The government of Japan has reportedly provided Russia with a proposal that would see the two countries cooperate on joint economic development of the disputed Kuril Islands. The Japanese proposals include economic projects to help develop fisheries and tourism on the islands, as well as a plan that would allow residents of the islands to use a regional digital currency rather than the Japanese yen or Russian ruble.
The two nations had already agreed to begin joint economic projects on the islands after Russian President Vladimir Putin visited the Japanese capital in late 2016. The Putin visit was designed to help warm relations between Japan and Russia, improve military ties, and provide a foundation for greater cooperation on a host of issues.
The move toward greater economic cooperation in the Kuril Islands is part of a larger effort to resolve the seven-decades-old dispute over that territory. The Soviet Union declared war and invaded the islands in the closing days of World War II, and Russia continues to maintain physical control to this day. Japan has long claimed sovereignty over several of the islands, and the dispute has continued to be one of the issues preventing the two countries from signing a formal peace treaty.
The Kuril Islands have been prized for their location, as they lie in an area of the North Pacific that is rich in marine life – providing abundant resources for fisheries. In recent decades, the islands’ mineral deposits and potential for oil exploration have made them an even more attractive prize. From the Russian perspective, the Kurils also occupy a strategic location since they provide Russia with continual access to the Pacific.
While the Japanese proposal is almost certainly just an initial offer for negotiating joint administration of the islands, it is an important first step that provides a potential solution to the question of which currency island residents would use. Russia’s Foreign Ministry has indicated that it will review the offer, but Ministry spokesperson Maria Zakharova stressed that these types of projects need to be undertaken in accordance with Russian law.