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Recent political posturing about the fate of the Kuril Islands is the latest development in a serious redressing of the balance of power between Moscow and Tokyo. Should the animosity continue, it is the latter which stands to lose the most.
By John Hemmings for RUSI.org
Russo-Japanese bilateral relations appear to be at an all-time low. Terse and public diplomatic exchanges between Tokyo and Moscow have followed Russian promises to build up their military strength in the Russian Far East. The immediate cause of tension is the disputed Kuril Islands (or Northern Territories as they're known in Japan), seized from Japan by Stalin in the fading days of the Second World War - preventing the two states from signing a formal peace treaty. The Soviet Union settled ethnic Russians on to the four islands off the coast of Japan's northernmost island, Hokkaido, following the eviction of Japanese civilians in 1945, and the new inhabitants continue to fish the same waters as their Japanese predecessors. As the territorial dispute stretches back nearly sixty-six years, why has it recently taken on new life, and what is the true significance of the current Russo-Japanese falling-out?
Old Problem, New Dynamic
In many ways, the answers lie in the changes that have swept over the region during the twenty years since the fall of the Soviet Union, and in the shift in perceptions that has taken place between Russia and Japan over that time. In the 1990s, the cash-starved Russian Federation looked to Japan for investment, technology and partnership in its energy projects in the region. Its willingness to try to reach some compromise over the issue was pushed by those in Moscow who saw real dividends in trying to reach some compromise with Tokyo over the Islands. In 1998, Boris Yeltsin was promised a $1.5 billion aid package from Japan and the IMF, and while both sides dismissed any link with the territorial dispute, Prime Minister Keizo Obuchi visited Moscow that same year to try to negotiate a deal with Yeltsin. On top of that, Japanese financing - totalling some $3.7billion - has flowed into Russian energy projects from the Japanese Bank of International Cooperation, Mitsui and the Mitsubishi Corporation.
Now, Moscow no longer sees dividends in trying to reach a compromise with Tokyo. Indeed, it reckons that it can gain more by taking a hard line on the issue: building up its military forces there and sending a revolving-door of politicians from Moscow has been met with approval amongst more right-wing members of the Russian electorate and the conservative elements of the military. With next year's elections in mind, Russian President Dmitry Medvedev's December visit to the islands - the first by a Russian leader - was also calibrated to appeal to nationalist sentiment and to reassure Russian security fears in the Far East. Sporting a bomber jacket (in Putin mode), Medvedev talked tough on Japanese claims, and promised aid and development money to local Russian leaders. Furthermore, a spat with Japan, coming so soon after China's own territorial-driven fishing boat incident in September, puts Moscow in Beijing's good books. Russia knows that it can play these games without paying a political price, safe in the knowledge that Tokyo has little recourse and can always be brought back to the table later.
If Russia has grown stronger, then the corollary is equally true. Tokyo is in a far weaker position than it was two decades ago. Its economy has been in the doldrums for more than a decade, with the Chinese juggernaut brushing past earlier this year. While it remains one of the largest global creditors, huge deficit problems have lead to a loss in creditworthiness. Politically, it has endured a large number of leadership changes, churning through five Prime Ministers in five years, and impairing its ability to get a serious grasp on long-term policy issues like security and the economy. Last week, as Prime Minister Kan's cabinet struggled to formulate answers to Japan's economic woes, it also had to deal with a sideline leadership battle which saw sixteen lawmakers - affiliated with a rogue member of the Democratic Party of Japan, Ichiro Ozawa - challenge the Prime Minister's leadership and threaten to impair his ability to pass legislation. Finally, Japan's relationship with its security guarantor, the US, has been on less-than-sure footing since former Prime Minister Hatoyama threatened to scupper a base-relocation agreement in Okinawa. While his mishandling of the issue (among others) ultimately caused the Japanese electorate to lose confidence in his leadership, the Futenma Base issue strengthened the Russian perception of an isolated Japan.
Whether the diplomatic furore around the Kuril Island/Northern Territories continues past the Russian elections next year depends on whether Moscow is serious about building up its Far East military command, currently in serious disrepair. Promises to allocate S400 SAM systems, a Mistral assault vessel and a modern fighter wing have followed the resumption of Russian bomber patrols. As the Asian Pacific develops into one of the biggest drivers of the global economy, it is not surprising that Russia begins to re-orient itself to this source of economic growth. Its relationships with the US, NATO and the EU are fairly stable at present, meaning that it can afford to focus less on its western borders. If, however, Russia does continue to militarize the islands further, it could elicit a Japanese response two or three years down the line. Ultimately, Russia retains the strong cards in this particular game: Moscow knows that it can either demilitarize the islands or invite Chinese investment as a way of applying leverage on Tokyo. And, given Japan's current malaise, Tokyo might just have to pay.
 Interfax-AVN news agency claimed that it had been told by a 'high-ranking representative of the Russian General Staff' that Russia would deploy its newest S-400 Air Defence SAMs to the Kurils.