VFM YACHI ATTENDS FIRST JAPAN-RUSSIA STRATEGIC

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 000697

SIPDIS

SIPDIS

MOSCOW PASS VLADIVOSTOK

E.O. 12958: DECL: 02/16/2016
TAGS: PREL PGOV ENRG EPET JA RU
SUBJECT: VFM YACHI ATTENDS FIRST JAPAN-RUSSIA STRATEGIC
DIALOGUE

REF: A. TOKYO 00163

B. MOSCOW 00601

Classified By: Ambassador J.Thomas Schieffer. Reasons 1.4 (B) (D)


1. (C) Summary. Russian officials told VFM Yachi during his
January 23-25 Moscow visit that Russia has no intention of
"controlling" or "monopolizing" Central Asia, but said that
Moscow should be "an important interlocutor" on issues
affecting the region, according to MOFA Russia Division
Director Matsuda. The Kremlin supported direct U.S.-DPRK
talks in Berlin, and expressed regret that similar efforts
had not been undertaken with regard to Iran. Matsuda
stressed that the new Japan-Russia strategic dialogue would
not be used to negotiate the status of the Northern
Territories. FM Aso's December 13 Diet statement referring
to the possibility of splitting the four islands with Russia
had "gone too far" and did not constitute a new negotiating
strategy with Moscow. End Summary.


2. (C) MOFA Russian Division Director Kuninori Matsuda
provided a readout on February 8 of VFM Shotaro Yachi's
January 23-25 meeting with Russian officials in Moscow, as
well as a wide-ranging overview of the status of Japan-Russia
relations. Matsuda said that VFM Yachi's Moscow meetings --
the first Japan-Russia strategic dialogue -- grew out of a
proposal made by Moscow following PM Abe's November 2006
Hanoi meeting with President Putin on the margins of APEC. A
key rationale for launching the new strategic dialogue, which
Matsuda said complemented existing meetings at the PM, FM,
and DFM levels, was to find areas of common interest between
Japan and Russia. The current structure, he said, was overly
formal and garnered too much media attention. The proposed
new strategic dialogue would allow participants to "relax"
and engage in frank discussion. He expected a second round
to take place in Tokyo within the first half of 2007.
Subsequent meetings might follow the &China-model8 and be
held away from the capitals to encourage more relaxed
discussion.

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"Arc of Freedom and Prosperity: Why Russia Isn't Included
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3. (C) Day one of Yachi,s three-day January visit began with
a 70-minute meeting with FM Lavrov. Lavrov, Matsuda
reported, pointedly asked Yachi why Russia had been excluded
from FM Aso's presentation on the "Arc of Freedom and
Prosperity" and challenged Yachi to explain how the vision
described in the "Arc of Freedom" would impact Central Asia.
(Note: Aso's November 2006 "Arc of Freedom" speech to the
Japanese Institute of International Affairs articulated a new
strategic world view and announced that Japan would be more
assertive in promoting economic prosperity and democratic
values in a area stretching from Eastern Europe through
Central Asia to Southeast Asia.)


4. (C) Yachi explained that Japan saw the Arc as promoting
cooperation with economies in transition, according to
Matsuda. Russia had already made the transition toward being
a developed country and, therefore, had not been included.
Instead, Yachi told Lavrov that Japan and Russia should be
partners in working with states along the Arc. Lavrov agreed
that Japan and Russia should discuss how the two states might
deepen coordination on Central Asia, Matsuda said. Yachi and
Lavrov agreed that a second Central Asian bilateral
roundtable should take place during the first half of 2007.
Lavrov added that Moscow had no intention of "controlling" or
"monopolizing" the region.

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Central Asia Dialogue
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TOKYO 00000697 002 OF 003



5. (C) In a separate conversation, First Deputy Minister for
Foreign Affairs Denisov suggested to Yachi how the Russian
side hoped to conduct a director general-level framework
dialogue on Central Asia, according to Matsuda. Denisov
echoed Lavrov,s observed assertion that Moscow did not
intend to dominate the Central Asian republics. The DFM
added, however, that since the Central Asian states had once
been a part of the Soviet Union, Russia should be "an
important interlocutor" on issues affecting the region.


6. (C) Lavrov and Deputy Minister of Foreign Affairs for Asia
Losyukov expressed concern about developments in Afghanistan,
Matsuda stated. According to Matsuda, both Russian diplomats
believe that the international community has paid
considerable attention to Iraq, but too little focus to
Afghanistan.

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North Korea and Iran: Six Party Talks A Model for Iran?
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7. (C) Yachi and Lavrov reviewed A/S Hill's January 2007
discussions in Berlin with DPRK VFM Kim Gye-gwan, Matsuda
related. VFM Kim had given the Russians a readout on
progress obtained in Berlin. During discussions with Lavrov
and Denisov, the Russians told Yachi that Moscow was pleased
that the U.S. and DPRK had begun direct talks on the nuclear
issue - a step that Lavrov characterized as "pragmatic" and
"realistic." Lavrov expressed regret that similar efforts
had not been undertaken with regard to Iran. Lavrov
reportedly told Yachi that Moscow believes that &growing
forces" inside Iran oppose President Ahmadinejad and support
direct engagement between Tehran and the U.S./Europe. Russia
thinks that the West should support those forces.


8. (C) "Judging from the way Lavrov raised the issue with
Yachi," Matsuda opined, the Russians appeared to be pleased
with the Six-Party process, and hoped to use the Beijing
discussions as a model for negotiation with Iran. Lavrov
told Yachi that Russia felt it now had more influence with
Iran and that Tehran had moved closer to Moscow.

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Northern Territories: No New Aso Policy
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9. (C) Asked about FM Aso,s reported proposal to divide the
land area of the disputed islands 50/50 between Russia and
Japan, Matsuda explained that media reports of the proposal
resulted from Aso,s December 13 response to an opposition
Diet member's question. Following the Diet presentation,
Matsuda claimed, Aso confided to Matsuda that he had not
expected opposition questioning to be quite so difficult and
asked him, "Did I get it right?" Matsuda said he replied
that the FM had "gone too far" and had convinced Aso to issue
a subsequent statement explaining that Aso had simply been
answering a question put forward by the opposition - not
establishing new policy on the Northern Territories.


10. (C) Matsuda stressed, however, that while the two
countries intend to discuss the Northern Territories issue,
those discussions would not be part of the new strategic
dialogue. Rather, the two sides hope to use the dialogue to
identify areas of common interest - a step that Matsuda said
should "make it easier to persuade public opinion" on the
need for a final solution to the Northern Territories issue.

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East Asia
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11. (C) Matsuda said that Russia and Japan shared similar
views on the need for peace, prosperity, and stability in
East Asia. The U.S., Japan, PRC, ROK, and Russia should

TOKYO 00000697 003 OF 003


cooperate to resolve any problem or issue that impact the
region. Unfortunately, he continued, Japan's links with
Russia were the weakest of all its bilateral ties with
countries in the region. At the same time, improved
Tokyo-Moscow ties in areas such as anti-terrorism could be a
boon for the U.S., Matsuda suggested. Energy cooperation
could provide a second area of potential benefit, since both
Russia and Japan hope to diversify their respective export
and import markets.

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Energy and Investment
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12. (C) On January 24, while Yachi met with his political
counterparts, Agency for Natural Resources and Energy
Director General Harufumi Mochizuki held talks with Gazprom
officials and discussed trade and investment opportunities
with Russian business concerns. Matsuda speculated that
public transportation might be the next project on which the
two countries might collaborate. Carefully noting, "no one
else had been convinced yet," Matsuda said that intercity
rail and aviation transportation sectors might offer
important investment opportunities. Japan was currently
engaged in competition with Germany over development of
high-speed rail facilities - a fight Tokyo felt confident of
winning because, according to Matsuda, the "German system did
not work well." As a result, Russia thought it was "too
risky to depend on the German system," he asserted.


13. (C) Recalling last December's discussion on the energy
sector and Sakhalin 2 project with embassy officers (ref A),
Matsuda said that Japan was "trying hard" to invite U.S.
participation in the East Siberian pipeline project. The
Siberian project would involve two stages. The first stage
would involve 100 percent commercial financing, mostly from
U.S. banks. Participants were "still talking" about how to
proceed with stage two, but Japan was "trying to involve the
U.S.," Matsuda offered. Russia needed U.S. technology for
drilling in the cold, harsh winter climate. Sakhalin 1
represented a unique opportunity for bilateral cooperation,
Matsuda observed. ExxonMobil, Rosneft, an Indian company and
a Japanese consortium were participating. "Sakhalin 1 should
be a model the future development of Siberia and the Far
East," he stated.
SCHIEFFER