I spotted this recent Economist article (I have a paper subscription; call me retro) over lunch yesterday, and was surprised to see that Japanese industry, after decades of wait (see article below), has finally bought Russian fuel. About time.
Living in Hokkaido for more than twenty years now has given me a number of insights by osmosis regarding our extremely proximate Russian neighbor (in three places — Wakkanai, Nemuro, and Rausu — mere kilometers away), and how that affects business.
First, Japanese and Russians tend not to get along. We still have no peace treaty (merely an armistice) with Russia after the 1945 seizure of the Northern Territories (and the big loss of southern Sakhalin, still called by its prewar name “Karafuto” by not a few Hokkaidoites). We also get occasional articles in the Hokkaido Shinbun reminding the public of pre-surrender Soviet submarine raids off Rumoi, and the impending invasion of northern and eastern Hokkaido before McArthur stepped in. Old people still remember postwar Russian concentration camps and forced repatriations from lands they feel they rightfully settled. And even today, the rough-and-tumble nature of the Russian that Hokkaidoites most frequently come in contact with (the sailor) was at the heart of the exclusionism behind the Otaru Onsens Case. The Japanese military, excuse me, “Self Defense Forces” still have a very strong presence up here (even building our snow sculptures) to ward off possible Soviet invasions, and keep us from getting too friendly with (or receive too many Aeroflot flights from) the Rosuke.
Second, Hokkaido has for years been unable to take advantage of the goldmine just off their shores. Potential deals with Sakhalin have not only been stymied by foot-dragging government bureaucrats (and the occasional businessman who, according to business contact Simon Jackson of North Point Network KK, cite business deals gone sour with the Soviets around three or four decades ago!). The most ludicrous example was where overseas energy interests were considering opening offices in Sapporo in the early 1990s (for Sapporo’s standard of living was far higher than that of Yuzhno-Sakhalinsk). But they took one look at the toolshed that was essentially the Hokkaido International School back then and decided their relocated families needed better educational opportunities. The Hokkaido Government has since rectified that with a much nicer building for HIS, but it remains in the annals of bungled policy and opportunities. Thus Sapporo missed out on all the gobs of riches that oil money provides anywhere (viz. Edmonton or Calgary) as the end of the era of cheap petroleum makes exploration and development economically feasible just about anywhere.
Third, as the article demonstrates below, Tokyo seems to be skipping over Hokkaido again with its first LNG deal. If we had set up the infrastructure when we had the chance, we could be getting some of that value-added. Granted, doing business in Russia (what with the shady elements posing as dealers and administrators) is pretty risky. But it seems in keeping with the historical gormlessness of Hokkaido (what with all the crowding out of entrepreneurial industry through a century of public works), and the maintenance of our island as a resource colony of the mainland. See an essay I wrote on this way back in 1996, and tell me if much has changed.
In fact, it seems the only reason Japan has come round to dealing with Sakhalin at all is because increasingly mighty China is squeezing them out of the market, according to The Economist below.