Moscow suspended the 1998 intergovernmental agreement with Tokyo on cooperation in the harvesting of marine biomes. It allowed Japanese fishermen to fish near the southern Kuril Islands within the quota allocated by Moscow.
“Unfortunately, Tokyo took a position to “freeze” payments due under the Agreement and delayed the signing of the annual executive document on the provision of free technical assistance to the Sakhalin Region, which is an integral element in ensuring its functioning. “Intergovernmental agreement,” said Maria Zakharova, Spokesperson of the Russian Ministry of Foreign Affairs.
The diplomatic department noted that the agreement was built on the basis of the balance of interests between the two countries, but now the agreement will be suspended until Japan fulfills its financial obligations.
In accordance with the terms of the agreement, the countries cooperated “for the purpose of collecting living resources by Japanese fishing vessels” in the marine area bounded by straight geodetic lines connecting the coordinates near the islands of Iturup, Kunashir, Shikotan and Habomai.
In April, Tokyo and Moscow agreed on a salmon quota for fiscal year 2022. According to the Fisheries Administration of Japan, the Japanese side has to pay Russia from 200 million to 313 million yen, depending on the volume of fish caught.
Japanese sanctions
Previously, Japan had announced several bloc sanctions against Russia due to the conflict in Ukraine. Tokyo has taken restrictive measures against 700 Russian, Belarusian, LPR and DPR citizens, as well as more than 200 Russian companies and organizations.
Specifically, on June 7, Japan announced the imposition of sanctions on two more Russian and one Belarusian banks. The assets of Rosselkhozbank, the Moscow Credit Bank and the Belarusian Bank for Development and Reconstruction will be frozen. It will be possible to make payments and transact with them after obtaining permission from the Japanese authorities. The restrictions went into effect on 7 July.
Previously, Tokyo froze the assets of Otkritie Bank, Novikombank, Sovcombank, VTB, Rossiya Bank, Promsvyazbank, VEB.RF, Sberbank and Alfa-Bank.
The country will also expand the ban on the export of goods to Russia. The ban will cover goods that “contribute to the strengthening of industrial infrastructure”. There is no talk about which production yet.
The list of goods and technologies banned for export already includes more than 300 items, including semiconductors, marine and aviation safety equipment, telecommunications equipment, communications equipment, military products, as well as software and oil refining equipment. Japan has banned the supply of luxury goods to Russia, including cars worth more than 6 million yen (currently 2.8 million rubles).
Since the beginning of the conflict in Ukraine, more than 70 Japanese companies out of 168 Japanese companies operating in the Russian Federation before the military operation left the Russian market. At the same time, sanctions and cessation of operations have a negative effect on the companies themselves. Thus, as of March 31, losses of seven of Japan’s leading trade and investment companies, including Mitsui, Mitsubishi, Itochu, Sumitomo and Marubeni, from the direct and indirect impact of the sanctions against the Russian Federation exceeded $2 billion. Sankei newspaper reported.
ending the dialogue
The possibility of conducting joint economic activities in the Kuril Islands was also barred. The Kuril problem escalated again with the start of the military operation and the imposition of sanctions on Moscow.
Japan’s Ministry of Foreign Affairs, in its annual Blue Book diplomacy report, described the south of the Kuril Islands as “illegal occupation”. They emphasized that the problem of the northern regions (as Tokyo calls the southern part of the Kuril Islands) is the biggest unresolved issue between Japan and Russia.
“The Northern Territories are islands over which Japan has sovereignty and were originally part of Japan, but are now illegally occupied by Russia,” said the Japanese Foreign Ministry.
The agency said it was making efforts to conduct negotiations aimed at resolving the land issue and signing a peace treaty.
In March, Moscow announced that it was ending peace deal negotiations with Tokyo due to Japan’s sanctions. At the same time, Russia banned Japanese citizens from visa-free travel to the Kuril Islands. The Ministry of Foreign Affairs also decided to withdraw from the dialogue with Japan on the establishment of joint economic activities in the South Kuril Islands and the prevention of the expansion of Tokyo’s status as a partner of the Black Sea Economic Cooperation Organization in the sectoral dialogue.
Oil and gas projects won’t stop
Despite the pressure from sanctions, the Japanese government plans to continue the participation of national companies in Sakhalin-1 and Sakhalin-2 oil and gas projects. Tokyo considers these projects extremely important for the country’s economic security.
The White Paper on Energy, prepared by the Japanese Council of Ministers, states that the situation with high energy prices may continue for a long time. In this regard, Japan needs access to a stable supply of liquefied natural gas from the Sakhalin-2 project, which provides about 3% of the country’s electricity production.
The government believes that participation in this project on the basis of long-term contracts will help reduce the negative impact of the global rise in energy prices.
On May 10, Koichi Hagiuda, Japan’s Minister of Economy, Trade and Industry, justified his decision to continue participation in the projects on the importance of obtaining oil and liquefied natural gas from there at reasonable prices. He also warned that if they withdraw from these projects, a “third country”, implying China, could replace Japanese companies in Sakhalin.
Sakhalin-1 is one of the largest oil and gas projects with foreign direct investment in the Russian Federation. Its operator is Exxon Neftegaz, a subsidiary of ExxonMobil. Rosneft (20%), Japanese Sodeco with 30% and Indian ONGC Videsh (20%) are also participating in the project.
Sakhalin-2 is an oil and gas project implemented on the island on the basis of production sharing. The controlling stake is owned by Gazprom. British Shell owns 27.5% of Japanese Mitsui and Mitsubishi, 12.5% and 10% respectively. Most of the LNG produced is shipped to Japan.