World in Ukraine: Japan's strong support of Ukraine bolstered by concerns over China

 by Brian Bonner

Some nations -- such as China and India -- show indifference to Russia's war against Ukraine, refusing to help Kyiv financially, criticize Moscow publicly or adhere to Western-led economic sanctions against the Kremlin.

Others, such as Turkey, proclaim solidarity with Ukraine, but refuse to take part in economic sanctions while seeking to capitalize on the rift between the West and Russia.

And then there is Japan, which is 8,000 kilometers from Ukraine and counts only a few hundred Japanese nationals and a few dozen Japanese companies in Ukraine.

But Ukraine has few stronger friends anywhere in the world, politically and financially.

Politically, Japan – with 127 million people, the world’s third largest economy and membership in the G7 industrial democracies – is a strong supporter of sanctions against Russia.

The country will remain so until President Vladimir Putin calls off the war in Donbas and returns Crimea to Ukraine. This stance is likely to be reinforced next year, when Japan hosts the next G7 meeting.

Financially, Japan has made $1.84 billion in commitments to Ukraine since the EuroMaidan Revolution prompted President Viktor Yanukovych to flee power on Feb. 22, 2014. The largest part of the support is a no-interest $1 billion loan so that Kyiv can make long-overdue improvements to its Bortnytska sewage treatment plant, cutting pollution in the Dnipro River, the prime source of drinking water.

Additionally, Japan has given $400 million in direct budget support and made numerous other smaller, though vital, loans, grants and gifts. For instance, Japan has supplied Kyiv’s new police force with 1,500 new energy-saving Toyota Prius squad cars, and is giving Kyiv’s metro at least five new energy-saving cars.

“Japan thinks the Ukraine issue is very important because this is a conflict between the largest country in Europe in size and the second largest country in Europe in size. This has significant implications, not only regional implications, but global,” Japan’s Ambassador to Ukraine Shigeki Sumi said in an interview at the Japanese Embassy in Kyiv this month.

“We can’t sit back, relax and let it happen,” Sumi said. “We have to stick to the established international principles. We are strongly against any attempt or any operations to change the things, boundaries, by force. This is very, very important. This is applicable not only to this region, but to the area where Japan is located – the Far East.”

China has recently been making aggressive moves and additional territorial claims in the South China Sea by creating artificial islands. China’s moves have “already alarmed not only Japan, but the Philippines, Vietnam, Indonesia and Thailand,” as well as the United States, which sailed a U.S. Navy warship recently near an island that China claims.

“For Japan, principle is very, very important,” Sumi said. “Many of these countries just keep quiet. I don’t think they are afraid of Russia. They simply don’t want to be involved in this kind of conflict. They have their own problems and their own issues.”

But cutting off all contact with Russia is not an option.

“We have to keep very strong positions against Russia as long as they continue the destabilization operations in the eastern part of Ukraine and the illegal annexation of Crimea. We should have a very strong and tough position,” the ambassador said. “At the same time it is also important to have dialogue with Russia. If we cut the dialogue with Russia, we have no communication means to discuss how to settle the issue.”

Ukraine has a lot to learn from Japan, including in energy efficiency. The island nation imports much of the oil and natural gas that it consumes and – until the 2011 Fukushima nuclear power plant disaster –also relied heavily on nuclear power.

Unlike Ukraine, the Land of the Rising Sun has learned to become energy efficient.

“Energy efficiency is very, very important both for producing energy and also saving energy,” Sumi said. Ukraine, simply by upgrading its coal generation stations, can make improvements in efficiency. On the consumption side, charging consumers based on usage is important to conservation.

Japan has 8 percent of the world’s gross domestic product, but less than 5 percent of its carbon dioxide emissions. By contrast, he said, China has 11 percent of the world’s GDP but more than 20 percent of its carbon footprint.

While all major Japanese companies are represented in Ukraine, Sumi acknowledged that businesspeople from his nation are cautious about entering such a volatile market.

“My suggestion is to be patient,” he said. “The recovery of the economy is coming. So far I don’t see any Japanese companies leaving Ukraine.”

Ukraine’s government needs to do much more, however, to attract investment, especially in improving rule of law.

Japanese investors are concerned about foreign currency restrictions that restrict the transfer of their profits and also are unhappy with a 5 percent import surcharge that is supposed to expire at the end of this year.

But they are most upset about random, non-transparent and intrusive inspections and investigations from prosecutors seeking company documents.

“This is a very unpredictable and irregular, these sorts of investigations,” the ambassador said. “The government needs more transparency. We do not allow any suspicious deals in Ukraine. But at the same time, when the prosecuting office does make these kinds of investigations, there should be some transparency. It’s happened in the past. Unfortunately, it’s still happening.”

But he said that Japan took a long time to make progress against corruption and, as long as Ukraine shows genuine will to improve and demonstrable progress, he expects his country to continue its support.

“As long as there is a strong will of the government hopefully, and the strong will of the people for change, Japan understands that we should help the people of Ukraine,” Sumi said.

Japan at a glance
Total area: 378,000 square kilometers 
Population: 127 million
Government type: parliamentary government with a constitutional monarchy
Chief of state: Emperor Akihito (since Jan. 7, 1989) 
Head of government: Prime Minister Shinzo Abe
GDP, PPP: $4.6 trillion (2014) 
GDP per capita, PPP: $36,194 (2014)
Main sectors of the economy: motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods

Ukrainian-Japanese relations:
Trade: $822 million (2014)
Exports from Japan to Ukraine: automobiles, electric machines, rubber and resin, optical devices.
Exports from Ukraine to Japan: ores, slag, ash, grains, ferrous metals, aluminum, chemicals. 
Japanese foreign direct investment in Ukraine: $165.5 million (cumulative as of December 2014) 
Main Japanese businesses: Sony, Panasonic, Mitsubishi, Toyota, Honda, Auto International, Nissan Motor, Subaru, Canon, Olympus, Toshiba, JVC, Fujikura, Yazaki.
Sources: World Bank, Embassy of Japan in Ukraine, Central Intelligence Agency, Ukrainian State Statistics Service.

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