live-and-let-live” — not “winner takes all.” The trick is to put the dispute in such a context that a zero-sum-game would be transformed into a win-win situation.

In this context, it looks like the time has come for the instrumental idea of switching the focus of negotiations from geopolitics — historical, judicial and purely territorial arguments — to mutual economic benefits.

The geographic framework in which the sides might treat the dispute with a reasonable chance for success must be expanded, as well as the time horizon — to exclude fruitless bargaining about deadlines and firm schedules.

In other words, it is advisable to focus on jointly working out a cooperation project and — within this new framework — try to resolve the territorial dispute as a routine step in the overall cooperation effort.

Just look at the map of East Asia and, in particular, at the area surrounding the Sea of Okhotsk. It includes Kamchatka in the north, Sakhalin and a stretch of the sea coast with the center in Magadan in the west, the undisputed Russian Kurils in the east, and the disputed islands and Japan’s Hokkaido in the south.

These territories have much similarity in natural conditions and development opportunities that, so far, remain more or less unused (even Hokkaido looks rather underdeveloped and poorly populated against the overall background of the Japanese archipelago, with its megapolises and mighty manufacturing network).

So, why not give up the fruitless and mutually irritating wrangling and, instead, focus on working out a large-scale and long-term development project embracing major parts of this vast but somehow compact sub-region?

In one variant, such a megaproject could embrace practically the whole area around the Sea of Okhotsk, as to include the above mentioned lengthy stretch of the Russian coast along the sea proper; in another, it could encompass only the island parts and the Kamchatka Peninsula.

The whole monumental project could and should get a well-sounding name. In the latter variant, maybe, it could be something like “HO-KU-SA-I-KA” — from HOkkaido-KUrils-SAkhalin, the Russian “i” meaning “and”) and KAmchatka. Phonetically, for the Japanese public, “Hokusaika” would invoke associations with the concept of “kokusaika” — “internationalization” in Japanese.

To a Russian ear, this name would also sound well and familiar, because it could be associated with Hokusai, the famous Japanese woodblock painter of the 19th century, whose arts and name are quite popular in Russian educated circles.

Another variant is to name the project using the word “Okhotsk” — after the sea around which these territories are located. The “Okhotsk Project,” for example, or the “OR-Project” (from “Okhotsk Rim Project”), as another possibility.

Maybe it looks naive, but the name is important. It is a well-known fact that badly named vessels do not sail well.

What about the content of the project? In the most general way, it should be a joint development scheme based on the introduction of a special economic zone embracing the chosen area.

The preferential regimen must embrace all the major aspects of business activities — trade operations (both exports and imports should be liberalized), long-term investment and credit resources, taxation of firms and individuals, subsidies for small and medium-size businesses (especially those involved in joint development schemes and stimulating marketing research), etc.

Free trade arrangements and other preferences either should be introduced for the Russian and Japanese enterprises only, or could be granted on a wider, truly global, basis. As it seems, the second variant is preferable because “globalization” and “multiethnicity” are regarded as very important prerequisites for and factors of successful social and economic development within modern civilizations.

It looks like our Hokusaika could figure as a good beginning for something even more significant and big in scale, such as the starting point for a multinational Russian Asia mega-project (which has already been partly discussed in these pages) eventually embracing all of Siberia and the Russian Far East, and maybe parts of Kazakhstan, Mongolia and the northern regions of China and Japan.

On such a background the notorious territorial issue would look trivial and insignificant, as it actually is.

For the initial phase of the original Okhotsk Project, the state administration in separate parts of this vast area needs, naturally, to remain as it is now. But it is quite easy to imagine that, at some moment in the not so distant future, the Russian administration in the “Four Islands” could hand over the steering wheel to the Japanese side — as a technical step, without provoking any too-profound changes in the overall situation.

As for the economic mechanism, from the very beginning some joint (bilateral) economic organs could and should be created to take over basic regulatory functions.

Natural conditions in the Okhotsk area are rather severe and the distances between its individual locations may be long. That makes especially important joint development of economic and social infrastructure, as well as effective assistance to small and medium-size businesses offered by the participating states — both separately and jointly. In this, creative efforts the accumulated international experience may be very instrumental.

Aside from oil, gas, forest and mineral riches, there are diverse nontraditional energy sources available in the area — a fact especially important in the aftermath of the recent catastrophe in Japan last spring, which has provoked worldwide a frantic search for energy production alternatives to nuclear power.

The subregion also stands out with its extremely good conditions for industrial fishing and “oceanic agriculture.” A strong impetus for economic growth can come from tourism and recreational activities as well. Eventually, the Okhotsk area can offer people from all over the world geothermal resorts, facilities for hiking and mountain-climbing, winter sports, scuba diving and exotic fishing, as well as exquisite cuisine, including seafood and wild game.

This is, of course, but a rough outline of the principles and accompanying factors eventually characterizing such a joint project. However, those are exactly the right principles and common overall goals that represent the most important elements necessary for a successful Russo-Japanese arrangement concerning the Okhotsk area and aimed at accelerating its social and economic development and resolving the sensitive territorial issue.

The terrible March 11 quake, tsunami and resulting catastrophe in Tohoku, which have been also felt in some parts of the Okhotsk area, have once more reminded us of the human helplessness before the power of nature and of the acute need for what we may call “geoeconomic solidarity.”

Andrey Borodaevskiy (annabo36@mail.ru), an expert on world economy and international economic relations, was a professor at Seinan Gakuin University in Fukuoka from 1994 to 2007.