Publication: Eurasia Daily Monitor Volume: 3 Issue: 152

As Russia has failed to secure any significant economic incentives from Tokyo, especially a Japan-bound Pacific oil pipeline route, the Kremlin has moved to develop and repopulate the Kuril Islands, apparently indicating a loss of interest in resolving the long-standing territorial dispute.

Russia’s government has approved a draft program for the social and economic development of the Kuril Islands in 2007-2015, which is Moscow’s way of demonstrating that it can take care of the Kurils on its own. First Deputy Prime Minister Dmitry Medvedev told the participants at an August 3 cabinet meeting that earlier programs to develop the Kurils fell short of expectations and the new blueprint should be “more realistic” and better funded.

The plan officially seeks to boost the local economy and create new jobs. The government program plans to increase both the population and industrial output levels by 50%, according to Minister of Economic Development and Trade German Gref. Under the program, the government would disburse some 17.9 billion rubles ($668 million) across all 56 Kuril Islands (Interfax, RIA-Novosti, August 3).

Russian officials highlighted the economic aspects of the blueprint. “As long as there is a gap in living standards between Japan, South Korea, and the Kurils, people will keep leaving,” Gref said. “The program’s implementation would raise fish processing revenues by 150%, and industrial output is to go up by 50%,” he said.

Gref urged infrastructure improvements, including new electricity-generating facilities, and he said a recreational and tourism area could be built in the Kurils. Gref also suggested building a year-round airport. “There is no stable air service there, and people are unable to get away from the islands for weeks,” Gref said, adding that even federal ministers had encountered this problem.

During the cabinet meeting, First Deputy Prime Minister and Minister of Defense Sergei Ivanov suggested that the government should have the Defense Ministry improve infrastructure facilities for the Kurils, including building a new airfield and port facilities. Ivanov described the state of the transport system in the region as “depressing.” “If cargoes are shipped to Kurils there are no piers to unload ships,” and airports there are only good for “kamikaze flights,” he said. Without key infrastructure facilities, “any talk about special economic zones is pointless,” Ivanov added (Itar-Tass, RIA-Novosti, August 3).

“The Kuril Islands undoubtedly remain a strategic territory for Russia,” Gref said. The program would also help increase the population of the Kurils by half, to 28,000-30,000, by 2015 from 19,300 people now, he said. “All of them will be provided with jobs,” Gref said. Ivanov had said earlier that more than half of the islands’ current population consists of Russian military personnel and their dependents.

However, Gref downplayed the significance of the program in terms of the territorial dispute with Japan over four of the islands, which Tokyo claims as its “northern territories.” Gref said the program had “nothing to do with the transfer or non-transfer of the four islands to Japan” and is instead geared toward raising living standards (RIA-Novosti, August 3).

Yet Kommersant suggested that the goal of the program is to demonstrate to the Japanese how committed Russia is to keeping the islands (Kommersant, August 4).

Moscow has consistently dismissed Japan’s insistence that Russia return all four islands. President Vladimir Putin said on June 2 that Russia “never considered giving the islands back,” though he noted Moscow had signed a 1956 declaration offering to return two of them.

At a meeting between President Putin and Japan’s Prime Minister Junichiro Koizumi in St. Petersburg on July 15, they reportedly discussed a peace treaty but failed to resolve the territorial dispute. Speaking at a joint news conference after his meeting with Koizumi, Putin said that talks were continuing, “including the toughest issue, the peace treaty” (RIA-Novosti, July 15).

Exactly one year ago, Moscow first used strong terms to rule out any compromise solution in its territorial dispute with Japan. In August 2005, Konstantin Pulikovsky, then Putin’s special envoy in the Far East, bluntly said, “Russia does not have any problem with the Kuril Islands,” adding that relations between Russia and Japan were good enough even without a peace treaty. Also in August 2005, regional authorities approved a blueprint on how to develop the Kuril Islands. The document involved a number of measures, including the creation of a special economic zone.

Despite the continued territorial rift, in November 2005 Putin traveled to Japan for a summit with Koizumi, which resulted in 12 broadly worded documents that made no mention of the island dispute. The two leaders also agreed in principle that Japan would receive access to oil from the new Siberian pipeline. “The two countries agreed that an early and complete construction of the East Siberia-Pacific pipeline would meet the strategic interests of the two countries,” the bilateral statement on energy issues said. “The two countries will aim to seek mutual understanding by the earliest possible stage next year.” However, both sides are yet to agree on the conditions for cooperating on the oil pipeline.

In December 2004, Russian Prime Minister Mikhail Fradkov approved a Japan-bound Taishet-Nakhodka pipeline route. As Tokyo failed to respond with investment pledges, the Kremlin became upset by Japan’s adamant stance on the territorial dispute and Tokyo’s reluctance to commit any funding for the Pacific pipeline. Subsequently, Russia revealed plans to build a branch oil pipeline to China first, instead of giving priority to linking the pipeline to its Pacific coast as sought by Japan.

Last month, Putin conceded that Moscow and Tokyo were yet to agree on the construction of the second phase of the Pacific pipeline taking Siberian crude to the Pacific. “The Japanese side wants us to sign an intergovernmental agreement on this problem, while our position is that this project is purely commercial and the state should not take on any obligations,” Putin explained (RIA-Novosti, July 15).