heybeyond the constraints of its Article 9 pacifist Constitution, Japan has recently introduced structural defense reforms Which has changed its security strategy. Against the backdrop of the conflict in Ukraine, it has also been in the news for supporting the Western sanctions regime and forging deeper ties with European actors viz. United Kingdom, Italy, France, GermanyThe The European Union and even Baltics,
G7 to meet as Russia-Ukraine war enters its second year Hiroshima, Japan, for their 2023 annual summit. An important part of the agenda will include brainstorming on more economic sanctions on Russia and plugging loopholes in the current sanctions regime in light of the protracted war wreaking havoc on the global economy.
Does this mean that all is well within the Allies universe?
Under the above convergent trends lies an aberration in Japan’s policies on Russian energy, which could lead to a fracturing of Allied unity as the war continues and costs escalate.
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Abe’s legacy and Kishida’s transformation
When Fumio Kishida became Prime Minister of Japan, it was expected that he would carry on his legacy preacherLate PM Shinzo Abe.
while it’s true how Japan has Posture With self-evident military capabilities, Kishida’s real departure from the Abe-era has been on the question of Russia. abe’s legacy Rested on cooperating with Russia for energy, managing China, and solving long-standing problems Kuril Islandss controversy.
However, Fumio Kishida has rewritten with his indelible ink the rules of his mentor Abe’s engagement with Russia. Kishida’s decision The imposition of sanctions against Russian President Vladimir Putin himself has been considered a landmark political decision in the history of Japan. Tokyo has also provided millions of dollars in humanitarian aid to Ukraine.
However, the Japanese leadership is reluctant to isolate Moscow on the sensitive issue of key energy projects in Sakhalin 1 and 2.
Japan’s quest for energy security
Energy cooperation with Russia is a fundamental principle of Japan’s long-term goal of energy security. Tokyo has been trying to diversify from its heavy reliance on crude oil from the Middle East. Imports from the region account for 90 percent of Japan’s oil and 20 percent of its gas. Learning from the dangers of dependency in today’s uncertain world, Japan has been quick to identify actors who can bridge the gap.
Therefore, in an effort to strengthen its energy security, Japan is co-developing oil and gas facilities off Russia’s Sakhalin. Due to geographic proximity that enables shipments to arrive approximately Three These days, it is important for Japan to efficiently obtain fossil fuels from Sakhalin. business data Forecasts for 2021 show Japan starting to import 3.6 percent of its crude oil and about 9 percent of its liquefied natural gas (LNG) from Russia.
However, the Kremlin’s retaliatory sanctions have left Japan in a vulnerable position.
Sakhalin 2 was Putin’s first victim the revenge against western sanctions. By the summer of 2022, they had confiscated project and ousted a major stakeholder, British firm Shell, which held a 27.5 percent stake. He then moved the project under a new Russian company, forcing existing stakeholders to buy new shares in the new company. As expected, Shell soon pulled out of the project.
Sakhalin 2 is primarily an LNG project that supplies Japan with most of its gas. Therefore, Japanese firms Mitsui and Mitsubishi, which jointly hold a 22.5 percent stake in the project, decided to stay On. Russia’s state-owned energy company Gazprom remains Largest Stakeholders in Sakhalin 2.
Putin’s next attack expected in a few months LaterThis time Sakhalin is targeting 1 oil and gas projects.
Before the war, Japanese firms, together as one Federation Named Sakhalin Oil and Gas Development Company (SODEC), the project had a roughly 30 percent stake, formerly operated by US-based company Exxon Mobil. India’s ONGC Videsh Limited, the overseas arm of the Oil and Natural Gas Corporation, with a 20 percent stake, and Russia’s Rosneft, also with a 20 percent stake, are the other major shareholders.
After the war, and to counterbalance the sanctions, Putin passed a decree It ‘unilaterally terminated’ Exxon’s contract without due compensation to the US firm and installed a new operator for Sakhalin-1. This sudden change authorized the Kremlin to decide whether foreign stakeholders could retain their stake in the project. As was the case with Sakhalin-2, the Japanese consortium chose to stick with the new operator, this time joined by India’s ONGC while Exxon left.
With US and British firms pulling out of these projects, the risk of China making a move to buy a stake is high. With such mega-stakes at China’s disposal, Sakhalin 1 and 2 are indeed a complicated bet for the West, with their key ally Japan caught in the middle of retaliatory measures. Even more worrisome for the West is the fear that Japan sought exemptions for the Sakhalin projects as the G7 imposed a price cap on Russian oil, which came into force on 5 December. Obviously, Tokyo is not preparing to move away from Sakhalin.
According to reports, Chinese companies are in talks to buy Shell’s stake in Sakhalin 2. As far as India is concerned, there is very little room for intervention. As much as New Delhi may want to be wary of Beijing becoming a disproportionately high stakeholder in key energy projects, its priorities will be to iron out differences between the West and Russia and keep production going, even at the cost of involving China. as well.
Read also: To what extent will China go to help Russia? Xi in no mood to prioritize Moscow’s economic woes
Impact on Japan-Europe relations
While Europe is struggling to break free from its energy dependence on Russia, Japan, its main ally, is doing the opposite.
This is a rift among the G7 which Russia can later exploit. So far, Japan’s most prominent ally, the US, has been and is mindful of Tokyo’s energy security aspirations. supported The decision to stay in the projects. But the protracted nature of the war would pave the way for Europe to work reliance on Russian gas and gaining more elbow room to impose another tranche of energy-related sanctions in 2023. The move could put pressure on Japan to reconsider its Sakhalin policy. Therefore, fault lines may be more susceptible to deepening.
While the fate of Japanese firms remains a bit uncertain as far as energy projects are concerned, Japan is deepening its ties with several European players in an effort to offset the divergence on Sakhalin.
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Kishida’sintegral security, push for europe
On the surface, this could be a balancing act by Kishida. However, at a deeper level, Japan’s pivot to Europe hinges on its repetition ‘Indivisible Security’‘ for Europe and the Indo-Pacific region. But what does this tell us about the nature of East-West solidarity and its future?
What is called in’issue linkage strategy’, Japan, under Kishida, is pursuing an Abe-era strategy to link security challenges in Europe and East Asia so that Europeans can act on them. This push is evident in increased defense cooperation with primary European actors. Japan recently agreement An unprecedented defense deal with Britain. it is got included in Italy and UK to develop most advanced AI-enabled ‘Tempest’ aircraft, to overtake US’s F-35. Japan’s involvement essentially provided a global reach and outlook for the European aircraft programme.
While the world’s eyes were on German Chancellor Olaf Scholz controversial tour China, Berlin together on 4 November 2022 swore off To deepen and expand the range of our cooperation with Tokyo in all key areas. Similarly, Japan’s defense cooperation with France has been strengthen, with strong convergence on the Indo-Pacific. Not only France, but all major European actors such as the UK, Germany and the European Union are focusing on the Indo-Pacific. It works on the idea of ’Indivisible Security’ benefit traction among all.
In this regard, if there is one Indo-Pacific player with the economic importance and rapidly evolving strategic capabilities needed to truly champion the merger of the two security theaters in Europe and the Indo-Pacific, it is Japan. The delicate balance on the Sakhalin question that makes Japan’s case even more credible is also an important consideration for India’s strategic autonomy.
The author is Associate Fellow, Europe and Eurasia Centre, Manohar Parrikar Institute for Defense Studies and Analyses. She tweets @swasrao. Thoughts are personal.
(Edited by Zoya Bhatti)