• STRATFOR analysis

    Tokyo courts Europe amid tensions with Russia


    JAPANESE Prime Minister Shinzo Abe met with German Chancellor Angela Merkel in Berlin on April 30 as part of a European tour that will also take him to the United Kingdom, France, Belgium, Spain and Portugal. Abe planned the visit in early February to invigorate trade and investment with these states, but that was before the Ukrainian government fell. Now the cloud overshadowing the trip is the showdown between Russia and Western powers, and both Tokyo and the Western Europeans remain relatively averse to taking on more strategic risks.

    The trip to Western Europe comes just days after Abe hosted US President Barack Obama in Tokyo to discuss shoring up the two countries’ alliance, the anchor of Japanese security. Abe has already sought to strengthen defense relations with European states as part of the process of changing global perceptions of Japanese military power. But now, in light of Russia’s moves in Ukraine, the security element of Japanese-European relations has taken on greater urgency.

    Abe’s trip will therefore shift focus toward making incremental improvements in defense ties. In particular, the prime minister hopes to negotiate a deal for the Japanese military to cooperate with European militaries on logistics, potentially as a means for the Japan Self-Defense Forces to expand their relationships and range of operations unobtrusively. He also aims to find ways for Japan and Europe to assist each other on cyber security, a major weakness and concern of both sides.

    As Russia’s relations with the West will be a source of security concerns for years to come, Japan sees prospects for joint arms manufacturing, particularly with France. Eventually, Tokyo aims to target Europe for arms sales, as Abe’s administration loosens tight restrictions on arms exports. Given its domestic industries, Western Europe is unlikely to become a major growth area for Japanese arms exports, but Tokyo is interested in marginal openings in terms of both joint development and sales.

    Japanese and European similarities

    Japan has modeled itself on the Western European powers since the Meiji Restoration. The Netherlands, Germany and Britain all played big roles in Japan’s economic and military industrialization and modernization. Japan’s defeat of Russia in the early 20th century and onslaught against British, French and Dutch colonies in World War II reflected the globalization of the European power system and Japan’s position as a major player within it. Since the war, Japan, like Western Europe, has taken advantage of the US security umbrella to minimize defense expenditures and focus attention on economic and social affairs, giving rise to a fleeting sense of optimism when the Soviet Union fell.

    More recently, Japan mirrors these states in having an advanced industrial economy while facing slow growth, high debt and worrisome demographic trends. In fact, Japan is ahead of the West in wading into these quagmires. For instance, it ranks above Italy and Greece in terms of debt-to-gross domestic product, it has struggled with deflation for well over a decade and its demographic decline is happening more rapidly.
    But Japan also has inherent strengths relative to the Europeans. It has a larger economy and a powerful central government that remains in control of its monetary and fiscal system—a critical advantage in Japan’s response to the global crisis not shared by members of the eurozone and still relevant as they debate the use of quantitative easing. Japan’s demographic decline also started from a better place, since the country has a much bigger population than its European partners. Moreover, Japan is ahead of Europe in trying to capitalize on these strengths to fend off the bubbling internal and external pressures of the post-Cold War system. After hitting rock bottom in recent years, with a financial crisis, earthquake and nuclear crisis and territorial clashes with China, Japan has adopted bolder policies to spur growth and reshape its military to respond to modern threats.

    Abe’s economic program, which he will tout throughout the European trip, consists of expansive monetary and fiscal policies of the sort that Merkel has openly rejected for Europe. Japan is not constrained by a supranational bureaucracy and does not have to debate its policies with 27 other countries, as France and Germany do. Where the two agree, however, is in Japan’s opening of its economy more to the outside world, which is intended to make it more efficient and competitive. While much of Japan’s focus is on boosting exports to developing economies, Abe is also pursuing trade agreements with its developed peers. This includes an economic partnership agreement with the European Union that the two sides aim to seal by next year, as well as deals with the United States (still being negotiated) and Australia that will link up with the Trans-Pacific Partnership.

    Though Japan’s exports to Europe have suffered from the latter’s ongoing crisis, the six states Abe will visit are leading export markets, accounting for a combined 7 percent of Japan’s total exports (more than 10 percent when the Netherlands and Poland are included). Meanwhile, Western Europe is the biggest investor in Japan of any geographical region. Its investment has not flagged to the extent of US investment over the past decade—Abe’s hosts account for more than 20 percent of total direct investment in Japan.

    Handling the crisis  with Russia

    The Russo-Ukrainian crisis highlights the shifting strategic landscape for both Japan and Western Europe. Russian encroachments in Ukraine and the former Soviet periphery have energized European efforts to diversify its energy sources and modernize its defense systems in the long run, but in the short run the Europeans remain attached to Russia and unwilling to impose harsh sanctions to deter it from additional territorial grabs.

    The Europeans are caught between US pressure to take on a greater security burden for themselves and their mutual interests with Russia.

    This has resulted in a reluctant and ineffective imposition of sanctions and mere threats of further punitive measures, with EU states diverging on national security needs and relations with Russia.

    Japan’s relationship with Russia is nowhere near as close as Europe’s. Russia and countries in its periphery account for barely more than 1 percent of Japanese exports and are not major investors in Japan.

    Nevertheless, the Russo-Japanese relationship is evolving into something different from the tense antagonism of the Cold War, and Japan has moved carefully in the latest crisis.

    Japan’s direct interest in the Ukrainian crisis lies in reinforcing the principle of sovereignty and territorial integrity without engaging in direct confrontation with Russia. Tokyo still views Russia’s control of the southern Kuril Islands (also known as the Northern Territories) as an injustice that needs to be reversed and is loath to see Moscow emboldened militarily. At the same time, the two are seeking to open investment channels. Russia needs more badly than ever to diversify its economy, especially energy exports, to the Pacific region and in doing so to balance China with Japan and other regional interests. Japan simultaneously wants to secure energy supplies from Russia and calm this strategic flank so as to enable a more concentrated focus on China.

    The nascent and fragile detente between these two has now come under threat by the demands on Japan to show solidarity with the United States and on Russia to lock down China as a strategic and economic partner.

    Hence Japan has adopted only light sanctions — delaying entry visas for 23 Russians and negotiations on easing the overall visa regime. But an intensifying conflict could endanger deeper interests, ranging from major energy projects in Russia to possible treaties on investment, space technology cooperation and safety codes for bilateral military interaction.

    Russia, in its urgency to solidify ties with China, has agreed to conduct joint drills near the disputed Senkaku/Diaoyu Islands, which is bound to stir nationalist sentiment in Japan. Moscow could also take steps to squeeze the Japanese out of various investment projects in preference for China or others. Japan also claims its corporations could invest in expanding efficient coal-fired power generation in Ukraine and elsewhere in Eastern Europe, possibly accelerating the process of weaning these states off Russian natural gas exports. Despite their historic rivalry, Russia and Japan have self-interested reasons for pushing their recent detente over a range of hurdles, but the risk is rising that the course of events between Russia and the West—and China and Japan—will pull the two apart.

    In this context, Japan will aim to strengthen economic and defense relations with Europe but, like Germany, not to the extent of provoking a great confrontation with Russia. Rather, it wants to ensure that its international standing and relationships are firmed up when it comes to its overriding concerns with China. While the Russians already control the Kurils and are limited in their attention and capabilities in the Far East, Japan fears China’s push to alter the territorial status quo and gain control over strategic space in the East China Sea. Tokyo clearly hopes its gestures of solidarity with the United States and the Europeans against Russia will pay off in the future with these states assisting Japan in defending against any encroachments by China.

    But just as Japan is limited in its willingness to confront Russia, the European powers will not have much appetite for East Asian quarrels.

    They need Chinese growth to help boost their ailing economies and are as deeply divided on issues relating to China as they are on the appropriate responses to their ongoing economic crisis and the intensifying Russian challenge. They will not be able to give Japan as robust assistance as it desires when the time comes. Still, corralling a group of nations to reinforce the principle of territorial integrity, deepening trade, and investing in energy infrastructure may help Japan establish the diplomatic precedents and relationships it needs in a future contingency.

    Republishing by The Manila Times of this analysis is with the express permission of STRATFOR.


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