JAPANESE VIEW OF RUSSO-JAPANESE RELATIONS FROM

C O N F I D E N T I A L MOSCOW 003177

SIPDIS

E.O. 12958: DECL: 10/28/2018
TAGS: PREL ETRD RS JA
SUBJECT: JAPANESE VIEW OF RUSSO-JAPANESE RELATIONS FROM
VLADIVOSTOK

Classified By: Acting Political Minister Counselor David Kostelancik fo
r reasons 1.4 (B) and (D)


1. (C) Summary. According to the Japanese Consulate
General in Vladivostok, Russia and Japan currently enjoy a
"calm and good" relationship marked by expanding economic
ties. The Russian desire to develop its Siberian and Far
East regions, as well as infrastructural needs for
Vladivostok's hosting of the 2012 APEC summit, provide rich
business opportunities for Japanese firms. The continued
dispute over the southern Kiril/Shishima Islands and the
resulting Japanese businesses' lingering negative image of
Russia, however, provide a current of disquiet beneath the
seemingly tranquil waters of the bilateral relationship. End
Summary.


2. (SBU) During an Embassy Moscow Poloff visit to
Vladivostok, Japanese Deputy Consul General Tomonori Hasegawa
shared his views on the Russo-Japanese relationship. Sitting
seven time zones closer to Tokyo than its Moscow embassy, the
Japanese consulate has a unique view of the bilateral
relationship, as well as a finger on the pulse of the Russian
Far East (RFE) economy.

A Quiet Relationship Defined by Economic Interests
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3. (SBU) Unlike its East Asian neighbors China and South
Korea, Japan has not yet felt a particular need to cement a
"strategic" relationship with Russia, nor is there a fixed
schedule for reciprocal top leaders' visits. The two
governments conduct a strategic dialogue at the deputy
foreign minister level twice a year (the most recent round
was held in Moscow on October 7),and an inter-governmental
commission on trade has been created in the last year with
both public and private sector participation. Approximately
800 Japanese currently live in Russia, with 120 in
Vladivostok and a couple of hundred more in the Sakhalin
area. Most of the Japanese expats consider life in the RFE
to be good, according to Hasegawa, and xenophobia is not a
problem for most, except in isolated incidents when a
Japanese national is mistaken for a Chinese migrant.


4. (C) Hasegawa characterizes the Russo-Japanese
relationship as "calm and good," bolstered by common economic
interests. In 2007, the trade volume between the two
countries reached $20 billion, and the figure is expected to
grow by 30% this year. Japanese and Russian companies have
already undertaken concrete projects in the joint development
of Siberian energy resources, and the Japanese government
last year proposed further areas of cooperation in the East
Siberian and Far East regions. Tokyo hopes that its
proposal, encompassing joint projects in the energy,
transport, information technology, environmental protection,
health care, trade and investment, and law enforcement areas,
will be the basis of future discussions with Moscow on
deepening the bilateral relationship. However, Hasegawa
laments, the GOR so far has not responded substantively.


5. (SBU) Hasegawa indicated that Japan was optimistic that
the GOR's serious intentions to develop the RFE and to
prepare for the 2012 APEC summit in Vladivostok would lead to
effective efforts to combat corruption and improve the
investment climate, thereby giving boost to bilateral
economic ties. Already, several Japanese business
delegations had visited Vladivostok to negotiate
participation in construction projects associated with the
APEC summit. In particular, Japan might contribute its
expertise in cement production for a bridge project that the
Primorskiy Krai had identified as part of the plan to improve
infrastructure in the run up to 2012.

Territorial Dispute and Low Investment Mar the Relationship
-------------- --------------


6. (C) Simmering directly beneath the tranquil waters of
the Russo-Japanese relationship, however, is Japanese
resentment over the Kiril Islands (Southern Shishima)
territorial dispute. While a formal channel exists for the
two sides to discuss the issue, meetings have not taken place
regularly and the dispute remains stalled. Hasegawa
commented that the GOR, as the government currently
exercising active administration over the islands, was in no
hurry and preferred to ignore the issue for now in favor of
expanding the economic relationship. Japan, on the other
hand, was anxious to address the economic and territorial
issues simultaneously. In particular, Japan did not want to
follow China's example, in which Beijing was content to
receive half of the Bolshoy Ussuriyskiy (Hexiazi) Island from
the Russians as part of the June, 2008 border settlement

agreement. Tokyo believed that, in the Russo-Japanese case,
it should get back all four disputed islands in their
entirety, Hasegawa stated.


7. (C) While Hasegawa viewed the Russo-Japanese economic
relationship in positive terms, his colleague in the Japanese
Embassy in Moscow, Political Section Counselor Jun Nanazawa,
noted to us that bilateral trade and investment ties, while
growing, were not very strong. (N.B. The $20 billion two
way trade volume is about half of the trade volume between
Russia and China, and one seventh of the trade volume between
the United States and Japan.) In comparison to China and
Korea, Japanese investment in the RFE and Siberia lagged far
behind. Japanese businesses were more cautious, and in
general tended to seek large-scale projects rather than
opening mom-and-pop stores in Russia like the Chinese and
South Korean businesses. Hasegawa also admitted that despite
a warming trend, large segments of Japanese investors
maintained a negative image of Russia and remained unwilling
to invest here. The reasons were multiple, including the
ongoing territorial disputes, lingering memory of the harsh
treatment of Japanese soldiers by the Russians at the end of
World War II, and a still pervasive impression of a poor
investment climate resulting from the negative experiences of
the 1990s, when several Japanese firms were cheated out of
their investments by their Russian partners.

Comment
--------------


8. (C) During a September conference of Russian and
Japanese scholars at the Moscow State Institute of
International Relations (MGIMO),several Russian academics
rather emotionally argued for closer ties between Moscow and
Tokyo as counterweight to the "U.S. hegemon" in the wake of
the Georgia crisis. Given the current state of "calm"
relations between Russia and Japan, the specter of a
Russo-Japanese alliance against the United States and the
West is not likely to materialize. Japan's proximity to the
Russian Far East and the Russian government's genuine desire
to develop its eastern regions create much room for the two
governments to foster a closer economic relationship.
However, as long as the territorial dispute is not resolved,
the relationship will remain largely "calm," and stalled.

BEYRLE