President Barak Obama skipped the APEC (Asia Pacific Economic Cooperation) summit held in Vladivostok earlier this month. His move was viewed as his negative reaction to the failure on the part of Russian President Vladimir Putin to attend the G8 summit held last May in Washington, D.C.

　　　At Nagata-cho, some quarters felt Prime Minister Yoshihiko Noda should also skip Vladivostok to protest the visit to the disputed Kunashiri Island -€ one of the four islands in the Russian-held Kurile Islands — in July by a delegation of senior Russian officials, including Prime Minister Dimitry Medvedev. Since, from Japan’s point of view, these islands were seized illegally by the Russians at the end of World War II, any visit by Russian officials is in fact illegal entry to Japanese territory. Despite the situation, Noda chose to attend the summit in Vladivostok.

　　　How, then, was Noda received? He was kept waiting by Putin for 50 minutes as the Russian side abruptly tossed in two meetings for Putin -€ with the heads of state of Malaysia and Thailand -€ just before the scheduled Japanese-Russian meeting. Despite this, Noda was all smiles when he finally shook hands with his Russian couterpart, calling for future discussions in “a quiet and constructive atmosphere” in order to resolve the problems hampering Japanese-Russian relations. Noda welcomed Russia to the World Trade Organization (WTO), stating that “bilateral cooperation (over the projected development of Far East Siberia) can be realized if our two nations strive sincerely to promote mutual trust and understanding.” Following the meeting, Noda and his Russian host together witnessed the signing of a memorandum on construction of a liquefied natural gas facility -€ a joint venture with the government-controlled Gazprom, the world’s largest extractor of natural gas.

　　　What dull and unenlightening diplomacy towards Russia the Japanese prime minister is pursuing. It actually is not such a bad idea to seek “a quiet and constructive environment” for future talks with Putin, but I truly wonder if Mr. Noda realizes that a great deal of national passion and realpolitik power is mandatory in order to materialize that.

　　　Professor Shigeki Hakamada, a Russia specialist at Niigata Prefectural University, points out that the Russian side regards the Japanese protests against the visit to the Kurile Islands by Russian political leaders simply as “a necessary domestic ritual (to pacify the people of Japan).” The protests Japan have so far made have neither been realistic nor convincing, notes the professor.

　　　While still president, Medvedev visited Kunashiri Island illegally in November of 2010. The then prime minister, Naoto Kan, recalled Ambassador Masaharu Kohno in “protest,” but sent him back to Moscow in just three working days, taking no further action that could remotely be construed as an official Japanese protest. Medvedev did it again last July 3, this time landing on Kunashiri as prime minister. The Noda administration went no further than noting that Medvedev’s action was “not in keeping with the fundamental stand of the Japanese government concerning the territorial issue.” The Noda administration also has failed to follow up with an outright protest against Russia’s current all-out efforts to turn the Kuriles into a major military stronghold.

Within the Framework of a World Strategy

　　　What does one make of a prime minister who, against such a backdrop, attends a delayed meeting with a smile, calling for a “quiet atmosphere” for future sessions. I seriously wonder if this prime minister may not be grossly lacking the fierce determination one naturally expects from any head of state faced with tough negotiations over territorial matters.

　　　As regards a territorial dispute with Russia, let me cite the example of the Republic of Moldova, introduced by Prof. Hakamada in the July issue of Anpo-ken Report , an organ of the semi-government Research Institute for Peace and Security, headquartered in Tokyo. Once a small part of the former Soviet Union, Moldova is located to the east of Romania, inhabited by some 3.6 million people with an average annual GDP (Gross Domestic Product) per capita of US$1,810. Since gaining independence, Moldova has continuously been at loggerheads with Russia over a territorial issue involving Transnistria -€ a tiny nation bordering Ukraine with a population of less than 650,000.

　　　Moldova’s staple merchandise is wines, some 80 percent of which are exported to Russia, while the nation is totally dependent on Russia for gas as its main energy source. In 2005, as a ploy to exert pressure on Moldova in connection with the land issue, Russia banned wine imports from Moldova while cutting gas supply. But the Russian action attracted this statement from the Moldovan government:

　　　“We shall never compromise, even if we lose the market for our wines and our gas supply from Russia. We are fully determined to survive the winter, even if we shiver in the cold with no gas to heat us. We shall never surrender. No matter how high a price we may end up paying for our determination, we shall never sacrifice our territorial security or sovereignty.”

　　　Taken aback by this fierce determination on the part of the Moldovans to persevere through hardships and fight for the nation’s integrity, the Russian government subsequently lifted the ban on wine imports. Although the land issue has yet to be resolved, efforts by Russia to annex Transnistria have been frustrated along with efforts by the latter to declare independence, according to Prof. Hakamada.

　　　The professor points out that it will be practically impossible to expect Russia to willingly work out solutions to territorial and other issues in ways compatible with Japan’s national interests -€ so long as the current situation prevails in which Russia “simply does not pay due respect” to Japan. Diplomacy should not be about smiling no matter what the other party may come up with. When a government says it will deal with a situation “resolutely” -€ as Mr. Noda has repeatedly pledged in the past year in office -€ positive results must follow. Japan is a nation blessed with advanced high technologies and economic strength, which the Russians presumably covet far more than Moldovan wines. What our prime minister must possess first and foremost is the mettle with which to utilize to the fullest extent all of our national capabilities, which have long been the envy of many members of the international community. Importantly, our diplomacy must also be backed up by credible military power. In other words, a combination of spirited commitment and credible military power is necessary to be successful in tough international negotiations.

　　　With that in mind, Japanese leaders must cooly analyze what the future holds for Russia and determine what proper distance Japan should keep from Russia within the framework of Japan’s grand world strategy. Japanese leaders, including Prime Minister Noda, appear to be too eager to forge ahead with the LNG joint venture project with Russia. However, one seriously wonders why Japan is buying LNG from Russia at prices among the highest anywhere in the world and why Japanese political and business leaders are continuing to rush forward to consummate more LNG deals, tripping over themselves in the process.

　　　Russia -€ the world’s second largest natural gas producer after the US -€ views exports of natural resources as its single biggest economic pillar. The Russian economy, which has fundamentally failed to nurture the manufacturing sector, runs the risk of being at the mercy of the fluctuations of primary natural resource prices -€ be they oil or natural gas. It is, therefore, no wonder that the Russians are extremely concerned with the price of natural gas -€ their biggest source of income.

The Importance of Being “Resource-Allies”

　　　The Russians insist that between US$350 and US$400 be paid per 1,000 cubic meters for their natural gas. The Chinese, being adroit merchants, will not pay more than 50% of these prices, refusing to become energy dependent on the Russians. Japan, on the other hand, has been buying energy from Russia at nearly the full asking price in the wake of rapidly increasing demands for thermal power generation following the Fukushima nuclear disaster in March of 2011.

　　　Meanwhile, the US has succeeded in developing new technologies to extract natural gas inexpensively and with a reduced burden on the environment, changing the world’s energy situation drastically starting some two to three years ago. In the US, natural gas prices dropped by 50% in 2010 compared to four years before; now, its market price is less than US$88 per 1,000 cubic meters. (The standard price in Europe and Asia, respectively, is US$353 and US$530.) Russia’s price of $350-$400 is the price at the point of extraction only. Thereafter, as natural gas is liquefied, shipped overseas, and circulated through various distribution channels, the retail price becomes truly exorbitant.

　　　Meanwhile, the US plans to cover 40% of its energy needs with domestically-produced natural gas by 2020, drastically reducing its dependence on petroleum. This development in the world’s greatest consumer of petroleum is expected to result in significantly reduced international oil prices, while still helping reduce natural gas prices without fail. It will deal a heavy blow to the Russian economy. This is why I feel it will be extremely difficult for Russia to regain its position as one of the big powers no matter how badly Putin wants it to happen.

　　　The US, which will without doubt be one of the world’s major energy exporting nations, will see the completion of the expansion of the Panama Canal in 2014. The new route will provide the US a major artery of energy exports to Asia-Pacific with greatly reduced shipping costs. A bi-partisan group of top Japan specialists in the US recently proposed that the US and Japan expand their military alliance to become “resource allies” as well.

　　　If one correctly reads between the lines of long-range strategies pursued by the US and Japan, he can easily understand why it is crucial for Japanese political and business leaders to sharpen their national consciousness before proceeding to approach Russia. If Prime Minister Noda is serious about demanding that the Russians return the Kuriles, then I firmly believe it is his responsibility to spare no effort in re-strengthening Japan’s over-all power, including its military capability, as a mandatory step towards realizing the coveted return of the four northern islands.

(Translated from “Renaissance Japan” column no. 526 in the September 20, 2012 issue of The Weekly Shincho.)