Russia, Japan agree on joint development of disputed islands

Russia and Japan have finally hammered out an agreement to jointly develop the four disputed islands in Northern Pacific and hold talks on the details of the joint economic development plan, removing the main obstacle that stands in the way of a bilateral peace treaty.

Japanese Prime Minister Shinzo Abe (l) with Russian President Vladimir Putin

Japanese Prime Minister Shinzo Abe announced the agreement today at the conclusion of talks with Russian President Vladimir Putin.

Japan and Russia have agreed to hold talks on joint economic development of the four islands - Iturup, Kunashir, Shikotan and Habomai rocks – that are at the center of a territorial dispute between the countries.

Japanese Prime Minister Shinzo Abe announced the agreement on Friday at the conclusion of talks with Russian President Vladimir Putin.

The talks promise to be difficult as the countries disagree under whose laws such development would occur. Russia controls the islands, but Japan claims sovereignty over them too.

Abe said that joint development would be an important step toward a peace treaty. Japan and Russia have not signed a treaty ending World War II because of the island dispute.

Besides Japan and Russia, some individuals of the Ainu people are also party to the Kuril Islands dispute, also known as the Northern Territories dispute over sovereignty of the South Kuril Islands.

The disputed islands, which include Iturup, Kunashir, Shikotan and Habomai rocks, like other islands in the Kuril chain that are not in dispute, were annexed by the Soviet Union in the aftermath of the Kuril Islands landing operation at the end of World War II.

The disputed islands are under Russian administration as the South Kuril District of the Sakhalin Oblast. They are claimed by Japan, which refers to them as its Northern Territories or Southern Chishima, and considers them part of the Nemuro Sub-prefecture of its Hokkaido Prefecture.

The San Francisco Peace Treaty with Japan in force from 1951 states that Japan must give up all claims to the Kuril Islands, but it also does not recognise the Soviet Union's sovereignty over the Kuril Islands. Furthermore, Japan claims that at least some of the disputed islands are not a part of the Kuril Islands, and thus are not covered by the treaty. Russia maintains that the Soviet Union's sovereignty over the islands was recognised following agreements at the end of the Second World War. However, Japan has disputed this claim.

Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin are in Tokyo to wrap up a two-day summit on an economic cooperation agreement and a protracted territorial dispute that has prevented their countries from signing a peace treaty to end World War II.

The Russian and Japanese leaders of are set to witness the signing of a raft of business agreements in Tokyo, after agreeing the previous day to seek economic cooperation on the disputed islands.

In five hours of discussions at a hot-spring resort, the two leaders ''talked about a special system for joint economic activity on the four islands and the peace treaty,'' Abe told reporters on Thursday in Nagato, southwestern Japan.

Disagreement over sovereignty of the four islands - known as the Northern Territories in Japan and the Southern Kurils in Russia - has prevented the two countries from signing an official peace treaty for seven decades.

Putin and Abe ordered their officials to start detailed negotiations on the terms and format for economic cooperation on the islands, Kremlin foreign policy aide Yuri Ushakov told reporters after the talks. The joint plans in areas including medicine, tourism and fisheries will be implemented on the basis of Russian legislation because the islands belong to Russia, he said.

The agreement also reflects the urgent needs of both countries. Russia has been starved for investment and trade amid low oil prices, and international sanctions over its actions in Ukraine. Japan, on the other hand, is need of diversifying energy sources, with its nuclear power industry in trouble in the aftermath of the 2011 Fukushima disaster.

The deals to be signed today include a $1 billion joint fund to invest in Russian projects, including energy and infrastructure, over the next three to five years.

Abe and Putin are expected to announce the agreements at a joint press conference in Tokyo later in the day. The two leaders will also attend a Russia-Japan business forum and Putin will visit a judo centre in the capital.

''The atmosphere in the meeting was very good,'' Abe said. At the beginning of their discussions, he said he hoped Putin, who arrived several hours late for the talks, could relieve his fatigue by taking a soak in the hot spring. Putin thanked Abe, and said he hoped their meetings will contribute to the development of relations.

A key to improved ties is the sovereignty of the four islands that the Soviet Union invaded at the end of World War II, expelling all 17,000 Japanese residents. Japan's official position is that the islands - home to rich fishing grounds - are an inherent part of its territory and are under illegal occupation.

''We talked about freedom for the former islanders to visit their former homes,'' Abe said, adding that he'd handed Putin letters from some of them, including one written in Russian. ''In the meeting I kept in my heart the feelings of the islanders whose average age is 81 and who don't have much time left.''

Russian energy minister Alexander Novak told reporters in Nagato on Thursday that 23 agreements and memorandums have been prepared between Russian and Japanese companies. The firms include Novatek PJSC, Rosneft PJSC, Gazprom PJSC on the Russian side, and Mitsui & Co., Marubeni Corp and Tokyo Electric Power Co Holdings Inc in Japan.

The two countries are discussing 65 deals, spanning a range of sectors, including energy, infrastructure and health care, Alexey Repik, chairman of the Russia-Japan Business Council said in an interview in Tokyo this week. Japanese investment in Russia rose by 51 per cent in 2015, even as total foreign investment fell by more than 70 per cent.