The Prospects for Future Economic Relations Between Japan and Russia

|Russia

The following is purely a personal viewpoint.

Ms. Kawaguchi, Minister for Foreign Affairs, has made her first visit to Moscow since assuming office. Foreign Minister Kawaguchi energetically handled her schedule during her stay from October 11th to 14th. This visit to Russia itself had great significance. It was expected to be an opportunity for the development of the relationship between Japan and Russia. In fact, I believe that it has given rise to an even more significant effect. The memorandum signed by Foreign Minister Kawaguchi and Deputy Prime Minister Khristenko as a result of the “Sixth Meeting of the Japan-Russia Intergovernmental Commission on Trade and Economic Issues”, which was held on the last day of her stay, incorporated a variety of issues, showing exactly how many issues there are to be dealt with in the field of economic cooperation between the two countries.

The important thing is that, in terms of economic aspects alone, there are so many issues with regard to which the two countries can cooperate and the two countries’ stance of dealing with these problems seriously in the future was reaffirmed.

In addition, a careful reading of each item in the memorandum reveals that each one really does have great significance. (It is noticeable that, of these, the necessity of holding a subcommittee meeting to deal with issues arising from the economic relationship with the Russian Far East in the near future was emphasized anew.)

Digressing from the main topic, let us recall the recent political and economic transition of the two countries. As we know, stable development has been observed in Russia since the economic crisis in 1998. The economic situation has been supported by specific favorable conditions and the neglect of the economy, as seen when arbitrary manipulation of the economy by an elite oligarchy was allowed to take place, has ceased. The parlous economic situation, which could be compared to an air show featuring a torrent of loop-the-loops and tailspins, has disappeared and become fairly stable. Although the scale of the government budget is too small in comparison with the size of the country, including its population, land area and resources, I would like to praise the government for slowly but steadily learning ways to manage the economy. On the other hand, although it does not occur as frequently as before, there are corporate takeovers that verge on the criminal and rivalries between corporate shareholders, so it is far from an environment in which people can invest with peace of mind. Consequently, improvements in this area should be shored up considerably; in general, however, steady progress has been made.

On the other hand, what influence did a series of Japanese political dramas have on the relationship between Japan and Russia? Has the situation been sorted out and clarified or, on the contrary, deepened the degree of chaos? At one time, viewing figures for Diet proceedings televised live reached a record high; however, leaving aside the reasons and the rights or wrongs, the two main characters attracting all this attention were erased from the political stage as a form of punishment to both parties for engaging in a feud. How should we evaluate this incident in the context of the relationship between Japan and Russia?

A member of the Russian State Duma said that, “With regard to the issue of the Northern Territories, I was pushed right to the edge by the Japanese side and was absorbed by the problem of how I should respond. However, the Japanese side unexpectedly retreated of their own free will, so all of a sudden, I gained both mental and temporal elbowroom.” He did not think that he needed to worry about the issue for the time being, and this may be his true feeling. However, I wonder what will be the central theme occupying the two countries in the future.

I think that an environment has evolved in which the two countries must devote their energies in earnest to improving economic problems, and escape from the past when everyone put the territorial issue under the spotlight to so great a degree that everything else took a backseat to it. (Of course, the importance of the territorial issue to Japan has not changed.)

Then again, since improving economic problems between the two countries has been a pending concern for a long time, many readers may think that there is no point taking up the subject again.

The idea of giving priority to multiple relationships has been in existence for a while, but in practice, the Japanese have generally lacked an awareness of the necessity of improving Japan’s relationship with Russia. Social relationships with neighbors depend on the depth of the “day-to-day relationship”, and between Japan and Russia this has remained very shallow in terms of the economy and culture. With regard to private interaction between Japan and Russia, although quite a few people have made great efforts at grass-root level in the areas of culture and technology, apart from local exchanges within Far Eastern Russia and Siberia, I have to say that in general, such interaction is completely inadequate. In particular, there is no comparison with its relationship with Europe and the U.S. Although the respective nuances differ, one could say that Japan lags behind China and the ROK. (Though I must admit that, in terms of closeness, the relationship between Japan and Russia cannot simply be compared with the relationship between Russia and the ROK, the U.S. and Europe, since they have historically had close relationships with Russia.)

Let us return to the economic aspect of the Japan-Russia relationship. In terms of economic exchange in the private sector, after the collapse of the Soviet Union, Japan made great efforts to establish a new relationship, with Keidanren at its center. However, the reward for this is too small compared with its efforts. The relationship with the newly emerged Russia is too shallow to be depicted in figures.

As far as Japan is concerned, there are various issues that must be resolved before it can engage with Russia in earnest, but the main ones are 1) the stability of Russia’s political and economic situation, and 2) the degree to which Russia can make progress in developing a market economy. I will stop short of talking about 1), but with regard to 2), I believe that educating management executives is crucial. Although at first glance it seems a rather roundabout method, it would actually prove to be something of a shortcut if they were rid of the image that they acquired during Soviet era of the capitalist economy as an economy of exploitation, predatory capitalism and the economy of the devil would actually be a shortcut. They could be taught the concept of “trusting business partners”, as well as “not deceiving people” and “fully respecting contracts”, in addition to basic business concepts, including marketing, quality control, investment, finance and labor management. Since I am directly involved in the situation, I can understand that “the Japan Centers have an important role as part of intellectual support to the Japanese government”, a point which is also included as the third clause of the most recent memorandum of understanding. With such Japanese support, Russia will be able to develop further and deepen its ties with Japan. As most experts have admitted, it is extremely important for Russia for the future to shift from large and serious economy from the Soviet era to economic restructuring by small and middle class enterprises. It is no exaggeration to say that development of the Russian economy will take place in five years’ time if the gaps in the Russian economy were filled. Japan has been laying the foundations for business with Russia by consistently providing this kind of intellectual support along with the G7 countries. This is support of which Japan can be very proud. In addition, I think that it is only a matter of time before partners in trade and joint projects with Japan emerge from enterprises with managers who have received this kind of education.

[Translated by ERINA]