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    Japan's Economic Relations With Russia

    What to Expect From Japan’s Minister for Economic Relations With Russia

    © Sputnik/ Konstantin Salomatin
    Asia & Pacific
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    A new ministerial post for economic cooperation with Russia was created in Japan on September 1. A Russian expert from the Institute for Strategic Studies (RISS) told Sputnik how this measure would affect the relations between the two countries.

    On the eve of the Eastern Economic Forum in Vladivostok, Japan's Prime Minister Shinzo Abe approved a new ministerial post for economic relations with Russia. It will be occupied by the current Minister of Economy, Trade and Industry Hiroshige Seko.

    The fact that the Japanese side appointed a specific person responsible for ties with a specific country is a highly unusual move. Does Seko's appointment demonstrate the real willingness of Japanese businessmen to invest in Russia? Head of the sector of International Economic Organizations at the RISS Vyacheslav Kholodkov believes that such an interpretation would be naive:

    "The inflow of Japanese investments in Russia is primarily defined by the investment climate, which is currently not the most favorable in Russia due to the economic crisis. Therefore, expectations that the appointment of Hiroshige Seko will dramatically affect Japanese investments and attract Japanese business in Russia are delusional."

    "There have been a lot of such illusions. Japan often intentionally uses bilateral issues in an attempt to convince Russia that economic relations between the two countries will flourish if the territorial issue is resolved on Japan's conditions. This has been claimed more than once. For example, in the 90s, the Japanese even started a rumor that if Russia gives them the Kuril Islands, Japan will pay from 25 to 30 billion dollars. Of course, the Russian leaders of the day didn't fall for it," Kholodkov told Sputnik.

    The fact that the Japanese government has now decided to focus on the economy, not politics, may be only encouraged. After all, the political atmosphere influences, but does not always determine the extent of the global economic cooperation according to Vyacheslav Kholodkov.

    "The government, which is interested in solving the territorial issue, is not a subject of business activity. In Japan, there are no state-owned companies, and private companies cannot be ordered about by the government," said the analyst.

    "There are far more acute and serious political issues between Japan and China than in Russian-Japanese relations. However, China now takes 26% of the market of high-tech products; Germany is in second place with 10%, and the US has only 7%. This is the reason why Japanese businesses rush to China. That's the way the market economy works. It's the same with Japan's relations with Russia. With the improvement of the investment climate in Russia, Japanese companies will come to the Russian market even if the territorial problem remains unsolved," the expert explained.

    Therefore, to link politics with economics and to decide what comes first is absolutely wrong. Moreover, the signing of a peace agreement between the two countries is not the most urgent task.

    "Any questions, which were intended to be solved by the peace treaty, had been long ago solved by the joint Soviet-Japanese declaration signed in 1956. In fact, that was the actual peace treaty: diplomatic relations were restored, as well as trade and economic relations," Kholodkov said.

    "However, the oil and gas sector and Sakhalin projects are probably the only areas of cooperation, where Japanese companies are, indeed, still active," the expert said. Because of the interest in these spheres, the government helps its private companies by providing credits and a variety of benefits for them to cooperate with Russia. With the improvement of the investment climate in Russia, the territorial problem also would not cramp the economy and the future joint projects of Russia and Japan, concluded the analyst.


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