24.03.2003
Euro-Pacific Nation
№1 2003 January/March
Dmitry V. Trenin

Director of the Carnegie Moscow Center, a member of the International Institute for Strategic Studies (London, United Kingdom) and of the Russian International Affairs Council (Moscow, Russia).

In the last two years, the Russian leadership has given up an
unpromising rivalry with the United States, dating from the Cold
War era, and assumed the policy of building a partnership with the
global superpower. Simultaneously, Moscow manifested its desire for
rapprochement with the European Union (EU) within a common economic
and legal framework which is based on EU standards and principles
(this is the only possible option for Russia). The essence of what
is already called the “Putin Doctrine” is bringing Russia’s foreign
policy objectives into line with the country’s resources and
domestic needs.

The new level of relations with the West is creating favorable
external conditions for Russia’s modernization – its primary
national goal of the early 21st century. Russia’s full-fledged
membership in the Group of Eight, forthcoming admission to the
World Trade Organization, the productive work of the Russia-NATO
Council and, finally, the possibility of Russia gradually embracing
the provision of Europe’s acquis communautaire are creating good
prerequisites for carrying out Russian reforms.

Russia has revised its relations with the United States and
Europe with a view toward meeting its domestic needs, but has not
yet found a suitable place for Asia in its policies. The Kremlin’s
Asian policy lacks clear-cut priorities. The Russian Federation is
developing a strategic partnership with China, building up
military-technical cooperation with India, seeking to restore its
political influence in North Korea (partly to develop economic
cooperation with South Korea), and exchanging cooperative plans
with Japan. However, relations with Japan cannot develop at the
desired level because of the lingering territorial dispute.

Russia’s Asian policy begins in the Far East

At the same time – and the Kremlin admits it – the situation in
Russia’s Far East region poses one of the most acute and largest
problems facing the country. Of course, a solution to the problem
of developing this region is Russia’s internal affair.
Nevertheless, considering the region’s geographical position,
outside factors can play a major role in these efforts. Let’s
analyze Moscow’s Asian policy from this point of view.

Russia’s relations with India have very good prospects, yet they
rest on a narrow foundation of military-technical cooperation which
has broadened recently due to the coincidence of mutual interest in
combating Islamic extremists. Obviously, Russia and India should
use their “problem-free” relations to boost their economic ties.
India’s recent move to invest in Russia’s energy projects on the
Sakhalin Island is a promising step in the right direction. The two
countries also have good potentialities for closer cooperation in
the science and technology sectors. Nevertheless, it must be
admitted that India will play a limited role in the development of
Russia’s Far East in the foreseeable future.

In the early 1990s, when Moscow began to strengthen its
relations with Seoul, many Russians entertained hope for a speedy
increase of South Korean investments in the economy of the Russian
Far East. However, Russia’s general unattractiveness to investors,
together with its lack of “political currency,” that is, effective
influence on Pyongyang, strictly limited the scope of bilateral
cooperation. In the late 1990s, Moscow again amended its Korean
policy and has since sought to “combine economics and politics” in
it. In particular, it has come out with an ambitious plan to
connect Eastern Asia with Western Europe by a railroad system
across Russia. However, the crisis situation that persists in and
around North Korea makes these plans a risky venture.

Under the circumstances, Russia gives priority to its
partnership with China. The reasons for this choice are obvious.
The Soviet-Chinese border had been a line of heated confrontation
for three decades before Moscow and Beijing finally normalized
their relations in 1989. According to former Soviet Foreign
Minister Eduard Shevardnadze, the U.S.S.R. invested 300 billion
rubles in the reinforcement of its 4,300-kilometer-long Chinese
border – double the Soviet Union’s average annual budget in the
early 1980s. This explains why the importance of establishing
good-neighborly relations with China is hard to overestimate.
Furthermore, Beijing and Moscow have recently become indispensable
partners in strengthening international stability in adjacent
regions, such as the Korean Peninsula and Central Asia.

Security considerations are backed by economic arguments.
Fast-developing China is one of the most promising new markets in
the world. Russian companies operating in the oil, gas, power
engineering, and aircraft industries are seeking to enter the
Chinese markets and consolidate their positions there. The Chinese
military is placing orders for new equipment, thus helping the
Russian defense industries to stay afloat. And Chinese consumer
goods, which are rather inexpensive, have found a niche for
themselves on the cheap market of Russia’s Far East. Finally, China
is a promising source of manpower for sparsely populated areas east
of Lake Baikal, which are rich in natural resources.

China: A problem partner?

It must be admitted that most of the speculation about a Chinese
threat looming large over Russia is groundless. Modern China is not
an aggressive country. The Beijing leadership, following Deng
Xiaoping’s course, demonstrates moderation and predictability in
its foreign policy. The official slogan of Chinese diplomacy –
“peace and development” – meets China’s actual needs. Economic
vitality has retained its primacy in the national strategy. The
Chinese armed forces are oriented not toward the north (Russia) but
toward the southeast (Taiwan) and the south (the South China Sea).
And concerning China’s “demographic aggression against Russia,”
this is a demagogic bugbear created by particular Russian
politicians who want to play on the feelings of disillusionment and
national humiliation experienced by some voters.

At the same time, any analysis concerning Russia’s prospects for
partnership with China, and how this will assist Russia’s
modernization needs, must take into account some essential
qualifications. China now excels Russia in a number of major
aspects. In particular, it has a 400-percent lead over Russia in
the Gross Domestic Product, and an 800-percent lead in manpower.
Russia’s traditional advantage in living standards, education and
even in military might, including the nuclear missile potential, is
gradually, yet perceptibly, declining. In some areas the advantage
has already disappeared. Therefore, Russia’s relations with China
have become a “partnership of unequal values.” There is nothing
threatening in this disproportion, yet Russia must take it into
account while building its strategy for the future.

Meanwhile, the future of China itself remains uncertain. The
restructuring of the Chinese economy, which has been required by
China’s joining the WTO, may slow down economic growth in the
country and, therefore, have grave social and political
consequences. The issue of power is becoming more and more topical.
Even from a Marxist point of view, the conflict between the
fast-developing “economic base” and the archaic “political
superstructure” in China is coming to a head. The change of
generations in the leadership of the Chinese Communist Party,
although proceeding rather smoothly, is not at all equivalent to a
political reform. There is no mechanism yet for switching from
authoritarian rule to a Chinese model of democracy – just as there
is no such model. One thing is clear: the CCP is a dynasty that is
already approaching its finish. Who will replace it, and under what
circumstances, are questions to which there are no answers yet.

Even though Beijing is now pursuing a moderate policy, a crisis
may bring chauvinistic forces to power. A military solution to the
Taiwan problem – such a scenario should not be ruled out – would
place China on the brink of conflict with the United States. On the
other hand, a peaceful reunification of Taiwan and mainland China
would raise the issue of whether the national agenda has been
concluded and, if not, where its next boundary lies. One should not
rule out the possibility of heightened tensions in Sino-Indian and
Sino-Japanese relations. In this case, Russia would find itself in
the uncomfortable position of having to choose between China and
the United States, between China and India, or between China and
Japan. Moreover, the Russian-Chinese border has not yet been
demarcated throughout its entire length, and there is a
hypothetical probability that China may reanimate its territorial
claims against Russia.

China, of course, can also be considered as a source of
financial investment. However, the larger part of Chinese companies
and banks are state-owned or controlled. This factor worries those
who regard the expansion of Chinese capital as a way to broaden the
political influence of China. Indicative in this respect was the
recent auction sale of the Slavneft oil company. The bidders
included the Chinese National Oil Company. Forces interested in
removing the Chinese rivals successfully availed themselves of the
above “politico-economic” argument.

Finally, China can be viewed as a potential market for Russian
investors. However, Russian companies have discovered that the
strategic partnership between Moscow and Beijing does not offer
them any advantages over other competitors on the Chinese market.
Russians may win only a small part of this huge market. There is a
possibility that China will open its doors to other Asian-Pacific
markets for Russian companies, but this opportunity would be
promising only for those companies which operate in the fuel and
energy sector.

In the foreseeable future, Russia should not count on China as a
source of advanced technologies. Although China boasts the world’s
fastest trains and highest dams, most of the technologies used in
the country are foreign. Russia still maintains its advantage over
its neighbor in research and development. While Russia may sell its
high technologies to China, one must take into consideration their
“special” nature: the majority of them are used either in the
defense industry or in nuclear power engineering.

Finally, although the development of Russia’s Far East requires
an increased manpower – which neither Russia nor other members of
the Commonwealth of Independent States can afford to allocate –
Russia will maintain tough restrictions on the immigration of
Chinese citizens. These limitations will be enforced so as not to
jeopardize the demographic situation in the Far East region: the
population of Russia’s Far East is five million people, compared to
130 million Chinese populating northeastern China.

Cooperation with Japan: Prospects and obstacles

Although cooperation with China is extremely beneficial for the
development of Russia’s Far East and Siberia, China – for purely
objective reasons – cannot be Russia’s leading partner in
modernizing the country. Meanwhile, Russia does need such a partner
in Eastern Asia, and Japan is a natural candidate for this
position. Arguments in Japan’s favor include its economic potential
(the world’s third largest after the U.S.A. and the European
Union), as well as its advanced technologies and financial
capabilities.

The idea of “leaning on Japan in economic relations” is nothing
new. It was first given consideration in the early 1960s when
Anastas Mikoyan, the highest-placed Soviet statesman to ever visit
Japan at that time, paid a visit to Tokyo. A more extensive attempt
to realize this idea was made in the 1970s after Japan’s Prime
Minister Kakuei Tanaka paid his first official visit to the
U.S.S.R. These efforts yielded noticeable yet limited results. The
Soviet Union exported raw materials to Japan while it imported
Japanese industrial goods and equipment. Japanese technologies were
used in the Soviet timber, fishing and other industries. However,
closer integration was never successfully achieved; the autarkic
Soviet model resisted integration.

And there existed other challenges as well to this relationship.
Until the end of the Cold War (actually until the breakup of the
Soviet Union), Moscow and Tokyo viewed each other as potential
enemies. The Soviet General Staff looked at Tokyo as the main
military base of the United States on the eastern frontier, while
the U.S.-Japanese Security Treaty and the U.S.-South Korean
alliance were viewed as an eastern variety of NATO.

The situation changed dramatically at the end of the 1980s when
Moscow and Tokyo were on the brink of a breakthrough in their
relationship. There arose the opportunity for signing a peace
treaty, solving the territorial problem, and developing large-scale
economic cooperation between the two countries. But for some
reason, this opportunity was squandered. Both Tokyo and Moscow gave
undue attention to the territorial issue and were unable to discuss
its resolution in a broader context. Besides, the ruling circles in
Japan remained skeptical for too long about then Soviet President
Mikhail Gorbachev’s democratic reforms. As a result, Gorbachev
visited Japan only in April 1991, at a time when his influence
inside his country was waning fast.

But even if Gorbachev had reached a last-minute agreement with
the Japanese leaders, it would not have been fully implemented, and
if it had been, it would not have been of much use for Gorbachev’s
reforms. More likely an agreement, should it be signed, would have
provoked the emergence of irredentism in Russia. This would act as
an irritant in bilateral relations with Japan, as well as a
destabilizing factor in the political situation inside Russia.

Subsequent efforts by Russian President Boris Yeltsin to improve
relations with Japan failed because of his political weakness, as
well as his inability to put forward solid arguments in favor of a
radical change in Russian-Japanese relations. The Yeltsin
presidency produced a rather paradoxical formula: a weak Russia
cannot afford to make concessions.

The beginning of the new century was marked by better conditions
for a Russian-Japanese rapprochement than ever before. The position
of the new Russian President, Vladimir Putin, on the Russian
political stage has become much stronger than those of his
predecessors. His reputation as a defender of national interests,
consistently high personal ratings, control over the State Duma and
the mass media, and the loyalty (though forced) of the regional
elite make him much more confident in his relations with other
countries. This was clearly demonstrated by the strategic turn of
Russia’s foreign policy toward the West following the tragic events
of September 11, 2001.

In turn, Japan, under pressure from geopolitical, strategic and
economic factors, has stopped focusing primarily on the territorial
issue, and begun to display interest in other aspects of its
relations with Russia as well. The ongoing strengthening of China
is forcing Tokyo to consider the problem of the balance of forces
in the region. Maintaining and sealing relations with the United
States remains an absolute imperative for Japan, yet these
relations are no longer enough. The Japanese government has to look
for new partners on the continent, and Russia is a natural
candidate.

The situation in and around North Korea brings to the foreground
the question of Japan’s national security. Naturally, Tokyo is
concerned about Pyongyang’s stated nuclear and missile programs,
but it also fears a potential military confrontation between
Pyongyang and Washington. In this context, Moscow becomes a highly
valuable partner for Japan.

Other pockets of uncertainty in the world also exist. The
persistent instability in the Middle East and the Iraq problem, in
particular, are compelling Japan to diversify its oil imports and
enhance its energy security. This goal can be achieved by importing
oil and gas from Russia’s Sakhalin and Siberia.

Overcoming obstacles

The new favorable environment for a Russian-Japanese
partnership, however, does not necessarily remove all of the more
serious obstacles for such an alliance. And although the
territorial issue was not on the agenda of Japanese Prime Minister
Junichiro Koizumi’s visit to Moscow in January 2003, it is
perfectly clear that full normalization of bilateral relations, and
the realization of a working partnership, will require a definite
resolution to the northern territories issue.

In both countries there are influential groups, for which the
return (or, on the contrary, retention) of all the four contested
islands has become their creed. Japan’s rightists and Russia’s
“national patriots” will strongly oppose any compromise, playing on
the dark past of Russian-Japanese relations, as well as on deeply
rooted mutual prejudices.

Even though Russian-Japanese rapprochement meets the national
interests of both countries, neither Russia nor Japan have
coalitions of political or business groups prepared to lobby such
rapprochement. Other factors standing in the way for closer
relations between the two countries include the general weakness of
state institutions in Russia (aggravated by the swollen
bureaucracy) and the traditional weakness of the political
authority in Japan (bureaucrats play a major role in that country,
too).

Still greater problems are posed by slow reforms in Russia, as
well as the merger of a large number of its politicians and
businesspeople with organized crime. Russia’s Far East remains very
unattractive to Japanese businesses, as well as to companies from
South Korea, the United States and other countries. The Japanese
economy, although strong and resourceful, continues to stagnate.
Reforming the economy may require a very high concentration of
political capital in the hands of reformers, which will leave
little resources for the further development of relations with
Russia.

The above obstacles are serious yet surmountable in the medium
or long term. However, a joint “action plan” alone is not enough.
The two countries must have clear-cut goals. For Moscow, this goal
must be one of increased cooperation with the Japanese economy,
with a view toward modernizing Russia and developing its Far East
and Siberian regions. Tokyo, on the other hand, needs political
support as well as a source of energy resources in the region where
Japan does not have many reliable allies.

Russia and Japan must also understand that a resolution of the
territorial issue can be achieved only through compromise and in
the spirit of the “two plus Alpha” formula. In order for a peace
treaty to be signed by both Russia and Japan, the leaders of these
two countries must be able to walk away from the negotiations as
winners. Before this time, Russia will have to formulate a
realistic program for developing Siberia and its Far East, and be
ready to implement investments and technologies from Japan.

Russia must also come out with concrete projects for cooperation
in its energy and transportation sectors, and the overall
development of its infrastructures. Investments will come only if
Russia ensures adequate conditions for corporate activities in the
region, and if Russia and Japan provide guarantees for such
cooperative projects.

Also, Japanese companies must be assured that their
participation in the development of east Russia will deliver
profits. Like Russia, they will need strategic thinking oriented to
the future. Efforts to normalize Russian-Japanese relations need to
be supported by the public at large in both countries; any deal
secured behind closed doors would, most likely, be rejected by
voters and have grave consequences for bilateral relations. This is
why there must be serious public discussions in both countries on
the entire range of issues concerning the future relations between
Russia and Japan.

Concerning the external factors for the development of
Russian-Japanese relations, the most important one is the favorable
position of Washington. A top priority of the U.S. foreign policy
is maintaining stability and security in the strategic region of
Northeast Asia. Normalizing Russian-Japanese relations would help
to achieve this goal.

There are still other sensitive issues which must be given
consideration. While developing relations with Japan, Russia must
solve the delicate problem of minimizing the damage these efforts
may have on Russia’s relations with China. Moscow must
painstakingly explain to Beijing the motives and objectives of its
policy, which is aimed not at creating some geopolitical alliance,
but at stimulating the modernization of Russia and, especially, its
backward eastern provinces.

Economic cooperation between China and Japan now exceeds the
volume of Russian-Japanese cooperation 20 times. Japanese companies
are moving their production facilities to China en masse and
sharing their technologies with the Chinese. Actually, the
economies of the two countries are integrating. Russia is thus
lagging far behind China in developing economic ties with
Japan.

Depending on how the above problems are addressed, the recent
Putin-Koizumi summit in Moscow may become a turning point in the
normalization of Russian-Japanese relations.

The larger part of last century was marked by wars,
confrontation and enmity in relations between Russia and Japan.
However, the new century is opening new, and more optimistic
prospects. To take avail of them, Russia and Japan must formulate
new guiding principles which will conform with the principles of
the times and the new geopolitical situation in the world. Czarist
Russia and the U.S.S.R. were two variants of an autarkic Eurasian
empire which relied mainly on military force. The present and,
especially, future Russia is no longer a “Eurasia” or “Euro-Asia.”
It would be best described as a Euro-Pacific nation open to the
outside world and seeking to establish “special relations” with the
global leader – the United States. The European Union is now
Russia’s main regional partner in the west, and Japan must become
its regional partner in the east. These two global partners are
Russia’s necessary supports for solving the modernization problem.
In the 1990s, Russia acquired Europe as a partner, and Japan is on
Russia’s agenda in the first decade of the 21st century.