Chapter 1

Sino-Japanese Competition
over the Russian Far East:
Is the Oil Pipeline Only a Starting Point?
Gilbert Rozman

Limitations of past studies demonstrate that we need a broad approachto the Russian Far East, distant from Moscow and located amidst fiveforeign states that have ideas about how to shape its future. Thisapproach may concentrate on two states, China and Japan, mostcapable of long-term influence in the area. So far, analysis of Russia’s
Far East in the context of foreign relations has focused on local
rivalries with Moscow over ties to the outside world,1 strategies in thecapital for limited integration into Northeast Asia,2 and difficulties incross-border relations.3 Missing is a wide-ranging outlook that views
1

2

3

Gilbert Rozman, “The Crisis of the Russian Far East: Who Is to Blame?”
Problems of Post-Communism, Vol. 44, No. 5, September/October 1997, pp. 3-12;
Gilbert Rozman, “Troubled Choices for the Russian Far East: Decentralization,
Open Regionalism, and Internationalism,” The Journal of East Asian Affairs, Vol.
11, No. 2, Summer/Fall 1997, pp. 537-569; Michael J. Bradshaw, ed., The
Russian Far East and Pacific Asia: Unfulfilled Potential (Richmond, Surrey:
Curzon Press, 2001); M. Titarenko, “Sibir’ i Dal’nii Vostok kak strategicheskaia
baza integratsii Rossii v ATR,” Problemy Dal’nego Vostoka, No. 6, 2002, pp.
98-105; The Russian Far East Today: Regional Transformations under
Globalization (Sapporo: Slavic Research Center, Hokkaido University,
Occasional Papers No. 1, 2003).
Gilbert Rozman, et al., Russia and East Asia: The 21st Century Security
Environment (Armonk, NY: M.E. Sharpe, 1999); Gennady Chufrin, ed., Russia
and Asia-Pacific Security (Tokyo: Sipri, 1999); Judith Thornton and Charles E.
Ziegler, eds., Russia’s Far East: A Region at Risk (Seattle: The National Bureauof Asian Research, 2002); Gilbert Rozman, “Russian Foreign Policy in Northeast
Asia,” in Sam Kim, ed., The International Relations of Northeast Asia (Lanham,
MD: Rowman & Littlefield, 2004), pp. 201-224.
Gilbert Rozman, “Turning Fortresses into Free Trade Zones,” in Sherman Garnett,-1-

Gilbert Rozman

the policies of actors in Russia through the lens of a leadership struggle
in the emerging Northeast Asia region.4 As great power relations kept
changing in Northeast Asia after the cold war, forces in Russia at firstremained aloof, fearing that any form of regionalism would be harmful.
As competition between China and Japan heated up, however,Vladimir Putin began to play an active role in steering regionalism,
looking for a path favorable to the Russian Far East as well as to
Russia’s overall influence. A struggle for advantage in the Korean
nuclear crisis looms in the background, and a tug-of-war over an oil
pipeline from Angarsk to either Daqing (An-Da) or Nakhodka (An-Na)
signaled the start of more intense rivalry. The Nakhodka route won in alate 2004 decision.
When Northeast Asia began to take shape as an economicallyintegrated region, both Japan and China started looking to the Russian
Far East to bolster their strategies for leadership. After Taiwan andNorth Korea, the Russian Far East offers the greatest opportunity for
redefining the lines of power in a region still in flux. While attention
has centered on territorial disputes between Japan and Russia andChina and Russia involving just a few small islands, the vast expanseof the Russian Far East is a much more alluring target, albeit for
influence rather than sovereignty. In the face of strong magnetic forcesfrom nearby countries Moscow tries to steer a narrow line between
integrating this distant area into a dynamic, emerging region andretaining a tight grip on it. Increasingly, this has meant weighing thepotential of China and Japan for serving Russian interests, while
keeping an eye on the evolution of the two Koreas on a divided

4ed., Rapprochement or Rivalry? Russia-China Relations in a Changing Asia
(Washington, D.C.: Carnegie Endowment for International Peace, 2000), pp.
177-202; Gilbert Rozman, “Cross-Border Relations and Russo-Japanese Bilateral
Ties in the 1990s,” in Gilbert Rozman, ed., Japan and Russia, The Tortuous Path
to Normalization 1949-1999 (New York: St. Martin’s Press, 2000), pp. 199-214;
and Iwashita Akihiro, Churo kokkyo 4,000 kiro (Tokyo: Kadokawa Shoten, 2003).
I have covered competing strategies over regionalism through six periods after thecold war in Gilbert Rozman, Northeast Asia’s Stunted Regionalism: Bilateral
Distrust in the Shadow of Globalization (Cambridge: Cambridge University Press,
2004). In 2004 there are signs of a seventh period beginning in which direct,
intense competition between China and Japan takes center stage.

-2-

Sino-Japanese Competition over the Russian Far Eastpeninsula.5 At last Moscow seems to be settling on an Eastern strategy,
as Beijing and Tokyo grow more serious in their offers to it.
Beijing and Tokyo made different calculations in approaching
central and local power in Russia.6 Beijing set past issues aside as it
kept wooing Moscow over 15 years, while it favored maximum
openness across the border. Tokyo was hesitant because of theterritorial dispute and was wary about cross-border ties. Despite thesedifferences, in the early 1990s both fared badly in their efforts tocapitalize on early decentralization in the Russian Far East. The former
promoted “border fever” through a rush of shuttle traders and plans forjoint corridors to the sea such as the Tumen River area delta project,while the latter gave priority to humanitarian aid and promises of
sub-regional integration into the “Sea of Japan economic rim.”7 Laterin the decade they each focused on Moscow, although Heilongjiang
province kept searching to build economic partnerships with
Primorskii krai and Japan allocated a fund controlled by LDP
parliamentarian Suzuki Muneo of Hokkaido that brought someassistance to the disputed islands under Sakhalin oblast. In contrast to
optimism at times about bilateral relations, cross-border ties were
troubled. Despite some gains in Sino-Russian trade from 2000 andgrowing output from multinational investments in Sakhalin oil and gas,neither country took satisfaction from its limited ties to the Russian Far
East. As each weighed a new strategy, the two found themselves ingrowing competition.

5

6

7

Gilbert Rozman, “The Geopolitics of the North Korean Nuclear Crisis,” inRichard J. Ellings and Aaron L. Friedberg, eds., Strategic Asia 2003-04: Fragility
and Crisis (Seattle: The National Bureau of Asian Research, 2003), pp. 245-261;
Taehwan Kwak and Seungho Joo, eds., The Korean Peace Process and the FourPowers (Aldershot: Ashgate, 2003).
Gilbert Rozman, “China, Japan, and the Post-Soviet Upheaval: Global
Opportunities and Regional Risks,” in Karen Dawisha, ed., The International
Dimension of Post-Communist Transitions in Russia and the New States ofEurasia (Armonk, NY: M.E. Sharpe, 1997), pp. 147-176.
Gilbert Rozman, “Backdoor Japan: The Search for a Way Out via Regionalism
and Decentralization,” Journal of Japanese Studies, Vol. 25, No. 1, Winter 1999,
pp. 3-31; Gilbert Rozman, “Northeast China: Waiting for Regionalism,” Problemsof Post-Communism, Vol. 45, No. 4, July-August 1998, pp. 3-13.

-3-Gilbert Rozman

To explore the rivalry over the Russian Far East, this paperchooses three angles of vision. First, it considers the China-Japan-US
triangle in Northeast Asia in order to disentangle the Sino-Japaneserelationship from a global framework, and to show how the overall
regional strategies of China and Japan include the Russian Far East.
Second, it assesses broader reasoning in Moscow concerning thebalance of power between China and Japan, including the Russian
calculus over the pipeline issue. Finally, the paper looks to ageographical realignment inside Russia and its impact on regionalismbalanced among Moscow, Beijing, and Tokyo. It considers the criticalconstituencies in Russia – Khabarovskii krai, Primorskii krai,
Sakhalinskaia oblast, and Amurskaia oblast –, avoiding the tendency to
see them as passive objects even though governors who shape theoutcome by lobbying Moscow and dealing across international borders
now face new controls.8 A few national leaders have been making
crucial decisions. It is they – George W. Bush, Kim Jong-il, Koizumi
Junichiro, and Vladimir Putin – who seized the initiative, along withnew leaders in China and South Korea over the period 2002-2004. As
Bush and Kim stayed in a standoff, there was talk of Hu Jintao’s“peaceful rise,” Koizumi’s “active diplomacy,” and Putin’s“centralization.”

The US and Sino-Japanese Competition in Northeast Asia
Each of the major actors in Northeast Asia faced at least one bout ofconcern over being outmaneuvered or even isolated. For Japan the low
point may have come in 2000 when many felt bypassed by South
Korea’s sunshine policy, which engaged each of the other three powers,
or in 2001 when Koizumi started in office amidst simultaneous
downturns in bilateral perceptions with Russia, South Korea, andChina. Strengthening ties with the US in response to a beckoning Bushadministration gave a firmer basis for joint efforts to reshape the Asian
mainland. In China there was enough concern about Bush containment
8

Iwashita Akihiro, “The Influence of Local Russian Initiatives on Relations with
China: Border Demarcation and Regional Partnership,” Acta Slavica Iaponica,
Vol. 19 (2002), pp. 1-18.

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Sino-Japanese Competition over the Russian Far East

efforts, even after signs of reconciliation following the 9/11 attack, thata new strategy called “peaceful rising” was adopted in 2003. (Although
the term lost favor when Jiang Zemin exerted pressure in 2004, Hu’s
victory in September made it clear that he was setting the agenda
again.) This includes appealing to Russia as a partner that can count on
Chinese benevolence. Russians earlier had been alarmed aboutbecoming irrelevant in the region; after establishing a strategic
partnership with China in 1996 and repairing relations with North
Korea there were still doubts that Russia’s weak economy would leave
it dependent on China.9 It is looking for balance. Americans inclined
to the Bush administration also had felt some alarm in the late 1990s
and at the time of the sunshine policy, fearing that US power wasreceding in the region. With these worries, countries are well attuned to
the need for expanding their influence, and the Russian Far East offers
one possible venue for the others and a challenge for Moscow.
For US interests there are at least four goals at stake in the Russian
Far East. One, the area which had been a militarized security threat
must not resume that role, either through a shift in Russian priorities or
through Sino-Russian military ties expanding beyond a measured levelof arms sales. Although this concern remained slight from 1992, itfavors a tilt toward Japan. Two, the US does not want any othercountry to gain substantial control over this part of Russia, and theprospect of China doing so, however resisted by Russians, looms farlarger than that of Japan. Three, the US regards Russian energy,
especially oil, to be a strategic resource, and seeks maximum access toit and input into its allocation. As American companies cooperated
with Japanese ones and others in the development of Sakhalin oil andgas, there is no doubt of continued preference for such multinational
efforts. Four, Washington is concerned that regionalism under any
other state’s leadership, but particularly China’s influence, could run
afoul of US interests under the broad rubric of globalization. All ofthese reasons favor Japan. 10 Although narrow reasoning about US
9

Vladimir F. Li, Rossiia i Koreia v geopolitike evraziiskogo Vostoka (Moscow:
Nauchnaia kniga, 2000); Iurii V. Vanin, ed., Koreia na rubezhe vekov (Moscow:
Institut Vostokovedeniia RAN, 2002).
10 Condoleeza Rice, “Promoting the National Interest,” and Robert B. Zoellick, “A
Republican Foreign Policy,” Foreign Affairs, January/February 2000, pp. 45-62,-5-Gilbert Rozman

global control at times appears to preclude acceptance of regionalism,
those who appreciate the limits of US power recognize that some sortof regional grouping is inevitable and turn to Japan and its ties to
Russia to begin to shape it.
US administrations have generally sought to bolster Japan’s roleon the Asian mainland, long favoring closer Japanese ties with South
Korea,11 after the cold war welcoming a breakthrough in ties between
Tokyo and Moscow,12 and increasingly seeking Japan’s more active
presence as a way to channel China’s rapid rise as a regional power.13
If during Bill Clinton’s two terms, especially in 1994-1998, Japanesefeared that the US was dealing with China, Russia, and North Korea
without enough coordination, the ensuing Bush administration left no
doubt that Japan would serve as its gateway to the region. It felt
confident that on Taiwan there was a meeting of the minds and on
North Korea, at least between Japanese Prime Minister Koizumi
Junichiro’s visits to Pyongyang in September 2002 and May 2004, no
one else came closer to Bush’s thinking.14 Agreement over finding a
way for the Russian Far East to withstand China’s influence alsobrought Washington and Tokyo together. After Putin drew closer toBush in the fall of 2001, the goal of overcoming the divide between
Japan and Russia, by working with Putin and Koizumi together, may
have risen in significance, even if closer Sino-US cooperation
diminished the obsession with containing China.
63-78.
Gilbert Rozman, “Japan and South Korea: Should the U.S. Be Worried about
Their New Spat in 2001?” Pacific Review, Vol. 15, No. 1, 2002, pp. 1-28; Victor
D. Cha, Alignment Despite Antagonism: The US-Korea-Japan Security Triangle(Stanford, CA: Stanford University Press, 1999).
12 Gilbert Rozman, “A Chance for a Breakthrough in Russo-Japanese Relations:
Will the Logic of Great Power Relations Prevail?” Pacific Review, Vol. 15, No. 3,
2002, pp. 325-357.
13 Gilbert Rozman, “Japan’s Images of China in the 1990s: Are They Ready for
China’s ‘Smile Diplomacy’ or Bush’s ‘Strong Diplomacy?’” Japanese Journal of
Political Science, Vol. 2, Part 1, May 2001, pp. 97-125.
14 Michael H. Armacost and Kenneth B. Pyle, “Japan and the Unification of Korea:
Challenges for U.S. Policy Coordination,” in Nicholas Eberstadt and Richard J.
Ellings, eds., Korea’s Future and the Great Powers (Seattle: University ofWashington Press, 2001), pp. 125-163.
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Sino-Japanese Competition over the Russian Far East

China, the US, and Japan agree on the need for peace and stability
on Russia’s borders as elsewhere in the region and economic reformand openness in support of external ties. If for a time Japan might nothave minded economic difficulties in parts of the Russian Far East that
could have boosted incentives to deal on the four disputed islands, itlater saw a more prosperous Russian local economy as positive. While
China might have welcomed more economic urgency in this part ofRussia to rely on Chinese goods and open the door to laborers andentrepreneurs from China, it too came to appreciate a stronger Russian
Far East economy in order to reduce fear of Chinese domination. Bothneighbors sought to promote cross-border ties to assist theireconomically troubled peripheries, Northeast China and Hokkaido.
Common interests favor reform and stability in a vast frontier that
could provide an impetus for new regional dynamism. Yet, clashingstrategies tied to questions of security and, more deeply, to national
identities and entitlements proved increasingly divisive in the late
1990s and the beginning of the twenty-first century. Intense debates in
China on “new thinking” toward Japan failed to set a new course that
met China’s objectives.15 Efforts to reduce Japanese concerns over
China’s strategic and economic threat could not overcome the risingtide of warnings.16
Japanese are growing concerned that China is seeking
predominance and would relegate their country to a secondary status asa political power as well as a military power.17 Chinese in 2001-2003
tried to appeal to Japan not to develop a containment strategy linked tothat of the US, and, after that made little headway, in 2004 vented
warnings that rising nationalism coupled with talk of a China threatmeans that Japan is bent on blocking China’s rise.18 In this distrustfulcontext competition over the Russian Far East intensified. US refusal
to entice North Korea with a clear compromise left the momentum for
15

Wang Yong, “Yi diqu hezuo huajie Zhongri jiegouxing maodun,” Zhanlue yu
guanli, No. 1, 2004, pp. 41-48.
16 Mori Kazuko and Zhang Yunling, eds., Nitchu kankei o do kochiku suruka?
(Tokyo: Iwanami Shoten, 2004).
17 Torii Tami, “Hannichi” de ikinobiru Chugoku (Tokyo: Soshisa, 2004).
18 Feng Zhaokui, “Duiri guanxi de jiannan qiusuo,” Shijie jingji yu zhengzhi, May
2004, pp. 26-31.

-7-Gilbert Rozman

cooperation stalled, adding to a competitive atmosphere. As American
power was exposed as overextended in 2004, the Sino-Japanesecompetition was unmistakably rising to the fore.
In the first half of 2004 China’s strategy in the region grew more
intensely opposed to US and Japanese power. In place of aneven-handed role as mediator in the nuclear crisis, Chinese insisted
that North Korea was now flexible while the US refused to negotiate
seriously. Chinese spoke of willingness quickly to reach a compromisedeal on the three remaining islands in the dispute with Russia and ofgenerous support for trade ties with Russia that can give a boost to theRussian Far East. When Putin visited in October, the two sides
announced that they had settled the territorial issue and some new
economic plans; yet to China’s apparent distress energy plans did notfavor it. Reconsidering the “new thinking” of 2003 that was meant toentice Japan into closer relations, Chinese assailed Japanesenationalism and foreign policy with new vigor. They were especiallyconcerned about Japan’s growing security role in the region,
encouraged by the US. It was assumed that geopolitical objectives
would draw Russia close if China was careful to assuage doubts, while
they were driving Japan apart and leaving China little recourse but totoughen its posture. A more secure Hu met in the fall with LDP figures
Kato Koichi and Kono Yohei in a renewed search for a way tojumpstart bilateral relations, but there were no easy answers, as bothsides awaited the US elections.19 After Bush won reelection, the wait
would continue as his foreign policy team was changing and handlingof the North Korea issue, the Taiwan issue, and regionalism in general
could drive other adjustments in dealing with Northeast Asia.
In 2004 Japanese strategy in the region remained focused on therise of China as well as the volatility of the North Korean nuclear crisis.
Early in the year the issue of family members left behind whenabductees were allowed to visit Japan in the fall of 2002 seemed toblock out other concerns as Japanese policy toward North Korea stayed
close to that of the US. After Koizumi took a one-day trip to
Pyongyang on May 22 and returned with five family members,
however, a new vigor seemed possible, as Japanese spoke of supplying
19

Asahi Shimbun, October 23, 2004, p. 2.

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Sino-Japanese Competition over the Russian Far East

energy in return for a freeze on nuclear weapons development. Insteadof Beijing monopolizing the role of intermediary with Pyongyang inthe six-party talks, Tokyo had begun to cultivate its own channels of
diplomacy and potential to broker an agreement. Soon, however, hopefaded. Tokyo again had to wait for others to act. If North Korea wasthe central regional concern, the Russian Far East continued also to bea source of division and long-term calculations.
Both Beijing and Tokyo are looking beyond US predominance inNortheast Asia. Beijing is limited by its impatience to regain Taiwan
and refusal to accept Japan as a political great power on a par withitself, thus limiting its interest in resolving basic security questions andapproaching Russia with economics in the forefront. Tokyo has beeneven more constricted by its focus on historical issues, delaying ageopolitical understanding with Moscow. Each side has hesitated, but
pressure is mounting to make a breakthrough in Russia.

Moscow’s Stance on the Pipeline and the Sino-Japanese Rivalry
From the time of the collapse of the Soviet Union intense battles
occurred over what direction Russian political and economic
development should take. Policies in the Russian Far East and toward
the countries of Northeast Asia often were criticized as failing to serve
national interests well, and many called for sharp adjustments. Leadersand public opinion in the Russian Far East, especially the critical krai
of Primorskii and Khabarovskii, tilted to Japan. In Moscow many
doubts were also raised about China’s rising power and its potential
impact on the Russian Far East; yet reservations remained about
Japan’s willingness to advance relations without a breakthrough on the
territorial issue and Japan’s excessively close ties to the US. Despite aspike in warm words to Tokyo in 1997-1998 and 2000-2001, Moscow
leaned to Beijing.
Ever since 1989 there were signs that leaders in Moscow would
welcome a chance to balance relations with Beijing by reaching an
accord with Tokyo and even creating a special relationship. While they
did not contemplate the transfer of the four islands, they did welcome
any initiatives from Tokyo that suggested the prospect of improved ties.
In addition to global and regional objectives, Moscow generally-9-Gilbert Rozman

favored a greater Japanese presence in the Russian Far East. In thesecond half of 2002 when Japan’s latest initiative turned to the An-Na
oil pipeline, this rekindled Russian hopes for a broader improvement inrelations. As at several points in the previous 15 years, some in
Moscow grew hopeful that the territorial issue would become a lower
priority for Tokyo.
Dmitrii Trenin is one Russian analyst who contends that in 10-15
years it will become clear that Russia’s main geopolitical problem of
the twenty-first century is the future of Siberia and the Far East. He
argues that at the heart of this area’s instability is the failure of the
traditional mobilizational model of development and the delay inachieving new development based on private, mainly foreign capital,
which leaves the area vulnerable to China. Trenin observes that
Washington is interested in Russia preserving its Far East, creating astrong foundation for partnership. Warning that Beijing’s strategy is togain access to energy and military technology as well as a destination
for China’s surplus population, Trenin implies that Japan is a more
promising partner even as Russia strengthens friendship and maintains
controlled use of Chinese resources for the development of Siberia andthe Far East.20 This argument resonates well in Moscow, calling for
Russia to balance against China in the region, but many remain
doubtful that Tokyo has the will to proceed.
In 2003-2004 Putin continued to struggle to identify and establish
his own agenda as economic interests battled and regional objectives
were finally being clarified. New decisions proved largely unfavorable
to China. In place of Yukos using business logic to plan a private oilpipeline to Daqing that would primarily be built by the Chinese
through their territory, ministerial interests and Transsibneft favored astate pipeline completely across Russian territory that would terminate
at the sea and favor Japan as well as diversified markets. Rather thanbilateral deals that left an overextended Russia at risk before a newly
assertive China, strategic reasoning opted for an expansive Northeast
Asia where Chinese interests would be kept in check. Especially thejoint efforts of regional elites across the southern tier of Asiatic Russia,
20

Dmitrii Trenin, “Aziatskii vector v strategii Moskvy,” Nezavisimaia gazeta, No.
15, October 27, 2003, pp. 13-14.

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Sino-Japanese Competition over the Russian Far East

who anticipated a large dose of investment and bountiful energy that
could be used for local industries and consumers as well as lessdependence on China, created a vocal lobby for An-Na. Strategic
thinking about the “East” gave Japan priority, but it favored as wellstable ties with China as a partner in arms sales and security matters.
Perhaps the biggest change for the region under Putin was apragmatic approach to the US, dramatized by the response to 9/11 andfurther evidenced by talks on cooperation on energy. While Yeltsin
may have quietly encouraged the US to remain engaged in Northeast
Asia, Putin curtailed the rhetoric of Sino-Russian partnership and madeclear that Russia could work closely with the US. In 2003-2004 thelimits of this global reconciliation were exposed, but the lessons forJapan’s interest in improving relations with Russia endured. Left
uncertain was how strongly Japan would link its insistence on the
return of all four islands to a breakthrough in relations. After Putin won
reelection in March, the debate inside Japan intensified over how
actively to insist on linkage as talks on energy cooperation advanced.
Meanwhile, the trial of Mikhail Khodorkovskii in Moscow and signs
that foreign investors in Sakhalin-3 oil and gas may be stripped of theirassets after a decade of exploration and infrastructure development leftmany wondering if Moscow was soiling the prospects for a large-scaleenergy project. As global oil prices reached record levels, however,there was no shortage of suitors for Sakhalin resources.
If Russia wanted to dispose of all of its available oil at the shortest
possible distance to a customer with a deep thirst for new imports ofthis vital energy source, the An-Da pipeline would serve well. Simple
marketing concerns for energy would favor the Chinese route, althoughdependence on a single purchaser could limit Russian freedom to set
prices. Yet, Russia chose in late 2004 to set aside the Chinese offer,
which it had invited and eagerly pursued for a decade, in favor of an
upstart offer from Japan, using Taishet, not Angarsk, as the starting
point. Many in China saw the Japanese offer less as an effort toenhance energy security than as a geopolitical maneuver that was also
embraced by Russia for geopolitical reasons. The idea spread thatJapan was embarking on a strategy to contain China matched by a
Russian strategy to limit China’s leverage in the region and supportedby the US geopolitical calculus. Chinese interest in a gas pipeline,- 11 -

Gilbert Rozman

however, met with more support, and an offshoot oil line could later
replace rail shipments if Japan vacillated. There was little to do but
wait to see how serious Japan’s energy offer to Russia would be.
While the geopolitical reasoning of Russia, Japan, and the US
were not seen as fully overlapping, their interests in preserving abalance of power in Northeast Asia seemed to coincide. It wassuspected that the US and, possibly, Japan aimed to keep China heavily
dependent on oil controlled by multinational companies that had totraverse sea lanes that could readily be interrupted.21 In short, the US
would make use of a stranglehold over China’s energy lifeline toensure that it did not undercut US power, for example by launching aninvasion of Taiwan. Whatever Russia may have thought about thisobjective, all three agreed that strengthening the Russian Far East’s ties
with Japan makes geopolitical sense. It would reduce dependence on
China, solidifying Russo-Japanese relations while preventing a vacuum
from emerging on the periphery.
China has tried self-policing to prevent troubles, reassurance toexplain what China is doing, generosity to show its benevolence, andother methods to persuade Russians that they have nothing to fear froma long-term partnership in all dimensions. Yet, the fear of China in the
Russian Far East remains palpable. China cannot put the territorial
claims of the past to rest. Preoccupied with US power and thepossibility of conflict over Taiwan, Beijing avoids quarrels with Russia.
Year after year Chinese insist that relations are improving, but they
never succeed in winning the confidence of Russians, especially in the
Far East. Part of the problem is extreme conditions and even paranoia
on the Russian side. Criminalization and coarse measures at bordercrossings interfere with progress for the Russian Far East. One cannot
escape the impression that Chinese suffer more from them thanJapanese.22 Skinheads target Chinese in cities such as Moscow, andthe media rails against Chinese behavior or imputed intentions.
Whereas Putin stands somewhat apart from Russian sentimentcritical of the US, he is not known to oppose those who call for
21 Wang Yajuan, “Jiu Zhonge yuanyou guandao xiangmu wenti fang Lu Nanquan,”
Shijie zhishi, No. 20, 2003, pp. 44-46.
22 Huanqiu shibao, June 4, 2004, p. 6; Utro Rossii, October 18, 2003, p. 2.

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Sino-Japanese Competition over the Russian Far East

preparing to balance China in Northeast Asia. Koizumi at times insiststhat Japan does not regard China as a threat, but he does little to rein in
the emotional incitement against China coming from Japanesepoliticians. Some Japanese argue that Russia needs Japan because of
its fear of China, and many Russians have concluded that it is Japanthat pursues a bilateral partnership directed against China and needs
Russia more. On the surface, this debate is about which side has
greater reason to make concessions on the disputed islands. Since adeal on islands is likely to require compromise from both sides, thisfutile debate serves mainly to awaken both sides to a common interest.
Russians would like to proceed on shared geopolitical objectives
without addressing the territorial question, and Japanese pretend thatthey can regain the islands even as they are edging closer to an energy
deal independent of them. Although it appears that Japan is now wellplaced to achieve a deal, the matter is complicated. First, failure toarrange a compromise that reaches beyond two islands would socontradict the nationalist rhetoric over many years that the public
might deem the losses more than the gains. Second, Russia’scommitment to foreign investment and rule of law may be so uncertainthat Japan could fail to reap the expected benefits. Third, US policies
may still drive Russia toward China or Chinese appeals for regionalism
may still offer an arrangement that reduces the need for bilateral deals.
Finally, uncertainty over North Korea’s nuclear program delays any
clarity over the shape of regional security. After Putin’s reelection
former Prime Minister Mori Yoshiro went to Moscow to redirect
attention to the islands without any signs of success, as Russians
remained confident that the oil pipeline was taking priority over the
territorial demands.23 Meanwhile, the Japanese government and media
showed no signs of debating the merits of seeking a compromise on
three islands or a two-stage approach with temporary arrangements forshared use of two islands.

23

Sankei Shimbun, April 16, 2004, p. 7.

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Gilbert Rozman

The Russian Far East and Territorial Reorganization
In the first half of 2004 old stumbling blocks reappeared in the path of
the new intensity for regionalism. A January decision to annul the 1993
tender results under a production sharing agreement for thedevelopment of the Sakhalin-3 oil and gas project led by the
consortium of ExxonMobil and ChevronTexaco as well as Rosneft
renewed doubts that the Russian side was serious about honoring
investors’ rights. Under these circumstances, of what use was talk of anenergy partnership between the US and Russia that would set theframework for development of the Russian Far East? Putin’s reelection
for a second term as president with a strong mandate to govern led
influential Japanese to reassert the priority of the territorial claims overenergy and other forms of economic cooperation. When Vasilii Saplin
left Sapporo after five years as Russian consul general he warned thatJapanese political circles, economic circles, and the public as a whole
were misreading the situation with the prospect that again relations
would hit an impasse.24 At the same time, China’s “new thinking”
toward Japan and “best-ever relations” with the US were giving way toan assertive foreign policy obsessed with delivering a message overTaiwan and no longer as cooperative in dealing with the North Korean
nuclear crisis. Meanwhile, Sino-Russian relations appeared to draw
closer, defiant of US assertiveness.
In Moscow there is talk of consolidation of territorial units,
reducing the number from 89 to fewer than half that number. The
Russian Far East could emerge with as few as three or four units, oneof which is rumored to be Sakhalin-Kamchatka as a maritime area.
This would become the natural partner for Hokkaido in what might becalled the North Pacific sub-region of the Northeast Asia region.
Economic ties would rest on two cornerstones: Sakhalin oil and gas,and Sea of Okhotsk crabs and fish. Yet, serious problems persisted withcommercial operations in both areas as seen in the fallout from the2004 trial of Yukos’ Mikhail Khodorkovskii as well as new questions
about whether Russia will honor the ten-year old contracts of
Sakhalin-3, and in the continued criminalized control over marine
24

Asahi Shimbun, May 19, 2004, p. 12.

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Sino-Japanese Competition over the Russian Far East

resources, as revealed again in 2003 with the murder in Pusan of
Vasilii Naumov who had exerted almost total control in this area in thelate 1990s.25 Japanese could not count on primacy over fishing. Most
Primorskii krai exports to South Korea were fish, and plans forinvestments in marine culture were advancing.26 More than China,
South Korea was Japan’s rival, including in the sensitive zone aroundthe disputed islands. Even more than Japan, it had reason to beconcerned about rampant export of crime from Russia, since as manyas 70-80 Russian ships can be found in Pusan at any time, bringing
thousands of sailors with passes.27
If the Russian Far East has been unable to capitalize on its mostfavorable export, marine products, due to criminal groups linked to
local administrations as well as to foreign partners, it has had more
success with its most promising import, used cars, despite persistentattempts in the central government to interfere. In parking lots of thearea it is common for 90 percent of the vehicles to have steering
wheels on the right. Prime Minister Viktor Chernomyrdin’s ban onsuch vehicles, the August 1998 devaluation that made Russian vehicles
much cheaper, punitive tariffs in 2003 and steps to remove atransportation surcharge of about $500 in this region by equalizing theprice of Zhiguli cars at all ends of the country were but some of theefforts that did not succeed in blocking the inflow from Japan. Local
residents may accept one alternative: the assembly of South Korean
automobiles in the Russian Far East, as agreed in mid-2003.28
The second administrative entity in a reorganized Far East would
include Primorskii krai. Japan and China might compete most intensely
here, but they would face an active role by South Korea and thespillover from any plan to integrate North Korea with the South andinto a wider region. One battleground is the labor market of Primorskii
krai. China had hoped to gain an edge, but found tight restrictions on
its migrant laborers. North Korea raised its profile after 2000 bycontracting to send construction, agricultural, and other workers. South
25
26
27
28

Vladivostok, April 22, 2003, p. 4.
Vladivostok, October 15, 2003, p. 3.
Vladivostok, April 23, 2004, p. 3.
Zolotoi rog, July 24, 2003, p. 15.

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Gilbert Rozman

Korea tried a different approach: hiring workers inside Russia andsupporting the resettlement of Koreans from Central Asia. Its
investments were said to serve 80 percent of the light industrial
production of Primorskii krai, providing for as many as 9,700 jobs intextiles and packing, mostly for women in small towns who facedsome of the most severe unemployment.29 Yet, Russian workers oftencame drunk or skipped work in the summer to tend their garden plots,
and Koreans managed to get the krai administration to agree to 900
Chinese workers in 2003 as they prepared plans for as many as 2,300
in 2004. New Russian customs procedures and American discoveriesof false certification of Chinese products as “made in Russia” were
threatening the textile business. Officials also complained that goods
destined for export were finding their way into local markets, where
their superior quality gave them an edge.30 As new WTO rules tookeffect in 2005 Korean textile production was ceasing.
Meanwhile, Korean villages such as “Friendship” built by South
Koreans with saunas and other amenities provoked mutual accusations;bribes did not suffice for local officials to grant the right of occupancy
or permission for normal work to those who lacked Russian citizenshipor even a status of “rehabilitated” to those whose families wererepressed and driven from the area. Despite professional qualifications,
recent Korean settlers worked alongside Chinese in the markets.31
Russians speak of Primorskii krai as the gateway to Asia, but it isa maritime region that diminishes a special bond with China. While
China offered in 2003 $1.5 billion to put into projects in the Russian
Far East and leaders in Primorskii krai welcomed good ties that would
be conducive to the use of those funds, such as processing wood
products, they were reserved about other proposals which Japan could
easily match. A Chinese suggestion to support joint processing of fish
was rejected by Governor Sergei Darkin, who argued both that there
are not enough quality fish for the local population and that Japan’s
proposal was more appealing. 32 When the two sides agreed on a
29
30
31
32

Zolotoi rog, November 25, 2003, p. 19.
Zolotoi rog, April 3, 2003, p. 15.
Vladivostok, March 20, 2003, p. 12.
Komsomol’skaia pravda, October 10, 2003, p. 40.

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Sino-Japanese Competition over the Russian Far East

cross-border zone in 2004, Russians were confident that they retained
enough controls to deny China its objectives for freer trade andtransportation.
If ships provide the principal link in the eastern sub-region,
railroad ties offer an important addition in the coastal sub-region.
Local leaders in the Russian Far East, backed by Putin, rest their hopes
on Kim Jong-il to reconstruct the Trans-Korean railroad and they havealready started to link it to the Trans-Siberian south of Vladivostok.33
Japan could assist with transportation routes that solidify Russia’s
regional presence as well as shape the integration of Korea.
If a third administrative entity is established in the Russian Far
East, it is likely to include Amurskaia oblast and other areas to thenorth and northeast. Russian officials will be keen on keeping Chinese
influence from predominating. Already the lumber resources of thearea are allotted to North Koreans working in a large lumber camp,which no longer has the trappings of a prison since a 1997 agreement,
as well as to Chinese.34 Since lumber ranks next to energy and marine
products as the Far East’s export of choice and China is the largest
potential market, Russians face the challenge of arranging economic
ties to serve political objectives. Inside South Korea, Russian workers
find work (about 4,400 of 14,000 Russians recorded in the South are
illegal workers) assembling furniture, much of which is sold in Russia.
Some complain that the wood should be processed in Russia and the
profits kept there.35 The main wooded areas are in this inland area ofNortheast Asia, where population densities are low, lines oftransportation from north to south difficult, and China’s geographicaledge hard to convert into a force for reshaping the Northeast Asia
region.
Construction of an electrical generating station of 340 megawatts
with a line crossing the Amur River from Blagoveshchensk is thecenterpiece of an integrated electricity grid for Northeast Asia that was
discussed in the spring of 2003. Resolution of the North Korean
nuclear crisis could make possible another, even larger, station carrying
33
34
35

Zolotoi rog, July 22, 2003, p. 5.
Vladivostok, June 5, 2003, p. 4.
Vladivostok, January 31, 2003, p. 10.

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Gilbert Rozman

500 megawatts from the Vladivostok area to North Korea. 36 One
report suggested that with an expense of $2 billion an electrical ringfrom Angarsk to the Pacific Ocean and reaching south throughNortheast Asia could yield benefits of no less than $14 billion.37
Chinese were also enthusiastic about energy cooperation with Russia
as the breakthrough that could propel regional cooperation forward.38
While their bilateral objectives contrasted with the multilateral rhetoric
most visible in Russian sources, a new urgency arose from the priority
given in 2003 to development of Northeast China, emphasizing reformof the dilapidated industrial complex in an international context. Amid
new signs of tensions in relations with Japan, including an outcry overnew casualties from chemical weapons left behind in Heilongjiang
province during the war, and continued stalemate over North Korea,
Russia continued to be appealing as a geopolitical partner. After 15
years of difficult economic ties along the border, however, hopes in
China were not high. The unexpected news in 2003-2004 that the
An-Na pipeline would likely receive priority left Chinese scrambling
to find another way of putting a positive spin on the partnership with
Russia.
Khabarovskii krai is the regional base of the Far East-Zabaikal
association and of the presidential representative, Konstantin
Pulikovskii. Its governor, Viktor Ishaev, has claims to leadership, as hejousts with Pulikovskii for authority. The city of Khabarovsk could
become the center of the inland area extending through Amurskaia
oblast or of a separate area through the vast north. Although it is on the
Amur River which forms the border with China, fear of Chinese
migration and economic domination inland where maritime powers areat a distance have led to Ishaev’s tilt toward Japan. That psychology islikely to endure. Yet, Putin’s newly centralized power, which could
promote consolidation of administrative units and economic priorities
could boost a regionalist approach less fearful of China.

36 Utro Rossii, April 12, 2003, p. 1.
37 Vladivostok, April 15, 2003, p. 3.
38 Zhu Xianping, “Zhonge nengyuan hezuo jidui Dongbeiya quyi jingji deyingxiang,” Dongbeiya luntan, No. 2, 2004, pp. 31-34.

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Sino-Japanese Competition over the Russian Far East

After reorganization of Russia’s Far East into three or four
administrative areas with different geographical circumstances andresource endowments, Japan will retain its advantage over China inregionalism for geopolitical and cultural reasons more than economic
ones. US-Japanese cooperation would influence the maritime zone
most, an accord on a process of Korean reunification would make iteasier to balance China on the coastal corridor, and inland fears ofChinese dominance would favor Japan. Putin’s reasoning on
regionalism and the energy politics of Koizumi give Japan the edge in
the Russian Far East as Hu Jintao, finally able to silence Jiang Zemin’s
strategic voice, scrambles to accelerate regionalism based on China’s“peaceful rising.” The decision to make quick concessions to Russia inorder to settle the remaining territorial dispute and to show growing
generosity in supporting Russian economic links are proof ofpragmatism that may give China an edge in the Russian Far East. Theball is now in the Japanese court.

Conclusion
Japan has won the battle over the pipeline route and is positioned togain a balance with China in the Russian Far East, but three factors
suggest this will be a protracted competition. First, because of theterritorial dispute, Japan will not likely seize its advantage. The
planned visit of Putin, if it occurs in early 2005, may reveal Japan’s
priorities. Second, without a development strategy for the Russian Far
East or a commitment to tackle lawless elements, the pipeline project
may become as much a burden as a blessing. Putin’s assertion ofcentral control in September 2004, eliminating the direct election of
governors, could set a more stable course. Three, the absence of an
overall framework of regionalism, including security on the Korean
peninsula, may reflect short-term conditions that will be overtaken
before long. With Sino-Japanese economic ties booming and theposition of the US in Northeast Asia drifting toward multilateralism,
emergent signs of sharpening competition may be overtaken by new
developments.
While the regional context of Northeast Asia continues to change,
the rise of China and Japan’s search for balance in Asia are likely to- 19 -

Gilbert Rozman

persist. Local elites in the Russian Far East can be expected to seek tominimize dependency on China even as they expand economic ties toit. In turn, national leaders are prone to view Japan as a welcome
partner if current tensions are ameliorated. In these circumstances,
China would be wise to downplay competition while stressing theshared benefits of regionalism. Cooperating with the US andembracing diverse globalization, Japan is well-positioned to shape
regionalism if it regards that as its priority. Before that occurs, however,competition with China is likely to grow, and the Russian Far East is
likely to become more significant as a battleground.

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