Owing to a longstanding territorial dispute over the Kuril Islands (also known as northern territories) Russia and Japan, haven't established a peace treaty 75 years after WWII. The return of the islands had been historically important to Japanese leaders. The new Japanese Prime Minister Yoshihide Suga acknowledged the dispute in his first speech in the Parliament. He said that he plans to resolve the dispute with Russian President Vladimir Putin through comprehensive talks and is hoping to sign a peace treaty. According to the Japanese Ministry of Foreign Affairs, the islands "are an inherent part of the territory of Japan, which have never been held by foreign countries. However, the Northern Territories have been under illegal occupation by the Soviet Union, since 1945 and then Russia."


The Japanese government has been actively pursuing negotiations with Russia to reach a peace deal. However, Moscow considers the islands rightfully Russia’s as a result of the post-war agreements, but from Tokyo’s perspective, the dispute was a result of illegal Soviet aggression. It began in April 1945, when Stalin broke the non-aggression pact with Japan based on the Yalta agreement in February that year, in exchange for territorial claims in East Asia. When the islands were invaded by Soviet troops, as many as 17,000 Japanese citizens were expelled.


Most analysts agree that overcoming the disagreement and developing a stable relationship is advantageous for both Tokyo and Moscow.  Setting a peace deal could also help bring Russia closer to the east, and Japan believes that Russia can reshape East Asia and sees it as a potential counterbalance to the rising assertiveness and power of Beijing. If the Kuril Islands issue is settled, the two nations will be able to strengthen their bilateral security and foreign policy cooperation, and together they can open the possibility to deter any challenge from China.


Japan needs balanced and pragmatic relations with Russia to withstand China’s growing military build-up, at least to ensure that Russia will not back China against Japan. Tokyo has openly expressed serious fears of a military confrontation with Beijing over China’s claims to the Senkaku (Diaoyu) Islands in the East China Sea. And Japan is uncertain how its strategic ally, the United States, would ultimately respond to a major military incident there. However, the reality has been that Sino-Russian partnership continues to gain strength, despite the concerns Russia has about China’s intentions in its Far East.  Because of dropping oil prices and sanctions, the Russian economy has been facing a decline. And, Russia wants partners to help unlock its resource-rich but underdeveloped areas and lift the standard of living of its people.


Seen from this context, Japan, especially in Siberia and the Far East, can be a significant force for the growth of Russia. It can provide an alternative to China in this regard. Japan has the most advanced economy of Russia's neighbors in Asia and can be the driver of foreign investment and technology transfers. Therefore, stronger ties with Tokyo could help boost trade and economic links with other nations in the vicinity. In Moscow’s view, the strongest opportunities for bilateral cooperation with Japan exist in the sectors of energy, infrastructure, agriculture, housing, energy conservation, medicine, and information technology. Given its wealth and size, Japan could continue to be one of Russia’s most important energy markets for years to come, especially in light of the deep structural reforms of its energy sector after the Fukushima disaster. More oil and gas from the Russian Far East will mean a closer and better supply of hydrocarbons than the Middle East, which exports the vast majority of the resources it needs, crossing the turbulent South China Sea. Russia can also export its oil and gas on more lucrative terms to energy-hungry Japan than to China or Europe.


To build a better position for itself on the continent of Asia, Japan needs Russia. Russia has the most natural resources and the most advanced weapons arsenal of any of Japan's neighbors in Asia. Regardless of what happens with territorial negotiations, relations with Russia remain important in strategic terms, including as part of Japan’s Eurasian strategy. Yet, striking a balance between the territorial and peace treaty negotiations and broader strategic considerations is never going to be an easy task, not least for politicians, who do not want to be seen as downplaying the former.


In all relevant aspects, gaining a close partner in the east will offer significant advantages for Russia. However, Russia does not have an Asia-Pacific policy and Moscow has so far struggled to harness the power of globalization, but these concerns will be resolved by Asian participation in Siberia and the Far East. Moscow uses a “sticks and carrots” approach, continuing a strategy of economic development and military build-up on the South Kurils, on the one hand, and teasing Japan with hopes about a “mutually acceptable” solution to the territorial issue, on the other. This game could last indefinitely, which is to Russia’s benefit, as the public in both countries would consider any imaginable solution to be a “betrayal” and mean political suicide for their leaders. The settlement of the South Kuril Islands dispute and the development of closer relations between Russia and Japan are in both countries' national interests, especially in context of China’s rise.


Disclaimer: The views expressed in this article are personal.