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    Central Asia
     Aug 17, 2005
Moscow hardens towards Tokyo
By Sergei Blagov

MOSCOW - As Russia has failed to secure any significant economic commitments from Tokyo, notably on a Japan-bound Pacific oil pipeline, the Kremlin has lost all interest in resolving its long-standing territorial dispute with Tokyo any time soon. Indeed, Russia has removed Japan from its Asian diplomacy priority list.

A top official has bluntly told Tokyo to forget about the disputed Kuril islands. President Vladimir Putin's special envoy in the Far East, Konstantin Pulikovsky, said this month that "Russia does not have any problem of Kuril islands", meaning it is happy with the status quo.

The "so-called territorial dispute" is a sort of publicity platform for Japanese politicians, Pulikovsky claimed. "It is absolutely their internal affair, we have nothing to do with it," he said. In the meantime, the Kuril Islands will become "a beautiful corner of prosperous Russia", Pulikovsky said.

Pulikovsky also said that Russia and Japan had good relations, particularly in the economic and tourist spheres, without a peace treaty. Japan has made the return of the Iturup, Kunashir, Shikotan and Habomai islands, which it calls the Northern Territories, a condition of concluding a peace treaty with Russia. These islands passed to the Soviet Union after World War II.

And then on August 10 Pulikovsky approved a blueprint for developing the Kuril Islands. The document reportedly involves a number of measures, including creation of a special economic zone to promote economic development in the Russian Far East. Businesses in the zone will receive preferential tax and other treatment. In other words, Moscow aims to demonstrate that it will take care of the Kurils on its own.

Other Russian officials have backed plans to give development of the Kurils a much-needed boost. On August 11, Russian Defense Minister Sergei Ivanov suggested to raise funds to develop the islands. He conceded, however, that the islands' infrastructure needed serious upgrade. Ivanov added that more than half of the islands' current population were Russian military personnel and their dependents.

The hardening of the Russian stance follows a softening just last spring. At that time, Japanese sources floated the possibility of a compromise over the disputed islands, arguing that better relations with Moscow were essential at a time when Japan's relations with China and South Korea were worsening. There were rumors of a new approach towards the territorial dispute: something less than a 50-50 split of the total area, more like 37-63, with the smaller part going to Japan.

Russian academics have been exploring compromise solutions. Vasily Mikheyev, head of the Institute of Far Eastern Studies of the Russian Academy of Sciences, suggested a sort of trade-off: Japan should take two islands instead of the four it currently claims and sign a peace treaty with Russia in exchange for Russian support for Japan's bid for a permanent place at the UN Security Council.

Energy issues
Just few months ago, Russia indicated that a major energy deal with Tokyo was possible. Last December, Russian Prime Minister Mikhail Fradkov approved a 4,130-kilometer crude oil pipeline from Taishet in eastern Siberia to Nakhodka in the Sea of Japan. The Kremlin chief of staff, Dmitry Medvedev, announced in April that plans for the Pacific oil pipeline were expected to be finalized by May 1. But a clear Russian pipeline blueprint is yet to be made public. China had hoped that the pipeline would be routed from Angarsk to the Chinese city of Daqing.

Officials say that the country's pipeline monopoly, Transneft, will not use Japanese or Russian public funding to build the Pacific pipeline, citing the company's future bond issues as a principal source of financing. This is seen as a trial balloon to test Tokyo's readiness to finance the pipeline project to the tune of more than $10 billion. The pipeline is expected to carry 80 million tonnes of oil a year when completed in about four years' time.

As Tokyo failed to respond, the Kremlin requested some clarity. But hints of a possible off-shoot to China have proved unwelcome in Tokyo, and Japan made it clear it would not contribute financially to any Russian pipeline with a branch to China.

In response, Russia revealed plans to build a branch of the pipeline to China first, instead of giving priority to linking the pipeline to its Pacific coast, as sought by Japan.

Unlike ties with Japan, Russia's investment cooperation with China has been booming. Just within the past three months, Russia and China have signed investment agreements totaling more than $2 billion. On the other hand, by the end of 2004 Japanese total direct investment in Russia amounted to less than $200 million.

As Moscow becomes more disenchanted with what it perceives as Tokyo's obduracy, China could replace Japan as the main beneficiary of a trans-Siberian oil pipeline.

Sergei Blagov covers Russia and post-Soviet states, with special attention to Asia-related issues. He has contributed to Asia Times Online since 1996. Between 1983 and 1997, he was based in Southeast Asia. In 2001 and 2002, Nova Science Publishers, NY, published two of his books on Vietnamese history.

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China beats Japan in Russian pipeline race
(April 29, '05) 

 
 



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