Relations with Russia: An Economic Upper Hand for Japan

Russian President Vladimir Putin first took office in May 2000. If we include the period from 2008 to 2012, when he served as prime minister during the presidency of Dmitry Medvedev, Putin has effectively been in power for 13 years. Anti-Putin demonstrations have been seen in recent years, but for the most part he has enjoyed high approval ratings and a stable hold on the government. The question is, how long will this continue? To answer that, it will help to consider several factors that have contributed to Putin’s popularity and his regime’s notable stability.

Unsustainable

Public support for the Putin regime is based on four key factors: (1) an economy greatly invigorated by proceeds from the sale of Russian oil and natural gas; (2) the public’s desire for order and stability following the poverty, chaos, and perceived international humiliation of the 1990s; (3) higher pay for military and law-enforcement personnel, higher pensions for Russian citizens, and other populist policies introduced under Putin; and (4) nationalist sentiment imbued with hostility toward the West and the conviction that Russia should resume its rightful place among the most powerful nations.

Will these factors continue hold sway in the future? Probably not.

First, energy prices on the international market are declining, and Russia is unlikely to reap major profits from oil and gas sales in the future. Even so, the Russian economy is unlikely to outgrow its reliance on the sale of natural resources.

Second, memories of the humiliations Russia endured in the 1990s are gradually fading. At the same time, the public has been losing its desire for stability above all else, as a general sense of stagnation and dissatisfaction is growing stronger.

Third, falling exports of energy resources will mean a decline in revenue, which will deplete the state’s finances. As a result, the government will probably not be able to continue the populist practice of redistributing proceeds from its energy sales.

And fourth, to modernize Russia’s industrial sector, it will be necessary to bring in advanced technology from the industrialized West and attract innovative businesses. In this respect, the anti-Western brand of nationalism exploited by Putin as a way of currying favor with the Russian public will soon lose its utility.

There is scant prospect of any new development arising that would reinforce the position of the Putin regime, whose security has rested on these foundations to date. It seems probable that Putin’s government will soon find itself on far less stable footing than in the past.

Putin has maintained his grasp on power not by virtue of any original governing philosophy or policies of his own but by preserving a balance among competing political forces. Unlike Joseph Stalin, Nikita Khrushchev, Mikhail Gorbachev, or Boris Yeltsin, he is neither a dictator nor a true reformer. The current Putin regime increasingly resembles the tenure of the Soviet-era leader Leonid Brezhnev (1964–82), widely regarded as a period of stagnation.

Desperately Needed: Economic Cooperation with Japan

Until this year Japan and Russia had essentially ignored one another for about a decade. Their relationship reached a turning point, however, when the two countries held summit talks in late April of 2013. This development reflects Putin’s newfound focus on Asia, Russia’s economic relations with Europe having come to a standstill.

The return of Liberal Democratic Party leader Abe Shinzō to the prime minister’s office is another notable development. The Abe administration, which has enjoyed approval ratings ranging from 60% to 70%, may yet secure a stable and lasting hold on the reins of government. To export its energy resources, import advanced technology, and develop its Far East region, Russia desperately needs economic cooperation with Japan. Accordingly, when Abe traveled to Moscow in April on the first official visit to Russia by a Japanese leader in 10 years, Putin seized the opportunity to make a heartfelt pitch for better relations.

Japan, which has seen its relations with China, South Korea, and North Korea deteriorate, is interested in stronger economic ties with Russia; access to Russian energy resources would be strategically advantageous for Japan.

Russia for its part, pragmatic by nature, was happy to see the hardnosed LDP retake control of the government from the ideologically inclined Democratic Party of Japan. The defeated DPJ government under former Prime Minister Hatoyama Yukio, an alleged Russophile, had never seriously tried to engage the continental neighbor.

Questioning Putin’s True Intentions

With the opening of a new chapter in Japan-Russia relations, three important considerations have arisen.

First is the superior position Japan will occupy in any forthcoming economic relationship. Economic ties will revolve around energy resources, and in this regard, at least for the moment, as a powerful purchaser Japan holds the upper hand. Given its extensive natural resources, Russia could afford to take a high-handed attitude toward Japan in the aftermath of the Fukushima nuclear power plant disaster. Now, however, the European market for Russian energy resources is shrinking, China is refusing to pay higher prices for imported natural gas, and Russia has fallen behind in providing infrastructure to enable the development of natural-gas fields in the Russian Far East and the subsequent export of liquid natural gas. Japan, meanwhile, has been preparing to import shale gas from the United States and is also pursuing the development of methane hydrate as an energy resource. In addition, Russia faces an uphill battle for the Asian market as more resources than ever flow to Asia from the Middle East.

Second is cooperation in the security field. In an effort to reach some kind of accommodation on international security and political issues, Japan and Russia have agreed to hold “two plus two” talks between their respective ministers of defense and foreign affairs. Russia’s interest in cooperation with Japan on security-related matters is a recent development, emerging only in the past year or two. The incentive, although unacknowledged, is concern over China. When Chinese President Xi Jinping visited Moscow in March 2013, he proposed to Putin that China and Russia take a joint approach in engaging Japan on territorial issues, but the Russian side demurred. Officially Beijing and Moscow continue to enjoy friendly relations, but in reality Russia is wary of China and is therefore trying to strike a more advantageous balance by pursuing better relations in the Asia-Pacific with Japan, Vietnam, and the United States.

The third key consideration is Putin’s true intentions. At their summit meeting in April, Abe and Putin issued a joint statement on the development of bilateral partnership (available online in Japanese) and agreed to restart and accelerate negotiations on a peace treaty that would finally put an end to an official state of mutual hostility left unresolved since World War II. In this way Putin has demonstrated a positive attitude toward resolving the Northern Territories issue, which is expected to raise his standing with the Japanese public. If, however, Putin’s apparent willingness to conclude a peace treaty is seen as a mere pretext for securing better economic ties with Japan, the Russian government will forfeit its credibility with the Japanese public, and relations between the two countries will deteriorate even further. 

(Originally written in Japanese on May 30, 2013.)

Top photograph: Following an exchange of documents, Japanese Prime Minister Abe Shinzō and Russian President Vladimir Putin shake hands in Moscow on April 29, 2013. (Pool photo: AP/Aflo.)