Country Report: Russia (May 2017)
Coverage of Russia in East Asia concentrated on the Belt and Road Initiative forum in mid-May with some attention given to the Korean Peninsula, as a new president was elected in South Korea. The first theme focused on mounting disappointment with Sino-Russian relations, as their visions of regional architecture diverged. Moreover, Putin’s place of honor at the forum proved to be no substitute for substantive results. The second theme held some promise for Russia’s peninsular strategy. Japan was being ignored or, worse yet, dismissed as of little political or economic use. India was being widely cited for its resistance to China. Yet, Putin’s “Great Eurasia” vision still centered on China and counted on the Eurasian Economic Union as well as ASEAN and the SCO, despite meager signs that this had a chance in the face of Xi Jinping’s Sinocentric designs, in which Russia occupied a marginal place. The “turn to the East” appeared to be at an impasse, but few acknowledged that this would be a problem for Russia.
The Rossiiskii Institut Strateegicheskikh Issledovanii on May 15 carried Ivetta Frolova’s article on OBOR, calling it, along with the BRICS summit in Xiamen in September, one of China’s top two international economic events of the year. The article stresses China’s active, dynamic, successful international economic activities. They are aimed not just at economic results, but at forging a “community of common destiny.” Frolova repeats the plans and figures given by Xi Jinping admiringly. She contrasts China’s lively economic role with its passivity in international politics, arguing that it does not want to become a superpower, but is content with participating in forming the rules of global development.
Much of Frolova’s article is devoted to Russia’s place in OBOR, attributing Russia’s importance to its geopolitical strengths for the Silk Road Economic Belt (SREB), namely the presence of its railroad infrastructure and customs policies through the EEU from Kazakhstan and to Belarus—cited the best transport route from China to Europe. Yet, Frolova warns that the infrastructure of the Trans-Siberian and BAM railroads falls short of contemporary requirements and appeals for modernization, especially in the Russian Far East, where it could stimulate the area’s development. She also mentions ongoing construction of two bridges to China—a rail line linking Dungjiang and Nizhneleninskoe and an auto bridge between Blagoveshchensk and Heihe. The recent OBOR forum announced a Russo-Chinese investment fund of 100 billion yuan ($15 billion) for cooperation between the units of Northeast China and the Russian Far East. Moreover, at the SCO summit in June 2016 in Tashkent, a three-way agreement was reached on an economic corridor through Mongolia. The article is enthusiastic about cross-border economic potential, paying no heed to problems that arose in the last quarter century of prior plans, singling out Tuva near Mongolia and Heilongjiang, which exceeds 20 percent of the trade volume with and investment in Russia and whose airport is targeted to be the nexus of international communications in Northeast Asia. Another agreement calls for a three-country highway, which will be advantageous for Russia in delivering cargos to China without reloading and changing drivers at the border and in lowering the transport costs. In the past two years, the border point at Erenhot has seen record growth, as shipments from China to Europe through Manzhouli have boomed. Although this is only transit trade for Russia, the article points to multiplying effects of its success and optimistically predicts new, high-speed transport, despite a mutual blame-game over the project Moscow-Kazan. The article’s language about Sino-Russian cooperation in Central Asia is rather odd; it claims that while tensions from competition remain, given the high level of mutual trust, they can find common interests that allow them onto a constructive track. Insisting that friendly relations between the two states are based on equality, good-neighborliness, and mutual respect, as well as the establishment of OBOR, the article confirms a firm basis for cooperation of these Eurasian states for many decades ahead. The term “Eurasia” serves to put the two on an equal footing in an article grasping for straws to put Russia’s uncertain gains from transit trade in the most favorable light.
On May 5 in Kommersant, Alexander Gabuev contrasted the hopes of May 2015 of the Putin-Xi agreement on joining the EEU and SREB with their results two years later. Early on, Russia boldly tendered a list of about 80 investment projects. Talks began on removing non-tariff trade barriers. Only two projects in Russia drew favorable credits, both run by persons close to Putin. Russians had hoped that this new summit would at last open the spigots, e.g., for the Moscow-Kazan railroad, but there is no sign of that. Xi will have a triumph without any need for concessions to Russia.
In Vedomosti on May 14, Alexander Gabuev describes a “Silk Road to Nowhere.” Assessing the Belt and Road Initiative summit in Beijing, he asserts that this celebration was aimed at showing that Xi’s project has advanced, though the final declaration lacked concrete details. Instead, it suggested that Beijing is striving to draw other states into its geo-economic orbit, and gave the misleading impression that China is only the organizer of a shared project. The forum guests counted, by virtue of their attendance, on attracting investments, preferential credits, and trade flows, Gabuev asserts, but no clear answers were given. Indeed, there are no criteria for determining whether the BRI is successful. Xi’s aims for strengthening transport and financial ties and simplifying trade conditions, as well developing contacts between people, fall far short of measurable criteria for efficient use of funds. Gabuev cites Igor Denisov on the fact that over the past three years, Chinese officials have attempted to specify concrete timetables, objectives, and amounts, but, in general, maps with corridors remain unpublished. Given these circumstances, it will be easy to claim success, even when old projects, such as the flagship Gwadar port in Pakistan dating from 2002, are rebranded part of the BRI, while local authorities feast on funding under an umbrella brand.
What will happen to Russia and its partners in the EEU, Gabuev asks, noting that China could choose routes to Europe to bypass them. So far, the situation is murky. The cost of going through Russia has fallen sharply, due to the devaluation of the ruble, raising transit via Russia and Kazakhstan from 0.7 percent of Sino-European trade in the 2010s to 1.6 percent, but this is based on existing, not new, infrastructure. Only one in five trains from China to the EU does not return empty, he adds. Because production is concentrated in coastal China, it is cheaper to go by sea, as lowering prices matters much more than saving time. In these conditions, the Chinese government subsidizes many containers sent by train. Gabuev denies that China is putting the kind of money into projects that experts had naively anticipated two years ago, especially in the post-Soviet space. Russia and the EEU prepared a list of 40 transport projects, but China has not reacted. The showcase Moscow-Kazan high-speed train was stymied by the conditions on which China insisted. Gabuev sees a sharp shift in China’s approach to risk after it recalculated its financial obligations in 2015. All Russia has garnered are two politically motivated investments for Yamal gas and Sibur, but Gabuev blames Russia’s investment climate for drawing only 2 percent of Russia’s investment in 2016. He concludes that the Great Eurasian Partnership, raised by Putin, is only a pipe dream.
Igor Denisov also wrote about OBOR at imi-mgimo.ru during the forum, calling this China’s effort to set the rules of the game for the globe and an internal effort to shape the environment for the 19th Party Congress, the only event this year in China of weightier significance. The two are linked as Xi’s ventures centralizing authority, setting aside Li Keqiang’s role in launching the maritime silk road, which was renamed OBOR to make it Xi’s initiative. Saying that OBOR had shifted from a regional initiative—where many Chinese provinces claimed to be renewing historical, external ties and establishing mutual connections with the outside—Denisov argues that it became something entirely different, ideologically connected to the “China Dream” and its strong world position.
On May 15 in Kommersant, TimofeiBordachev asked: Would China’s rising power and influence allow space for the development of other states, noting India’s absence in this regard and warning of harm to regional stability? Further, how can Russia and China find a mechanism for raising the level of their cooperation and how much priority will be given to advancing formal-alliance relations, being discussed more in China than in Russia? As a great power, Russia does not need China to defend itself from outside threats, but it looks to a union in terms of how it will stabilize or destabilize the international scene, vis-à-vis the United States and Europe. Casting aside hope for the West, it puts the prospects for Sino-Russian relations in some doubt, perhaps hinting at uncertainty over Sino-US ties since the Xi-Trump summit in April.
Bordachev in lenta.ru on May 18 wrote of the BRI forum as China’s attempt at world leadership, asserting that on May 14 the Deng epoch of biding one’s time ended conclusively. Xi’s appeal was for global, not regional, leadership, promising a more just order than what the West had offered since 1991. Yet, Bordachev warns of China’s aims to return to the past and argues that Russia’s presence was not in order to draw Chinese investments. It is a great and rich country, for which national security is important. If investment in the Russian Far East is important, the means for development for the export of Russian goods can be found inside Russia. Putin’s address emphasized responsibility for stability in the world and the region. Stress is placed on India’s refusal to send a delegation to the BRI forum, owing to sovereignty claims in Kashmir, where China is advancing a project with Pakistan. India also questions China’s claim to forge a more just international order and reacts differently from Russia—a party that is said to prioritize its global role over the issue of China’s economic penetration into Central Asia and is actually benefiting greatly from China’s presence there, alleviating their socio-economic position. India is only a middle power that is fighting against Pakistan; thus, it fights over every little interest fiercely, argues the article. With its great power outlook, Russia can cede ground in Central Asia, while India cannot do the same in its near periphery. For Russia, China is a vital partner versus the United States, which trumps concerns about divergent national interests in neighboring areas. The essence of this is that Russia’s national identity—drawn from the Soviet Union—steers its foreign policy. China’s world aspirations are evidently not viewed with suspicion in this global context.
On May 17 in lenta.ru, India’s refusal to become part of BRI was discussed—a blatant exception in East, Southeast, and South Asia. On May 13, separatists had killed 8 workers near Gwadar, which Pakistan proceeded to blame on India, as if the corridor vital to Pakistan and China was seen as so threatening by India that it had taken this terrorist action. The article notes India’s dissatisfaction that the route goes through an area in Kashmir which it claims, and adds that India is also at odds with China’s moves in Southeast Asia, having strategic interests that correspond to those of the United States. As China strengthens its place in the region, it is trying to oust its competitors, argues the article; this may even gain an edge with Vietnam. India keeps warning countries in Southeast Asia to be wary of Chinese money, which buys off political leaders and leaves states in debt, not to mention influencing their foreign policy. But few listen to the Indians when China offers money and a chance at development. Most of all, the article argues that India worries about the Indian Ocean and the string of pearls. Yet, Modi’s strong stance is being criticized for passing up a chance to sustain economic development, and even Modi is cautious to keep dialogue with China going. China, however, insists that India is welcome to join BRI, and claims ignorance on what dialogue India is seeking.
Both sides would benefit, the article concludes, but India needs persuading. This ending leaves the impression that, however much India’s doubts are being aired, the hope is for reconciliation in order to prevent further widening this divide and leaving Russia few options.
On May 19 Aleksei Maslov wrote for RIA Novosti on Russia’s place in the Silk Road when the world becomes “non-Western.” Asserting that we now live in a Western world, he argues that OBOR could lead to a path where this would be superseded. New transport and economic corridors, reviving ancient trade routes, would have civilizational significance. Vagueness and lack of parameters would make it impossible to judge their success. China declares that it is friendly to all and is open to any country joining. It will give them new opportunities for development. Yet, this means recognizing China’s leadership in the reconstruction of the world, joining a project of international scope, but one that is one-sided in nature under China’s sponsorship, strategy, and format. Even in the SCO and BRICS, let alone ASEAN, there are heated debates in an attempt to satisfy the interests of many participants—but this is different. Things might move forward quickly, but mistakes are more likely. Following its tradition, China is ready to give a lot, but on condition that its leadership is recognized. Countries are faced with rejecting BRI (the United States, some European states, and India) or accepting it as is, agreeing to China’s rules for the biggest project of the 21st century. Yet, Maslov insists that a third path exists, as Putin has proposed, for drawing together the EEU, SCO, and ASEAN as a variant within the limits of BRI. Various regional projects could advance together, and states could feel more secure. Russia and the EEU have proposed about 40 transport projects, but China favors only those that it controls and treats Russia as only one part of the one belt economy. This is not a business plan, but a geopolitical attack in all dimensions. While Chinese investments in Russia in this project are miniscule, China realizes that it needs Russia for the quickest and cheapest transport of goods. Russia is the only real major partner ready to risk joining China in building a new world reality, but it is not ready to be a mere statistic in a Chinese project.
RIA Novosti on May 15 insisted that China is intent on assuming the leading role in Eurasia, as if this were a revelation after years of pretense that China accepted Russia as an equal partner. Interviewing Gevorg Murzaian, it described the summit as China’s push for global leadership. This was about civilizations, beyond transportation. Citing scandals also noted in the Western media, namely India’s objection and its ramifications for BRICS that matter for Russia; North Korea’s missile test to embarrass China, which could hardly lead the world if it could not control its own vassals; and European states’ refusal to sign the declaration, given its shortfall on standards. None of these matters, however darkened the sense of triumph from Beijing, as China drew states into its geo-economic orbit and only pretended to form a large, harmonious family. China is not ready for the role of world power, apart from being a powerful economy. It lacks an appealing ideology unlike the United States and Soviet Union; its model is left unclear. Moreover, it prefers not to confront the West, leaving to Russia to deal with Syria and Iran, where it defends their common interests. China cannot be trusted to defend the interests of others. Finally, China’s army’s strength projection remains in question, leaving it at most a US junior partner in the G2. Yet, regionally, it is succeeding, reflecting integration processes in Eurasia and welcomed by Putin in linking the EEU, SREB, SCO, and ASEAN, although the author questions ASEAN’s cohesion and finds Central Asia a more hospitable terrain for China. While Russia may find some matters in Central Asia worrisome, there is not quite a threat since China’s goal is to stabilize regimes, which fully corresponds with Russia’s interests. It is very unlikely that China will try to drive Russia out of the area. It needs Russia for all of its overland corridors to Europe and is concerned about Russo-US ties drawing closer, giving Russia more leverage and prompting China to respect its interests more. The real threat, the article adds, is Russia’s passivity on China’s infrastructure projects, unlike Kazakhstan, as companies hold back on Putin-Xi agreements, as if China has to finance everything. That is not the way China operates. This blame to Russia, not China, is increasingly visible in recent publications.
On May 16, Kommersant wrote about the vision of Eurasia Putin presented to the forum, while noting that the Chinese focus was just to show its leadership without any sense of the specifics. China signed 270 agreements, including one with Russia on regional economic cooperation worth $1.4 billion—with a chance to climb to $14 billion—linking the Russian Far East to Northeast China. Yet, the article notes that India sees OBOR as a “colonial enterprise,” aimed at pushing countries into heavy debt for the infrastructure projects they approve, citing Sri Lanka’s near budget collapse over the credits for a port construction. Putin’s appeal was no longer narrowly on the integration of the EEU and OBOR, but on a “Great Eurasia” with the SCO and ASEAN, denying a Sinocentric vision. The article appeared troubled by the lack of attention in the Chinese media to non-Chinese speakers amid the focus on Xi’s personal triumph. Great skepticism is shown, equating Xi’s idea to a long-forgotten slogan of Hu Jintao. Clearly, Russians are not pleased that their country was left marginalized in the proposals, even if Putin occupied a place of honor, despite his words trying not to rubberstamp Xi’s plans.
On May 15 Kommersant showcased India’s boycott of the forum, citing anger over violation of its sovereignty, opposition to China’s model of development, and distrust of the Chinese plan to integrate Asia on its terms. So much attention to India’s reservations can be seen as an indirect reflection of Russia’s own misgivings despite its involvement.
On May 12 Kommersant described Russia’s goal as strengthening the EEU in the face of China’s growing power. Yet, no Russian coverage explained how that was happening. In complaining about how little was being done under the new Chinese rubric, the article said that a lot of projects were proving unviable and that the Chinese were demanding harsh terms for their loans, meaning that eventually the properties would revert to China. Many countries, readers were told, are cooling toward China’s initiative, recognizing the strict returns demanded for Chinese investments, in contradiction to the rhetoric about a “community of common destiny.”
Andrei Ostrovskii on May 11 in Argumenty Nedeli complained about Russia’s failure to take advantage of China’s OBOR plans, blaming it for nearly passing up the opportunity to participate. China’s aim, he says, is to reduce the transport time and cost to Rotterdam, and Russia has the advantage since it offers the shortest distance of the seven proposed routes. The problem is that Russia demands China to invest the entire sum, forgetting that the route through Baku and Georgia is already in operation and is an alternative. It is assumed that Russian cities would prosper as a result of the high-speed line, that Russia has fallen way behind in economic ties with China having only $69 billion in trade in 2016, and that Russian regional centers are atrophying as Chinese ones thrive. Asked who will win—Russia’s ultraliberal financial capitalism, Protestant capitalism in the United States and the EU, or China’s mix of communism and capitalism—Ostrovskii responded that China is leading, but it must overcome challenges posed by an aging population, a shortage of energy, and ecology. Such thinking upgrades Russia’s role as an energy provider and environmental alternative, while hinting at the promise of closer integration without fear of Chinese domination. The case for embracing China’s BRI is unmistakable in this analysis.
On May 17 in Kommersant, Ivan Zuenko asked what to expect from the announced $1.4 billion Chinese fund for cooperation between Northeast China and the Russian Far East.
BRI and the development of the Russian Far East are separate: the former is a philosophy of joint development which would boost Xi, and the latter is a Moscow prerogative with no room for local initiative. Chinese investment might not preserve the status quo and is associated with ecological losses and risk of illegal migration, often unjustly. Russia seeks investment in high tech production utilizing local cadres. China is prepared to act only on terms favorable to it—using its equipment and materials untaxed, its workers, and investments on credit. It does not want to proceed on Russian conditions. The result is memoranda of intentions with no need to follow up and no problem in starting over two years later, when China may have a new leader and new “great concept.” It is up to Russia to save the Far East, not counting on the generosity of its neighbors, concludes Zuenko.
In Fontanka on May 18, Nikolai Kudin evaluates Chinese tourism to Petersburg. He noted that a quarter million Chinese visit the city annually (225,000 in the visa-free program alone), spending no less than a billion rubles, but the city does not see this money. The money never leaves China or returns there, insists the article. Tens of restaurants owned by the Chinese accept Chinese credit cards, cut-rate group payments are arranged, and the Chinese-owned souvenir shops even refuse entry to Russians. Sums reported for Russian taxes are a bare fraction of the large intake from the tour buses discharging their Chinese passengers. The visa-free program allows stay of 15 days for groups up to 50 persons, with arrangements handled by monopolies. In 2016, 1.3 million Chinese, a rise of 15 percent, visited, 85 percent of whom came in this manner with money flowing back to China through backchannels such as the mafia, the article reports.
On May 15, Georgii Toloraya asks in a Valdai report if China’s initiative offers an opening for Russia and warned that Russia must advance its integration plan for Eurasia, which is not fully in sync with China’s. Despite China’s claims of success, he insists that the situation is not yet clear. Fewer leaders participated in the summit than China had sought. Some may not be active in advancing China’s initiative. India is on the sidelines, and this forum may have harmed Indo-Chinese relations and BRICS. Toloraya calls this more of a geopolitical than an economic initiative, worrying also about China’s exports squeezing the market for Russia. Over three years not many real projects have gone forward. China will demand commercial conditions for funding and is occupied with geopolitics. Victor Larin also sees geopolitics in the forefront, but he is more optimistic that political problems can be resolved through economics. The fact that China has turned to continental goals from a maritime orientation is welcomed since China seeks a peaceful neighborhood. Russia has similar aims and can cooperate with China in both South and West Asia.
The Korean Peninsula
On March 13 in Valdai, Georgii Toloraya describes South Korea after the presidential elections. He paints a hopeful picture of serious change in policies toward China, South Korea’s number one trade partner and a geopolitical giant; of some shift in policies toward North Korea although not one that Russia is seeking; and economic and political improvements with Russia as part of a more balanced foreign policy. Park’s departure is good for Russia, he says. Toloraya concludes that closer ties will be positive for the situation on the Korean Peninsula and for multi-sided diplomacy. On March 16 Kommersant also raised hopes for a change in Seoul’s foreign policy course after the election, as Russia counted on a revival of the Khasan-Rajin joint project with Seoul. Charging that Park had chosen a super-tough policy toward North Korea and drawn close to the United States while badly damaging relations with China, the article stresses Russia’s loss of its coal exports by railroad through North Korea (49 percent of which go to South Korea). But now the blockade would end, many expected. Repeating China’s claim that the real purpose of THAAD is to contain China and noting that China is readying tougher sanctions on Seoul, the article states that the real test is how Seoul will handle THAAD. The impression here is of a zero-sum test, where North Korea’s threat is ignored and US pressure is defied.
A Rossiiskaya Gazeta article on May 20 reports on the closing of the air route from Dandong to Pyongyang, which had been newly established and only operated twice a week. There was uncertainty over whether it was due to a decision to put more pressure on North Korea or to insufficient traffic. That leaves only Air Koryo flying to North Korea from four cities: Beijing, Shanghai, Shenyang, and Vladivostok. In addition, the new sea route from Vladivostok to Rajin is mentioned in the article.
Tatiana Shchenkova wrote on May 5 for the Carnegie Center about North Korea and Russian plans for an electricity grid in Northeast Asia reaching South Korea, China, and Japan, which in March 2016 had been endorsed by groups in these states, including the Softbank group, and in September had been heralded by Putin at the Eastern Economic Forum. This plan should not come as unexpected because it is needed by all four countries, she adds: China for its struggle with ecology and advance of new technologies; South Korea for the supply of energy; Japan for lowering prices of electricity in its market; and Russia for attracting investment into its Far East. Yet, she faults the low level of political trust among these states. In the 2012 Vladivostok APEC meetings, after Japan’s closing of nuclear power plants, the plans accelerated. The idea of electricity from Sakhalin to Hokkaido stumbled before Japanese laws that do not allow for importing electricity. More progress was made with China, but talks there also failed, readers are told. Talks with South Koreans slowed after some interest. China shifted attention to an “electricity Silk Road,” whereby it exports electricity and utilizes its own technology, investing heavily in networks running from the western part of the country. Yet, China also accepts cooperation involving Russia, leading to a line from Weihai to Seoul with linkages to Japan. The article suggests that political risk is what is holding things up, especially the very low level of trust among China, South Korea, and Japan, as questions of national security are raised. North Korea’s nuclear program has risen dramatically in recent months, too. As Russia keeps pushing for an electricity ring for energy security, it should be realistic that bilateral projects—Weihai-Seoul and Sakhalin-Hokkaido—offer the most hope. The author calls on Moscow to refrain from loud political slogans and adherence to building a regional grid in order to avoid the situation where Asian countries deal amongst each other without taking Russian interests into account. The message seems to be that Russia must tone down its rhetoric, but there is nothing concrete here on how it should approach South Korea or Japan to reduce political risk. No mention is made of risk associated with Russia and its role in national security concerns.
In Mezhdunarodnaya Zhizn, Viktor Samoilenko praises the utility and effectiveness of ASEAN as a regional organization, claiming that it has become the nucleus of broader international cooperation involving nearly all of the leading states in the world. As others have fretted about its growing weakness, this laudatory commentary treated ASEAN as a godsend for peace, stability, and security with significant further potential. Hope was placed on partnerships with the EEU and SCO, despite a lack of detail about what they would mean apart from leading to broad Eurasianism, which places no demands on values given the merits of the “ASEAN Way” and adheres to the principle of “sovereign equality.” The article avoids mention of China’s interference with the centrality of ASEAN or Russia’s peripheral relevance to the association. It appears to be grasping for some mechanism to suggest that Russia need not face sinocentrism, as that prospect grows more imminent. With little promise for India, Japan, or South Korea as partners offering balance and multilateralism to Russia, the idea of Greater Eurasia does not openly distance Russia from China but feigns that ASEAN’s large and growing role would somehow keep Russia free of undue Chinese pressure.
Konstantin Asmolov in Rossiya v Global’noi Politike praised Asian values as the path to progress. He credited Confucian attitudes with being the sole source of dynamism raising states into the first world—South Korea, Singapore, Taiwan, and, of late on that path, Vietnam and China. In each case, there was authoritarianism and values seen as an alternative to “universal ones” with stress on stability as well as harmony. Excluded are rights of the individual, pluralism, and local autonomy, as limits on individual freedom are much greater than in democracy of the Western type. Asmolov contrasts “right to thought” in the West with “correct thought” for the Chinese, and is hesitant to criticize the preservation of tradition as a force that contradicts modernization, although he acknowledges change in later stages as society is transformed and economic growth slows, exposing the negative sides of an authoritarian regime. He concludes that the idea of Asian values is an answer to the attempt by the West at cultural hegemony over the world, as countries seek to demonstrate, at a minimum, different paths of development in the East and West, and at a maximum, the superiority of Asia. The article makes no effort to differentiate China and Asia in this discussion, but he does observe that in South Korea new generations are more attracted to the “culture of globalization.” Yet, awareness of Asian values in contrast to universal ones gives him reason to expect multipolarity in the future world order, where differences in value systems are accepted.
Vitalii Shvydko on May 12 in russiacouncil.ru assesses bilateral relations with Japan, noting that Abe’s visit two weeks earlier proceeded quietly in Russia and Japan as if it were just another round in a long dialogue about working issues as opposed to controversial ones. Japan continues to put the territorial issue first, even if this goes unstated, and Russia disagrees with Japan on two key matters—the North Korean nuclear and missile programs, and the territorial issues in the East and South China seas, which are of equal significance to the Northern Territories to Japan. Russia seeks to avoid these issues, not to appear as an ally of Japan. Shvydko insists that Japan’s territorial quest with Russia is now limited to some possibility of joint use with no change in Russia’s sovereignty—in other words, Japan should abandon any hope for the return of even the two, small islands. Russia views economic deals as strictly commercial in nature, in no way connected to political relations. It is Russia that would make concessions to allow Japan access to its resources and human capital, readers are told. Japan should not see any payments it makes as leading Russia to make political concessions. In this article, Russia’s main interest is described as political: for Japan to recognize a new world reality, in which the United States no longer sets the rules and there is recognition of the justice and legitimacy of Russia’s actions. The ongoing dialogue is positive because it treats Russia as a subject, not an object, but little else hopeful is asserted, as concerns are raised about Japanese public opinion turning against Abe’s warm diplomacy toward Russia. The article suggests not to pay so much attention to personal relations when Moscow is continuing to lose interest in deal-making with Japan. The motivation to overcome the influence of Western sanctions is gradually slipping, as Russian gas supplies to Europe hit record levels this past winter and the northern route pipeline proceeds with financing from Western companies aimed at a 2019 completion date, while the southern route through Turkey looks ever more realistic. The necessity to quickly establish eastern routes is diminished, lowering political pressure in talks with both Japanese and Chinese business for the “turn to the East.” In talks with Abe, Putin has made no changes in his principal positions, while the biggest global problems can only be resolved with Russia’s cooperation. Little is expected of Japan in the Russian Far East, where Japan’s financial injections fall far short of Russia’s needs, which it must address. This serves as the most pessimistic account yet of the prospects for bilateral relations on the basis not of Japan’s unwillingness to compromise but of Russia’s reassessment of its needs due to its geopolitical and economic confidence.