“To the Russian executives here in the audience, let me tell you that Japanese pile drivers were used in constructing the bridge you crossed to be here today. And it is Japanese-made gas turbines producing the electricity used in this hall. I hope that all of you accumulate many experiences working together with Japanese companies at the earliest possible time. … President Putin, the road to becoming the manufacturing power you are aiming at has a proven shortcut. And that is partnering with Japanese companies, I can proclaim emphatically.”
This was Prime Minister Shinzo Abe’s pitch to a lineup of Russia’s top political and business leaders who gathered in Vladivostok for the Eastern Economic Forum, organized by the Russian government in early September.
“The Pacific Ocean is now poised to evolve into a free, fair, and open economic zone. The vast Eurasian land area lying beyond this city will provide further impetus to its dynamism. I am firmly convinced that the sparkle of Vladivostok will light up even the farthest reaches of the Pacific Ocean and give rise to enormous synergistic effects,” Abe said, and emphasized that such synergistic effects will depend on “creating a win-win situation” through the development of energy resources and expansion of their production capacity.
Notwithstanding the history of tough relations between the two countries — during the Cold War and in the post-Cold War period — both Russia and Japan have consistently pursued joint development of energy resources. Sakhalin-I and Sakhalin-II are the fruits of their efforts. The oil and liquefied natural gas (LNG) produced from both consortiums will only grow in importance if the current chaos in the Middle East continues further, China strengthens its control of the South China Sea, and the Trans-Pacific Partnership collapses, casting uncertainty over a steady supply of LNG from the United States.
Yet Abe’s address at the Vladiovostok meeting was notable for the widened scope of his vision of a new form of cooperation with Russia, extending beyond the Russian Far East to the “vast Eurasian land area.” It is likely that Abe’s vision is aimed toward the Arctic Ocean, in the distant north.
On the day before Abe’s address, Tadashi Maeda, CEO of the Japan Bank for International Cooperation (JBIC), who serves as “control tower” on Japan’s export finance strategy, and Leonid Mikhelson, CEO of the independent gas company Novatek, signed a memorandum that included $400 million of JBIC financing for the Yamal LNG project to develop gas and oil fields near the Arctic Ocean. Novatek is a majority shareholder in Yamal LNG.
Early this year, China decided to invest $12 billion in the project, forcing Japan to content itself with offering a mere “cooperation.” But for Russia, Yamal LNG follows only Sakhalin in terms of importance. The strategic significance of Japan’s cooperation is hardly negligible. Moreover, it would not be cost-efficient for Russia to develop the infrastructure to supply oil and gas to the rest of Asia for the sake of China alone. The “China plus one” strategy is worth exploring, as it places Japan in the ideal position of “balancer.”
Indeed, Arctic gas is already being supplied to Japan on an experimental basis. At the end of 2012, a tanker carrying 135,000 cubic meters of LNG from the Snohvit natural gas field departed from the northern Norwegian port of Hammerfest, destined for Japan’s Kyushu Electric Power Co. After crossing the Arctic Ocean and the Bering Strait, it finally arrived at the Kitakyushu port of Tobata. The total distance traveled by the tanker was 40 percent less than via the Suez Canal route to Japan.
The Arctic Ocean is thought to possess 13 percent of the world’s oil reserves, and 30 percent of natural gas (although the total amount of reserves are unconfirmed). Russia, Canada, the United States, Denmark and Norway are the five countries facing the Arctic Ocean. However, Japan, China, India and South Korea have also displayed a strong interest in the governance and resources of this region.
As a result of the crisis over Ukraine, Russia currently faces economic sanctions from all of the Group of Seven countries, including Japan. Given the slump in crude oil prices, its economic conditions are rough. Yet Russia has maintained an assertive stance on the world stage.
Global warming grows worse with each passing year. In a first, in 2014 a Canadian freighter successfully crossed the Arctic Ocean without the aid of an icebreaker, eventually reaching China. Russia appears confident that continued climate change will strengthen its geopolitical position over the long term.
Russia’s ascendant position will be solidified if the Arctic Ocean becomes a vital region for maritime transport and the production of oil and natural gas. The north Eurasian city of Murmansk, on the Barents Sea coast, and the eastern Eurasian city of Vladivostok, facing the Sea of Japan, could become the two gateways for energy exports. Furthermore, for the first time in Russian history, the Arctic Ocean offers Russia unfettered access to a world ocean. Russia may seize this opportunity to finally fulfill its long-deferred dream of becoming a global maritime power.
It remains to be seen whether the upcoming summit between Abe and Putin will produce any breakthrough in the territorial dispute between Tokyo and Moscow. In addition to aligning their positions toward China, Japan and Russia must also deepen a common understanding regarding maritime peace between the two countries and security on the Korean Peninsula.
What does seem clear, however, is that Abe is employing his new concept of “Eurasia” to identify in more strategic ways than ever the mutually complementary aspects of the geopolitical positions of both Japan and Russia, where they need each other.
Yoichi Funabashi is chairman of the Rebuild Japan Initiative Foundation and former editor-in-chief of the Asahi Shimbun. This is a translation of his column in the monthly Bungei Shunju.
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