Japan, Russia Sign Deals Worth $2.5b

Japan launched a fresh effort Friday to overcome a deadlock in a territorial dispute with Russia by announcing bilateral economic deals worth ¥300 billion ($2.5 billion).

The more than 60 deals, in sectors such as energy, health care and transport, are part of a push by Japanese Prime Minister Shinzo Abe to soften Moscow’s resistance to Tokyo’s claims on four islands to Japan’s north that are administered by Russia, news outlets reported.

The islands were seized from Japan by the Soviet Union at the end of World War II and are now considered by Russia to be an integral part of its territory.

“The total value of Japan’s contribution in investment and loans, including through agreements between private sector firms, is around 300 billion yen ($2.54 billion),” Kyodo said, quoting Deputy Chief Cabinet Secretary Kotaro Nogami.

Economic cooperation agreements are based on the eight-point plan, put forward by Japanese Prime Minister Shinzo Abe during his meeting with Putin in Sochi on May 6. It includes contributions from the private sector, and is intended to boost cooperation in the energy sector, small- and medium-sized business and the industrial development of the Russian Far East. It also includes provisions on cooperation in high-tech industries, including nuclear energy, and humanitarian exchange.

Among the new deals, Japanese trading house Marubeni Corp. and Russian oil giant OAO Rosneft will jointly develop a gas field off the southwestern coast of Russia’s Sakhalin island, close to Japan, Tass reported.

Russian gas giant Gazprom and Japan’s Mitsui & Co. and Mitsubishi Corp. will work together to develop gas fields and build liquefaction facilities in the Yamal Peninsula, in Russia’s north.

Separately, Russia and Japan plan a $1 billion fund for equity investments in bilateral projects such as pharmaceuticals and energy.

The Russian Direct Investment Fund and Japan Bank for International Cooperation will each invest $500 million in the fund, according to RDIF Chief Executive Kirill Dmitriev.

Dmitriev said 20 joint investment projects are planned, with four or five likely in the next six months. The project areas include agriculture, airport logistics, manufacturing and health care, he said.

The bank will invest in over 20 projects, Dmitriyev said at the Russian-Japanese business forum in Tokyo. RDIF will hold a 49% stake in the fund against JBIC’s 51% stake, and the volume of investment will be proportionate to stakes.

The joint fund will invest in projects in the agricultural, infrastructure and other spheres.