IEEJ: September 2012 All Right Reserved
Special Bulletin
A Japanese Perspective on the International Energy Landscape (100)August 24, 2012

Rising Geopolitical Tensions in Northeast Asia and Their Impact on Energy
Problems
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
Geopolitical tensions have risen remarkably in Northeast Asia. Particularly, Japan has seen
severe conflicts and tensions with three of its neighbors, South Korea, China and Russia, oversovereignty and territorial issues.
First, Japan’s dispute with South Korea over the Takeshima Island issue has been
escalating. The dispute heated up on August 10 when South Korean President Lee Myung Bak
visited Takeshima Island which is claimed by Japan. South Korea refused to receive and sent backJapanese Prime Minister Yoshihiko Noda’s personal letter deploring the South Korean president’s
visit to the disputed island. The Japanese Ministry of Foreign Affairs then refused to allow a SouthKorean embassy official to enter the ministry to return the letter. The two countries took actions thatwere unusual in diplomacy. South Korean President Lee also made a remark urging the Japaneseemperor to give an apology, adding fuel to the confrontation mainly between Japanese and South
Korean government officials. The Japanese government has made a plan to jointly lodge a suit with
the International Court of Justice over the territorial dispute, indicating a step forward. The politicaldispute and tensions are affecting bilateral economic relations including a bilateral currency swap
expansion deal and Japan’s planned purchase of South Korean government bonds. Media reports
have worked to stimulate national sentiment in the two countries, causing concern over theunprecedentedly high tensions between them.
With China, Japan’s territorial issue over the Senkaku Islands has escalated again. OnAugust 15, Hong Kong activists claiming the Senkakus as Chinese territory landed on Uotsuri Island,one of the islets. The Okinawa prefectural police then arrested and deported 14 Chinese activists fortheir alleged violation of the Immigration Law. In a subsequent development on August 19, 10Japanese citizens including local assembly members landed on Uotsuri Island. In response, theChinese government demanded release of the arrested activists and lodged a protest against what it
claimed to be Japan’s violation of China’s sovereignty, escalating bilateral tensions over theterritorial issue for the first time since a Chinese fishing boat collided with Japan Coast Guard ships
near the Senkakus in September 2010. Over the Senkaku issue, anti-Japan demonstrations took placein such Chinese cities as Shanghai, Chengdu, Hangzhou and Shenzhen on August 19, with somedemonstrators becoming violent. As Chinese actions are likely to grow severer, with the deported
Hong Kong activists reportedly planning to land on the Senkakus again in October, bilateral tensions
are expected to remain high.
1

IEEJ: September 2012 All Right Reserved

A development involving a Japan-Russia territorial dispute came prior to the two
mentioned above. On July 3, Russian Premier Dmitry Medvedev visited Kunashiri Island, one of thefour Russian-held northern islands claimed by Japan, along with Vice Premier Olga Golodets andRussian Far East Development Minister Viktor Ishayev. This was Medvedev's second visit to thedisputed island, following the first in November 2010 when he was President of Russian Federation.
Like the previous visit, the latest one is expected to have various repercussions on future
Japan-Russia relations. During his visit to Russia in late July, Japanese Foreign Minister Koichiro
Gemba exchanged views with Russian officials on the possibility and importance of stronger, deeper
bilateral relations. On the territorial issue, however, Gemba and Russian officials failed to go beyond
confirming their basic policy of proceeding with positive talks in search of a solution that would be
acceptable for both countries.
The geopolitical environment in Northeast Asia has thus become unprecedentedly severefor Japan. The background behind the severe environment includes not only Japan’s bilateral
problems with the three countries but also a complicated combination of the shaken Japan-U.S.
alliance, the United States’ engagement in Northeast Asia, a relative decline in Japan’s power amid
China’s rise coupled with South Korea’s enhancement of economic power, and Japan’s confused
domestic situation.
The geopolitical tensions naturally exert wide-ranging repercussions on key regional
political and economic problems. They also have various implications for energy problems. First, wemust acknowledge that Northeast Asia, including China, will expand energy demand and grow more
important as the demand center of the global energy market. Japan, China and South Korea face thecommon challenges of rising dependence on energy imports and heavy dependence on Middle Eastoil. Particularly, Japan and South Korea commonly feature heavy dependences on energy imports
and low energy self-sufficiency ratios. The cold fact is that Japan, China and South Korea are racing
to secure resources in the global energy market. But they can find common interests as big energy
consumers and importers. Their cooperation is possible and significant in many areas including
global environmental measures, energy conservation promotion and nuclear power generation safetymeasures.
Especially, we may conclude that the three countries as the main liquefied natural gas
importers in the world share consciousness of the Asian LNG price premium problem, which meansthat Asian prices are far higher than European and American prices for natural gas (including LNG)
which is expected to expand its role in the global energy market. Since the 2000s, the three countries
have discussed and implemented possible, significant cooperation programs regarding theabovementioned areas, while being affected by political problems sometimes. As the rising tensions
could affect their cooperation, we must pay close attention to relevant future developments. The
deteriorating geopolitical environment in Northeast Asia or the whole of Asia can be viewed as adestabilizing factor for the global energy market. Given Asia's growing importance, we may have toclosely watch future developments involving the energy market. As a matter of course, thegeopolitical tensions have significant implications not only for the relations between Japan, China
2

IEEJ: September 2012 All Right Reservedand South Korea as energy consumers and importers but also for Russia that intends to enhance its
presence as a major energy supplier for the Asia-Pacific region. Russia has made various approaches
on and held talks with China and South Korea over gas pipelines from Russia to those countries.
With Japan, Russia is expected to discuss further energy cooperation.
International relations involving sovereignty and territorial issues are very difficult and nocountry makes any easy compromise. Therefore, no optimism can be warranted over the Northeast
Asian geopolitical environment. For Japan, particularly, tougher problems have emerged in addition
to severe economic and energy problems at home and abroad. Japan should promote dialogue withthe three countries while maintaining its resolute response to sovereignty and territorial issues. At thesame time, Japan should implement a steady strategy for the stability and future development of theregion while enhancing relations with the United States. The future of the region's geopoliticalenvironment related closely to resources and energy problems has become a very important
challenge for Japan.
Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/whatsnew/JPOIEL.html

3