Japan Commits Russian Asset Profits for War Material for Ukraine

While consistent with G-7 policy which Japan approved, it may harm Japan's security

The Japanese government is preparing to use proceeds from frozen Russian assets for Ukraine.  The money, $3.3 billion, helps to underwrite a larger loan that was approved by G-7 leaders in June.  The total G-7 loan is $50 billion. Ninety percent (90%) of the money is to the purchase of weapons and ammunition. Ten percent (10%) will go to funding the Ukrainian government.  The loan is guaranteed by the "profits" from the frozen Russian assets.  Therefore, the "loan" is only window dressing for a grant, as Ukraine will never pay it back.

Japan is not a NATO country.  Its agreement in June to the G-7 transfer of gains from Russian assets violates international law, according to experts, and sets Japan up to face additional problems vis a vis Russia.

Kishida at the 2022 Quadrilateral Security Dialogue meeting with Australian prime minister Anthony Albanese, US president Joe Biden and Indian prime minister Narendra Modi

Japan’s enthusiasm to support the US and Europe is based on its desire to keep strong US support for Japan’s core security interests. Even so, Japan is taking an action with political, strategic and legal complications that fuels instability instead of reinforcing Japan’s regional security. It is especially intriguing that Japan’s support for the Ukraine enterprise comes at a time when Ukraine is starting to crumble internally and where it faces a manpower crisis.

One possible ramification is the Russians may cancel Japan's participation in the Sakhalin oil and gas project.  That project includes Russian company Gazprom and two major Japanese conglomerates, Mitsui and Mitsubishi. 

A number of Japanese companies have already signed contracts for gas and oil.  Included are

• Kyūshū Electric Power Company: 0.5 million tonnes per year – 24 years (June 2004)

• Tokyo Gas: 1.1 million tonnes per year – 24 years (February 2005)

• Toho Gas: 0.5 million tonnes per year – 24 years (June 2005)

• Hiroshima Gas Co. Ltd: 0.21 million tonnes per year −20 years (April 2006)

• Tōhoku Electric Power Company: 0.42 million tonnes per year – 20 years (May 2006)

• Osaka Gas: 0.20 million tonnes per annum – 20 years (February 2007)

• Chūbu Electric Power Company: 0.5 million tonnes per year – 15 years (August 2007)

It isn't clear if it is in Russia's interest to cancel Japan's participation in Sakhalin, but Russia has the option to do so.

For some time and in many engagements, Japan and the Russians have been trying to negotiate a peace treaty (essentially ending World War 2) and sorting out the future of the northern territories that Russia currently holds.  These discussions have not gone anywhere recently, but this gives the Russian government a strong excuse to formally discontinue future negotiations.

Russia, China, North Korea

The Japanese government is surely aware of the growing relationship between China and Russia, and joint exercises both have held to intimidate Japan, Korea and the United States.  Japan's self-defense force is tiny, undermanned, and incapable of defending Japan by itself.  The Russians and Chinese may use Japan's decision on frozen Russian assets as an excuse to crank up more military threats against Japan and Japanese interests.  For example, the Russians may come out supporting Chinese claims to the Japanese-administered Ryukyus islands, or even supporting a rather weaker Chinese sovereignty claim over Okinawa (which houses vital US military bases and operations). 

Japan's main regional concern is China and its creeping efforts to expand in the First Island Chain by pressurizing Taiwan and in its rocky relations with the Philippines.

Japan also is concerned about North Korea's growing nuclear arsenal and the development of ballistic missiles with nuclear warheads.  Japan has fallen far behind in ballistic missile defenses, recently rejecting the idea of buying Aegis Ashore, probably the best defense against ballistic missiles currently available.  Russia has indicated it is preparing to step up military cooperation by the North Koreans, which could mean the future transfer of Russian air defense systems to North Korea, and possibly the sale of modern fighter jets and bombers.

While Japan probably believes it can manage relations with North Korea, that image is a North Korea without close allies and only in pursuit of its own geopolitical objectives (which leaves Japan on the sidelines). But if a bigger regional conflict brews up, North Korea could play a role in an oppositional alliance that would threaten Japan.

While Japan is spending more on defense, it will be years before Japan can realize any benefits.  Meanwhile Japan has a recruiting crisis in its military, as most young Japanese do not want to serve and don't have to do so, as there is no conscription.

In June Japan's prime minister Fumio Kishida and his government have a disapproval rating of more than 60%.  Some in Tokyo say that he will be replaced in September when his Liberal Democratic Party holds leadership elections.  While the issues are local and not foreign policy or defense related, it is not clear if a new leadership will share Kishida's enthusiasm to align with the US and the Europeans on Ukraine.

It is in Japan’s interest, given the ambiguities of US defense commitments in the region and its preparedness and capability to fulfill its assumed obligations, to try and maintain a conciliatory attitude, as best it can, with China, North Korea and Russia. Using Russian asset profits to buy war material for Ukraine, in that light, seems like a bad policy.