Japan Finally Gets Tough On Russia

By Amy Gleich:

Last week in Tokyo, during a meeting of Prime Minister Shinzo Abe’s cabinet, Japan chose to impose harsher sanctions on Russia. The decision took effect immediately after the meeting on August 5. The sanctions focus on 40 individuals and two companies. A statement from the Japanese government outlined the scope of the sanctions, saying “assets held in Japan by those directly involved in Russian annexation of Crimea or the instability in Eastern Ukraine will be frozen.” Japan has also begun requiring approval for imports of products made in the Crimea region and the port city of Sevastopol.

The sanctions focus mainly on Crimean officials and Ukrainian separatists — no senior Russian officials are on the list as Japan is quite interested in keeping the lines of communication open with Russia. Japan’s Kyodo News quoted Chief Cabinet Secretary Yoshihide Suga as saying, “We will continue to seek a peaceful and diplomatic solution to the situation in Ukraine through coordination with the international community, led by our Group of Seven partners.”

Who’s on the List?

Ukraine’s ex-president Viktor Yanukovych, acting head of the Republic of Crimea Sergey Aksyonov, adviser to the Council of Ministers of Crimea Rustam Temirgaliyev, Prosecutor of the Republic of Crimea Natalia Poklonskaya, Defense Minister of the self-proclaimed Donetsk People’s Republic (DPR) Igor Strelkov, DPR Prime Minister Alexander Borodai, to name a few – as well as other people, who, in the view of Tokyo officials, are directly responsible for the annexation of Crimea and the fighting in eastern Ukraine.

Here’s the full list of individuals.

The two companies on the list are Chernomorneftegaz and Feodosia Enterprise. Chernomorneftegaz, prior to the annexation of Crimea, developed Ukrainian deposits in the Black and Azov seas. After the annexation, Chernomorneftegaz’s deputy CEO announced that the company would become part of Russia’s Gazprom. Feodosia provides oil transshipment services via rail and sea. It has also been a receiving point of fuel supplies from Russia for the annexed Crimea.

Why Russia Matters to Japan

Before the Crimea crisis this year, Prime Minister Abe had “actively sought to forge close diplomatic and economic ties” with Russian President Vladimir Putin.

Why? The biggest reason is energy. Since the 2011 Fukushima Daiichi nuclear disaster, Japan has relied heavily on Russia for its energy needs. In 2013, Russia was Japan’s fourth largest liquid natural gas provider. At the same time, China and North Korea are eagerly courting Russian energy and Japan doesn’t want to lose out. “We see China and also South Korea developing new energy cooperation with Russia,” said Nobuo Shimotomai, an expert on Russian-Japanese relations at Hosei University in Tokyo. “Japan does not want to be left behind.”

The other reason is territory. Before Russia began its march into Crimea, Tokyo had come close to reaching an agreement with Russia on the return of the Kuril Islands to Japanese sovereignty. The islands, known in Japan as the Northern Territories, have been a main discussion point between Japanese and Russian leaders.

Japan was the last of the G7 countries to impose sanctions on Russia, and even when it did, Tokyo’s approach was much more cautious than that of the other member countries. Earlier this year, Japan sanctioned 23 individuals by denying them visas (but never released a list of their names) as well as suspending bilateral talks with Russia. However, Japan has been much more moderate in their reproach of Russia than have been the U.S. and the EU — both of which continue to increase economic pressure with escalating sanctions.

Why Get Tougher Now?

A big reason is Malaysia Airlines Flight 17. Not only was the passenger airliner shot down – widely believed by separatists armed with Russian weapons —  killing all 298 people on board, the Ukrainian separatists also prevented the international community from investigating the crash site and recovering remains for several days. This, along with the fact that both the U.S. and EU have recently implemented the harshest sanctions to date, add up to a lot of pressure on Japan. Even still, Japanese sanctions pale in comparison with western measures that will expand existing sanctions into the oil sector, dual-use goods and defense.

Does Japan Really Mean It?

How wholeheartedly is Japan really backing these sanctions? Forbes.com contributor Eamonn Fingleton suspects that history may shed some light on Japan’s current dealings with Russia. Fingleton notes that during the Vietnam War, Japan “maximized its opportunities;” while officially supporting South Vietnam, Japan was not deterred from “conducting significant trade with North Vietnam.”

It looks like a similar situation may be shaping up with Russia and Crimea. Japan feels the need to join the West in supporting Ukraine and scolding Russia for its annexation of Crimea and possible involvement in shooting down Malaysia Air Flight 17, but at the same time, Japan has no desire whatsoever to actually cut ties with Moscow; their long-term goals are actually to create a stronger bond with Russia.

In fact, analysts say that the measures taken by Japan are “largely symbolic.” Japan doesn’t really import much from Crimea and it is unclear whether or not the sanction-targeted people even hold any assets in Japan. Still, the symbolism is enough to insult Russia and make the West feel like Japan is siding with them.

Unvitations

In April 2013, Putin hosted Abe for the two countries’ first formal summit in Moscow in a decade. The two leaders agreed to set in motion talks about Tokyo’s claim to the Kuril Islands. The planned August 2014 talks between Russian Deputy Foreign Minister Igor Morgulov his Japanese counterpart, Shinsuke Sugiyama, were going to address this very topic. There were also plans for Putin to visit Japan sometime this autumn. Japan’s new sanctions have apparently changed all of that.

Calling the new policy “unfriendly,” Russia’s Foreign Ministry announced August 5 that meetings between Russian and Japanese deputy foreign ministers planned for the end of August would be “inappropriate” in light of the sanctions and have therefore been postponed.

The ministry added that these new sanctions would “inevitably threaten and set back a whole range of bilateral relations.” The Russian ministry went on to stress that Russia has not cancelled talks, merely postponed them; Russian Foreign Minister Sergey Lavrov said he hoped Putin would visit Japan as scheduled.

This piece is cross-posted from OilPrice.com with permission.