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Japan/Russia: Invasion Fall-Out Continues to Catalyze Change in Tokyo

April 8, 2022
By James Brady

Japan has continued its maximalist response to Russia’s invasion of Ukraine, this week calling out “war crimes” and further ramping up financial and economic sanctions. Recent events have undone years of Japanese efforts to improve ties with its northern neighbor, while the downturn in relations has had the least impact on the energy sector. Fall-out from the invasion continues to impact key domestic policy issues, including economic security, constitutional reform, defense build-up, and nuclear energy.

Breaking New Ground

It is perhaps not surprising how consequential Russia’s invasion of Ukraine has become in Tokyo, given how many elements of the conflict mirror long-held fears or past traumas in Japan. These range from a democracy coming under attack from a revanchist autocratic neighbor and of being left to fight alone without direct foreign military support, to rocket attacks and threats of nuclear strikes on major cities and concerns about catastrophes at nuclear power plants. Even so, it was by no means inevitable that the government of Fumio Kishida would respond in the maximalist way that it has.

In the early days of the war, the response included donating non-lethal military supplies to Ukraine; providing USD 200mn in humanitarian aid; freezing the assets of many top Russian officials, military-connected entities, and banks; and joining in the isolation of Russian financial institutions from the SWIFT messaging system. On the trade front, Japan restricted high-end exports including luxury cars and will revoke Russia’s Most Favored Nation status at the WTO, raising import tariffs. These steps are of a different order entirely to former premier Shinzo Abe’s half-hearted reaction to Russia’s 2014 seizure of Crimea.

Latterly, there has been a rare meeting between the prime minister and NATO leaders in Brussels and the first ever meeting of a Japanese foreign minister with NATO counterparts. Coming back, FM Yoshimasa Hayashi brought 20 Ukrainian evacuees on a government plane from Poland to formerly refugee-shy Japan. This week Kishida again broke new ground as he labelled the killing of civilians in Bucha a “war crime,” spoke of “repeated violations of international humanitarian law,” and called for Russia to be held accountable for “cruel and inhumane” actions. He also announced a further ramping up of financial sanctions on hundreds more individuals, entities, and banks; the expulsion of eight Russian diplomats from Tokyo; and plans to ban imports of Russian coal and vodka.

Reverting to Hard Lines

Bilaterally, the events of the last six weeks have undone years of Japanese efforts to improve ties with its northern neighbor. To Tokyo’s dismay, Moscow broke off negotiations over the Northern Territories/South Kuril Islands seized by Soviet forces in summer 1945, the resolution of which dispute is a prerequisite for sealing a peace treaty to officially end that long-ago conflict. Russia also stepped up military activities around Japan in recent weeks, holding drills on the disputed islands, sailing warships through Japan’s northern Tsugaru Strait (apparently carrying troops to Ukraine), and sending a maritime intelligence vessel down and up the southern Tsushima Strait.

Tokyo in turn has reverted to hardline language of the sort it long ago abandoned. The forthcoming edition of the Diplomatic Bluebook, an annual foreign ministry report, calls the Northern Territories an “inherent” part of Japan for the first time since 2011, and the prime minister referred to Russia’s “illegal occupation” of the islands for the first time since 2003.
The area that has been least affected is the energy sector. Kishida reiterated that Japan would not pull out of its public and private-sector investments in oil and natural gas projects in Russia’s Sakhalin region, given the implications for long-term energy security. However, Japan will freeze new investment in the Arctic LNG2 project, ban the export of oil refining equipment, phase out coal imports, and take steps to lessen the need for Russian energy.

Impacting the Domestic Agenda

Putin’s war of choice has brought home the reality of the deteriorating international security environment and Japan’s need for a firm response. A new economic security bill passed the Lower House on 7 April and is likely to be approved by the Upper House before mid-June, with key provisions on strengthening supply chains for strategic goods like semiconductors, ensuring the security of core infrastructure, public-private funding for advanced technologies like AI, and non-disclosure of patents for sensitive technologies. Japan is also reported to be working with the United States to help flesh out the details of the Biden administration’s new Indo Pacific Economic Framework, which is expected to include plans for international cooperation on strategic supply chain stability.

The invasion has added a fresh dynamic to a number of key long-term policy debates, as discussed in recent notes. On constitutional revision, still-popular former premier Abe has embarked on a tour of provincial party offices to drum up grassroots support for the Liberal Democratic Party (LDP)’s four-point plan for constitutional revision, centered on clarifying the status of the Self Defense Forces in the Article 9 ‘peace clause.’

On defense build-up, Abe’s brother and current defense minister Nobuo Kishi has called for an even larger budget to “drastically” strengthen defense capabilities. In the face of China’s ongoing assertiveness in the region and North Korea’s accelerating missile development program, the idea of doubling defense spending to 2% of GDP no longer seems as far-fetched as it did even six months ago. The long-mooted acquisition of ‘counterstrike’ missile capabilities could well be included in the new defense strategy documents due by year-end, though the idea of ‘nuclear sharing’ of US missiles that Abe floated recently has gained much less traction.

And on nuclear power, Kishida promised this week to make “maximum use of energy sources that can ensure energy security” including nuclear power and renewables, to avoid power shortages during summer and winter usage peaks this year. A recent survey found support for restarting idled reactors at 53%, up 9 percentage points since September and the first instance of majority backing for the technology since the 2011 Fukushima Dai-ichi disaster.

Constitutional revision, defense build-up, and nuclear power are all likely to be pushed by the LDP in the run-up to the Upper House election expected in July. And while substantive progress is not yet assured in any area, the prospects for each after the election are surely now brighter than ever.

The views and opinions in these articles are solely of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and not as legal, financial, accounting, tax or other professional advice or counsel.

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