Euro-Pacific Nation

24 march 2003

Dmitry Trenin – Director of the Carnegie Moscow Center, Senior Research Fellow of the Primakov National Research Institute of World Economy and International Affairs, and a Member of the Council on Foreign and Defense Policy.

Resume: Having established stronger relations with the United States and Europe, Russia now needs a reliable partner in the Far East that could contribute to its program of modernization. Japan is the best candidate for that.

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.

Last updated 24 march 2003, 19:00

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