Abe meets Putin, agrees to 'new approach' in bid to resolve festering territorial dispute

SOCHI, RUSSIA – Prime Minister Shinzo Abe voiced confidence about resolving Japan’s territorial dispute with Russia after talks Friday with President Vladimir Putin — but Tokyo may have few cards left to play as it seeks to win concessions from Moscow.

Japan has pinned its hopes primarily on boosting economic cooperation, which it believes will have spillover effects on the territorial row. Russia seized three islands and a group of islets off Hokkaido at the end of World War II and Tokyo and Moscow have yet sign a postwar peace treaty.

Tokyo’s confidence in its economic leverage has been strengthened by the sluggishness of the Russian economy, which has been hit by falling oil prices, the depreciation of the ruble and high inflation.

Tokyo also believes Putin’s pivot to the east, in which he has focused on developing the resource-rich Russian Far East and the Siberian region, is working in its favor.

“We, of course, believe that peace treaty negotiations and joint economic projects with Russia should be conducted in parallel,” Deputy Chief Cabinet Secretary Hiroshige Seko, a close Abe aide, told reporters following the leaders’ talks in the Black Sea resort city of Sochi.

In Friday’s talks, Abe laid out an eight-point plan, outlining how Tokyo and Moscow could cooperate in the revitalization of the Russian Far East, energy development and the construction of state-of-the-art hospitals among other areas.

“I have a sense that we are moving toward a breakthrough in the stalled peace treaty negotiations,” Abe told reporters after his three-hour meeting with Putin in Sochi. The talks included a 30-minute session where the leaders talked one-on-one, a Japanese official said.

“We agreed to resolve the peace treaty issue by ourselves as we seek to build a future-oriented relationship. We will proceed with the negotiations with a new approach, free of any past ideas,” Abe said without offering any specifics.

The Japanese official said the “new approach” does not mean a change in Japan’s stance to seek resolution on the ownership of the disputed islands — Etorofu, Kunashiri and Shikotan, as well as the Habomai islets group off northeast Hokkaido. The disputed islands, called the Northern Territories in Japan and the Southern Kurils in Russia, were seized by the Soviet Union following Japan’s August 1945 surrender at the end of World War II.

Russian Foreign Minister Sergey Lavrov said Abe and Putin used the talks to discuss concrete dates for a visit to Japan by the Russian leader.

Japan believes that only talks between the nations’ leaders can move the territorial issue forward. A 2014 plan for the Russian president to visit was put off after Moscow annexed Ukraine’s Crimean Peninsula in March of that year, souring Moscow’s relations with Western countries and Japan.

Abe and Putin also agreed to hold a meeting of senior officials on the territorial dispute in June, Lavrov told reporters following the talks.

At the meeting, Putin invited Abe to participate in the Eastern Economic Forum to be held in Vladivostok in September. The forum will bring together business and government representatives to discuss investment opportunities in Russia’s Far East and the Asia-Pacific region.

Abe showed a willingness to participate, noting the importance of cooperation in the Russian Far East, according to the Japanese official.

In addition to their meeting in Vladivostok, Abe said he also looks forward to the possibility of meeting Putin on the fringes of July’s Asia-Europe summit in Mongolia, as well as in September at the Group of 20 summit in China and in October during the Asia-Pacific Economic Cooperation summit, the official said.

In hopes that economic incentives will have a positive effect on the territorial talks, Abe presented Putin with an eight-point plan to forge closer ties, including in areas such as oil and gas production, development of the Russian Far East and construction of medical centers.

The Russian Far East and Siberian regions are rich in energy resources to which Putin has attached great importance in developing. Japan is also interested in energy development with Russia as it looks to reduce its heavy dependence on oil imports from the Middle East.

Although Moscow may see benefits in expanding economic cooperation with Tokyo through developing energy and other projects in Russia’s eastern regions, the advantage would likely not be big enough to draw the concessions on the territorial issue Japan is looking for, analysts say.

“The principal incentive that Abe plans to offer is Japanese economic investment in Russia, especially in Siberia and the Russian Far East,” said James Brown, associate professor at Temple University in Tokyo, who specializes in Japan-Russia relations. “This is unquestionably something that the Russian authorities desire. But Russian enthusiasm for closer economic ties with Japan is not nearly strong enough to persuade the country’s leadership to make deeply unpopular concessions.

“The Japanese side misjudges the extent of its economic leverage,” he added.

Russia is also likely to insist that Japan’s proposal for cooperation is not a one-sided affair but a mutually beneficial undertaking.

Japanese firms have a strong interest in doing business in Russia despite the difficult political situation, so Russia would like to aid in the operations of Japanese companies, Putin told Abe, according to Seko.

Through closer economic ties with Russia, Japan can expect an increase in oil and gas imports, which would be in line with its desire to diversify energy imports that are currently heavily dependent on the geographically far-off Middle East.

Japanese firms already have stakes in oil and gas projects off the Russian Far Eastern island of Sakhalin.

For the Japanese firms who do seek to do business in Russia, barriers in the form of complicated administrative procedures, vague and unclear application of laws, and lengthy waiting times for visas and work permits are seen as larger hindrances than the 70-year-old territorial row.

In terms of improving the investment environment, Japan and Russia are already making progress.

Ministerial-level talks on trade and the economy took place for the 11th time in Moscow last September, and a bilateral advisory council on the modernization of the Russian economy held its fifth meeting in October in Tokyo.

Moreover, even if Japan finds its economic leverage effective, it will likely have reservations about offering generous economic support to Russia in consideration of its ties with the United States and other Western powers, which have criticized Russia for its actions in Ukraine.

Russia’s membership in the Group of Eight was suspended over what Group of Seven members called the illegal annexation of the Crimean region.

U.S. President Barack Obama had urged Abe in February not to meet with Putin under the current circumstances, sources said at the time.

Japan, which hosts the annual G-7 summit later this month in Mie Prefecture, must now play a delicate balancing act as it seeks both closer Russian ties and to stay in lockstep with Western nations that have imposed sanctions on Moscow over Crimea.