Japan Steps Up on Ukraine

Russia’s invasion of Ukraine shredded more than a decade of trying to foster better relations with Russian President Vladimir Putin. The harsh reality of a nuclear-armed nation able to act with impunity is also raising tentative talk about whether Japan should abandon its longstanding rejection of nuclear weapons. For corporate Japan, there will be growing pressure to join the decisive steps by Western firms such as BP to walk away from their ambitious investments, no matter what the financial costs.

With its emphasis on maintaining relations and improving economic ties, Japan’s foreign policy seldom makes fundamental shifts. This continuity is aided by the fact that government control has rested with the Liberal Democratic Party for most of the postwar period. But the shock of Russia’s increasingly brutal offensive has forced rapid actions on a number of economic measures as Japan tries to keep up with its G7 partners. This unusual determination to act has been encouraged by the Japanese government’s fear that a failure to stand up to Russia in Europe could embolden China in its efforts to seize Taiwan and the Japanese-administered Senkaku Islands.

On Friday, Japanese Prime Minister Fumio Kishida announced asset freezes and visa bans on Russian officials, financial sanctions against three Russian banks, and restrictions on exports to Russia of dual-use technology such as semiconductors. Two days earlier, Japan had already banned the issuance of Russian sovereign debt. When other G7 countries and the European Union jointly unveiled further economic measures on Saturday, Japan was initially absent. However, the Kishida administration has gradually caught up. They have now joined efforts to exclude certain Russian banks from the SWIFT financial messaging system. Japan has also added restrictions on transactions with the Russian central bank and has personally sanctioned Putin.

Some of the delay can be put down to bureaucratic caution. Policymakers want to be sure they understand all the potential consequences of an action before moving forward and would discuss issues broadly within the government as well as with the private-sector companies that might be affected. The Japanese government is also small in comparison to the size of its economy. The national government workforce is around 280,000, compared to 2 million in the United States. This shortage of personnel, combined with Japan’s suffocatingly bureaucratic work practices, means that it takes longer to understand and implement policy changes.

At the same time, there has been a traditional reluctance by Japan to interfere in the affairs of foreign countries. This goes beyond its war-renouncing constitution (crafted by the U.S. occupiers) to broader areas. In most international conflicts, Japan calls blandly on all sides to talk things over. In the face of human rights issues, such as China’s oppression of its minority Uighur population, Japan has lagged behind the United States on banning cotton from the region. Similarly, it has not taken steps against the Hong Kong government over the crackdowns there.

Cataclysmic events, especially the fast-changing situation surrounding Ukraine, have clearly had an impact, with Japanese rhetoric increasing on a daily basis. Kishida has become firm in condemning the Russian invasion, describing it as “a serious violation of international law and a major violation of the United Nations Charter.” Both Kishida and Foreign Minister Yoshimasa Hayashi have also described Russia’s actions as “aggression.” This is significant because acts of aggression are illegal under international law.

Even former Japanese Prime Minister Shinzo Abe, in many ways the leading architect of the efforts to improve economic ties with Russia during his nearly eight years in power until 2020, has had an apparent change of heart. He has described Russia’s invasion as a serious challenge to the international order that must not go unchallenged, presenting the situation as a growing threat to Japan. He suggested in a television talk show that Japan should alter its non-nuclear stance and instead consider a NATO-style system in which U.S. nuclear weapons are based in Europe but remain under U.S. custody.

“Japan is a signatory to the Nuclear Non-Proliferation Treaty and has its three non-nuclear principles, but it should not treat as a taboo discussions on the reality of how the world is kept safe,” Abe said on a television program on Sunday. His comments were dutifully rejected by Kishida, who said in parliament that such a deal would be unacceptable in light of Japan’s commitment not to possess, produce, or allow nuclear weapons on its territory.

The tougher line from Abe, who remains a senior figure in the Liberal Democratic Party, is a far cry from when he was in office, during which time he had more than 20 face-to-face meetings with Putin and boasted that the Russian leader was “dear to me as a partner.” For the nationalistic-leaning Abe, a primary if unlikely goal is to persuade Russia to give up its control of four fog-bound islands off Japan’s northern tip that were seized in the final days of World War II.

The idea of regaining the “Northern Territories” appeals to Japan’s right-wingers. After eight years of Japanese diplomacy, Russia actually hardened its stance by revising its constitution to explicitly ban any territorial concessions. Longstanding if inconclusive talks on settling the dispute and finally signing a peace treaty from World War II have also now been suspended.

But there were more practical goals for improving relations with Moscow, notably Japan’s quest for energy security. With its foreign energy dependence at more than 90 percent, Japan was hit hard in the oil shocks of the 1970s. A strategic decision to focus on nuclear energy was upended in the Fukushima nuclear plant disaster of 2011. One of the biggest initial projects was a 30 percent stake by Japanese trading firms in the Sakhalin I oil and gas field development in 2003. The highly expensive project employed deep-water drilling off the coast of Sakhalin Island, Russia’s easternmost island just 25 miles from the northern tip of Japan’s Hokkaido Island.

This was followed by the equally ambitious Sakhalin II natural gas project, Russia’s first large-scale liquefied natural gas (LNG) project. In 2006, Russia employed strong-arm tactics to wrest control of the project from lead partner Royal Dutch Shell. Japanese companies Mitsui and Mitsubishi were also forced to sell half of their equity stakes yet decided to persist with the project, helped by a $5.3 billion loan from the state-backed Japan Bank for International Cooperation. The investments seemed a perfect fit. Russia needed the capital and technical expertise, while Japan wanted to diversify its worrying energy dependence on the always volatile Middle East. One Gazprom official spoke of the high-quality work done by Japanese partners in the construction of the complex LNG facility.

Other activities have followed, notably other LNG projects in the challenging and expensive environment of the Arctic region. Most recently, the Japanese trade ministry announced a deal with Russian oil giant Rosneft to promote projects related to hydrogen, ammonia, and carbon capture, areas where flagship Japanese companies such as Toyota are keen to take a global lead. “Through this agreement, it is expected that Japan-Russia energy cooperation will be further accelerated,” the Japanese trade ministry stated optimistically in 2021.

Such multiyear and multibillion-dollar projects are not easily unwound, but pressure is mounting to do so. British oil company BP has announced that it will walk away from its 20 percent ownership in Rosneft. Shell followed, stating that it would end all joint ventures with state-run Gazprom, including by divesting its remaining nearly 28 percent stake in Sakhalin II. This is awkward for Japan. Western partners will demand that Japanese firms follow them out of the door, although the estimated $25 billion price tag for the BP decision will make Japanese companies think twice.

There are of course even bigger stakes involved in terms of Japan’s security. When in office, Abe had pushed what many saw as the limits of what Japan can do under its pacifist constitution that renounces the use of force to resolve international conflicts. However, if Putin continues to threaten the “nuclear option,” Japan may have little choice but to do the unthinkable and agree to host U.S. nuclear weapons.

Speaking over the weekend, Abe suggested that if Ukraine had kept the nuclear arms it inherited from the breakup of the Soviet Union, it might not now be under a Russian attack. For a country that has long prided itself a being a force for a world free of nuclear weapons, change has in some ways come quickly. Putin’s miscalculation could therefore have major repercussions in East Asia. Not only will hoped-for energy investments be foregone, Russia could also find itself with new deployments of U.S. nuclear missiles on its eastern frontier.