Russia, Japan look to joint development of Kuril Islands

Russia and Japan are seeking opportunities for cooperation on the Kuril Islands in the Far East of Russia.

Last week a Japanese business delegation visited the islands of Kunashir, Shikotan and Iturup. Their mission?  To explore options for joint economic development of the islands.

The delegation was made up of representatives from 32 private companies in Japan, officials from the central government and from the Hokkaido prefecture authorities, as well as bureaucrats from several ministries and public organizations. The group was led by the special advisor to the prime minister, Eiichi Hasegawa. 

During the visit, representatives of the Sakhalin regional administration, under whose remit the Kuril Islands fall, presented opportunities in various economic spheres. In energy, one idea was to set up combined wind and diesel power plants, which can offer uninterrupted power generation with a renewable element. One such plant could be built in Yuzhno-Kurilsk, the main town on Kunashir island. It is anticipated it could increase local capacity by six megawatts, enough to satisfy the needs of the island’s fishing processing facilities, which are seeking to expand output.

In the transport sphere, Japanese knowledge and experience could well be utilized to upgrade local port facilities. One key goal is to set up a direct ferry and air link between the southern Kuril Islands and Japan. Improved transport routes would increase both business opportunities and tourism.  

Japanese technologies for capturing and processing bio-resources are much in demand in the Russian fishing industry and Japanese delegates found bays in the Kuril Islands to have ideal conditions for the development of sea-farming.

There is potential, too, for projects in residential construction, the hotel and hospitality sector, healthcare, trade and domestic waste recovery.

“We accumulated a lot of the incoming information, discussed ideas for different projects, and listened to the opinions of experts. I plan to report the results of our trip directly to the prime minister,” Hasegawa told reporters at the end of the trip.

Professor Tagir Khuizyatov, of the Global Economics faculty at the Far Eastern Federal University, told Asia Times: “[There is] great potential for joint economic development in the southern Kuril Islands. In part, this could be in tourism, with nostalgia trips to the older parts of Shikotan Island that to this day maintain an air of the past.”

He added: “The setting up of an effective transport and logistics network for travel and distribution will allow, for example, for Japanese goods to come to the islands at much lower prices than today. Currently, [Japanese goods] are sold for triple the price of their home market.” 

To further cooperation in healthcare, there would have to be changes made to legal frameworks to allow Japanese medical institutions and doctors to practice medicine in the islands, Khuizyatov said. “The main question that both sides will need to resolve, however, will be how to frame the legal aspect of the joint development. Which country’s laws will serve as the basis for the taxation, for the police oversight, and other regulations and authorities that concern day-to-day business dealings? As soon as an answer is found, that will serve as the key to opening up actual development of the [islands] by both sides.”

“Which country’s laws will serve as the basis for the taxation, for the police oversight, and other regulations and authorities that concern day-to-day business dealings?”

The professor anticipated progress will be made toward this end before Russian President Vladimir Putin and Japan’s Prime Minister Shinzo Abe meet at the Eastern Economic Forum in Vladivostok in September.

Putin and Abe were due to meet on July 7, on the sidelines of the G20 meeting, to discuss the islands’ developments and also the possibility of signing of a peace accord.

Moscow and Tokyo never got round to signing a peace accord after World War II – and one of the main obstacles is the issue of sovereignty over the southern Kuril Islands. Iturup, Kunashir and Shikotan, as well as dozens of smaller, uninhabited islands, were claimed by the USSR after the war, and its claims were confirmed by international law. Japan, however, never accepted the transfer of the islands to Soviet control and continues to see them as its Northern Territories.

The idea of joining forces to develop the islands was first proposed by Vladimir Putin during a visit to Japan in December 2016 and discussed again during the Russia-Japan summit in Moscow in April this year. The Russian president at the time spoke of his side’s readiness to continue talks on concluding a peace agreement, adding that “we do, however, need to create an atmosphere of trust and cooperation.”