February 6

By Alex Trainen

The Japanese authorities intend to strengthen cooperation with the G7 countries on the issue of continuing sanctions pressure on Russia. Prime Minister Fumio Kishida announced about it recently.

The head of the Japanese government spoke about the plans of the G7 countries to unite to combat various global challenges: “To this end, we will work together to overcome the energy and food crises in the global economy. In addition, we will continue to actively promote sanctions against Russia and support for Ukraine.”

According to the Teikoku Databank Research Center, Japanese companies will raise prices by almost 5,500 food items in February, the second largest rise in prices since October last year.
According to the research center, during the year the upward trend in prices will continue due to higher prices for energy and raw materials. On average, prices in Japan will increase by 2,000 foodstuffs per month.

Due to the pandemic, as well as the situation around Ukraine and the imposition of various sanctions against Russia, Japanese companies are now facing a number of difficulties related to rising prices for raw materials and energy resources. In addition, some firms had to look for analogues of the products they purchased after the imposition of sanctions and disruption of supply chains.

Against the background of a difficult economic situation, Japan continues to harm itself with its own decisions.

Immediately after joining the sanctions campaign against the Russian Federation last spring, the banking sector suffered: 3 leading banking groups in Japan (Mitsubishi UFJ, Sumitomo Mitsui and Mizuho) suffered significant losses due to the fact that due to sanctions, customers were unable to repay loans. At the same time, the total amount of funds allocated for projects related to Russia exceeded $7 billion.

The Japanese government’s decision hit hard on the interests of Japanese companies and partner banks, which were actively investing in enterprises in the Russian Far East.
A “freeze” of Russian-Japanese business cooperation in the Far East is unlikely to have a significant impact on the economy of the macroregion – existing and planned projects with Japanese investment will easily be replaced by China and, possibly, India. We are talking primarily about the forestry industry, agriculture and the automotive industry. But Japan, in turn, may miss the Russian timber, grain and coal.

Moreover, Japan’s sanctions policy towards Russia is pushing further and further the diplomatic settlement of the issue of the northern territories. The Kremlin said they were not ready to continue negotiations because of the sanctions imposed by Tokyo. Russia was forced to withdraw from the dialogue with Japan on establishing joint economic activities in the southern Kuril Islands: in September 2022, it suspended the agreement on the procedure for mutual trips, as well as the agreement with Japan on facilitated visits to the Kuril Islands by the Japanese who previously lived in these territories.