Japan’s Kishida Steps on Russian Oil Slick

The simmering tensions between Moscow and Japan during the past four-month period of the war in Ukraine surged when the Secretary of the Russian Security Council Nikolay Patrushev sounded the warning at a meeting on national security in Khabarovsk in the Russian Far East on Tuesday that Japan is ramping up its revanchist plans for the Kuril Islands.   

To quote Patrushev, “The border situation on the territory of the Far Eastern District is being shaped under the conditions of the US and its allies increasing their military presence in the Arctic and Asia-Pacific regions and activating Japan’s revanchist aspirations with regards to the Kuril Islands by means of creating new military blocs.”  

Russia has been a victim of Japanese revanchism historically. While the world is familiar with Japan’s surprise attack on Pearl Harbour, most wouldn’t probably know about a similar Japanese attack 36 years earlier on February 8, 1904 on the Russian Pacific Fleet based in Port Arthur that triggered the Russo-Japanese War. By the way, it was also an attack without a formal declaration of war.

Tokyo felt emboldened by the Anglo-Japanese Alliance of 1902, which obligated either power to provide military aid if one found itself at war. The Alliance was directed against France and Russia. 

Patrushev has highlighted that the geopolitics of the Far East has phenomenally changed. Indeed, the deterioration of the Russo-Japanese relationship causes surprise, since the two countries have been coping with a cordial, “quasi-friendly” relationship through the past decade, their dispute over Kuril notwithstanding. 

Japan is not even remotely connected with Ukraine’s NATO membership, but Tokyo is acting in sync with the US-Japan Treaty, emulating Washington’s sanctions against Russia. Notably, Tokyo has abandoned its reticent diplomatic idiom regarding Kuril and now calls it a Russian “occupation”.  

Japan’s motivations may seem inscrutable but aren’t hard to fathom. Japan concluded that the war in Ukraine would spill over to the Far East and a conflict over Taiwan might ensue.

Second, Japan bought into Washington’s narrative that the US had got Russia’s neck in the noose and Moscow would emerge out of the conflict in Ukraine as a weakened power, which in turn would shift the regional balance in favour of the Indo-Pacific strategy aimed at containing China. 

Third, Tokyo is one hundred per cent committed to the idea of the NATO entering the Indo-Pacific theatre. With NATO support, Tokyo may be calculating that a weakening of Russia would enable Japan to handle the Kuril dispute from a position of strength. 

Fourth, Prime Minister Fumio Kishida’s trips to the US and major European capitals and his performance at the recent summit meetings of the G7 and NATO aimed to position Japan as a key player in the Indo-Pacific. The Russia-Ukraine war and Chinese “assertiveness” topped his agenda also during his 5-nation Southeast Asian tour in April-May and his appearance at the Shangri-La conference in Singapore in June. 

While in Jakarta, Kishida drew a direct line between the Russian aggression and China’s decade of “assertiveness” in the East and South China seas. “We are facing many challenges, including the situations in Ukraine, the East and South China seas, and North Korea, and maintaining and strengthening the rules-based, free, and open international order has become more important,” Kishida said. 

Japan’s appeal in Southeast Asia lies in mutually beneficial economic engagement, fair and transparent infrastructure financing, and its potential as a security counterweight to China’s growing influence.

In Washington’s reckoning, Japan stands perhaps the best chance of nudging the reluctant Southeast Asian nations to identify with the US-led international sanctions campaign against Russia and to shift to a more active position on the Ukraine war. 

On its part, Russia has belatedly begun reacting to Japan’s unfriendly stance. Moscow has bolstered its military forces in the Kuril Islands with new air and coastal defence missile batteries. With the Northern Sea Route opening up, Kuril’s strategic importance has vastly increased.

The Kuril archipelago, located on the southern side of the Kamchatka peninsula, is in close proximity to Russia’s strategic bases hosting its nuclear submarine flotilla and guided-missile and ballistic missile launchers. The placement of the Russian nuclear submarine arsenal in Petropavlovsk-Kamchatskiy requires the Kremlin to implement a programme of militarisation of the Kuril Archipelago and the island of Sakhalin.  

Meanwhile, Japan sees that a defining feature of Russia’s national security posture today is its securing of the “no limits” partnership with China by a set of coherent, well-thought-out and complementary strategic rationales.

No doubt, the war in Ukraine has cemented the Russian-Chinese partnership. Russia’s increasingly adversarial relationship with the West and its increasingly close partnership with China complement each other. Kishida realises all this and has decided that his predecessor Shinzo Abe’s strategy to entice Russia to be a “balancer” in the Japan-China-Russia triangle is no longer tenable. 

Patrushev’s sharp remarks are meant to convey to Tokyo that Moscow is taking serious note of the unfriendly shift in Japan’s stance. Moscow notices that Japan has lately entrenched its ties with NATO at a juncture when the alliance wants to limit Russia’s reach across the globe, including in the Pacific region. Moscow understands that it is under US protection and backing that Japan has become more strident on Kuril issue. 

Of course, Moscow will not lower its guard, as, technically, Japan and Russia are still at war. Although Japan surrendered to the Allies in September 1945, ending World War II, Moscow and Tokyo never signed an official peace treaty. 

In March, Moscow suspended the peace-treaty negotiations with Tokyo after Japan slapped economic sanctions on Russia. Kishida called Moscow’s decision “extremely unreasonable and totally unacceptable.” Russian Deputy Prime Minister and Presidential Envoy to the Far East Federal District Yury Trutnev said last month that Moscow will strip Japan of the right to fish in waters near the Kuril Islands.

Last week, President Vladimir Putin issued a decree that appears to be a step toward nationalisation of the foreign shareholdings in the giant Sakhalin-2 oil and gas project where Mitsui and Mitsubishi hold 22.5% shares. The five-page decree says it is up to the Kremlin to decide whether foreign shareholders should remain in the consortium.

Meanwhile, Tokyo’s support for the US proposal at the recent G7 summit advocating a price cap on Russian oil has put Moscow’s back up. On Tuesday, the former Russian president Dmitry Medvedev sternly warned that Japan would be kicked out of Sakhalin-2 project and its supplies of Russian oil and gas cut off if it supported the US move. Medvedev forecast that if any price cap is imposed on Russian oil, the market price will touch somewhere between $300-$400 per barrel!   

Sakhalin-2 is critical to Japan for meeting its energy needs. Sakhalin-2 alone meets about 8% of Japan’s gas needs and to replace it, Tokyo has to buy from spot market where competition for LNG shipments globally is currently intense and the price is around six times that of Russian gas. Besides, Japan’s entry will tighten the LNG market materially this decade, as Japan will have to compete with Europe.

Japan depends on imports to meet 90% of its oil and gas needs. The Japanese currency has fallen to its lowest in 20 years, resulting in its import bill shooting up by 70% in yen terms. This is indeed shaping up as one of the most serious energy crises Japan ever had, and it can severely hurt the economy.

In a recent study, the Economist Intelligence Unit estimated that yen will continue to depreciate against the US dollar through 2022, which will “constrain Japan’s economic growth this year through stronger inflation, softer consumer spending and delayed business investment.”

As Russia tightens its screws on Japan, it appears Kishida may have bitten more than what he could chew on the price cap idea. Top Japanese experts have doubted the rationale behind Japan’s policy trajectory. Of course, Moscow’s dexterity to use oil and gas as geopolitical tool is not to be doubted. The Kremlin decree on Sakhalin-2 could be intended, partly at least, as a wake-up call that alienating Russia could damage Japan’s vital long-term interests. Patrushev spoke up only four days after that.