Putin woos Japan investors, promises pipeline
(Reuters)
Updated: 2005-11-21 14:22

Russian President Vladimir Putin, stressing economic ties with Japan rather than a 60-year-old territorial row, urged Japanese investors on Monday to put more money into Russia's economy and to be more pragmatic in their approach.

"Since my last visit in the year 2000, Russia has changed in a positive way. In our country, the economy has been growing by about seven percent a year ... (but) Japanese investors are still making only very hesitant steps into Russia," Putin told a gathering of some 500 Russian and Japanese business executives.

"Expanding the geography of our business relations will help us expand our ties in general, he told the economic forum, where top Russian executives had a chance to discuss investment opportunities with Japan's business elite.

Russian firms like gas giant Gazprom and state oil company Rosneft attended the gathering, as well as Toyota Motor Corp. and other Japanese firms that have spearheaded a wave of Japanese investment in Russia's growing economy.

Putin's speech made no reference to the dispute over four islands in the Pacific, known as the Northern Territories in Japan and the Southern Kuriles in Russia, that has soured relations between the two countries for decades and prevented them from signing a peace treaty after World War Two.

"The territorial issue is certainly a difficult issue and it is not easy to find a solution," Japanese Chief Cabinet Secretary Shinzo Abe told a news conference.

"It is important that the two governments confirm their political will to have serious talks toward signing a peace treaty."

While Putin spoke to the business leaders, a small band of Japanese protesters gathered near the Russian embassy in central Tokyo carrying banners demanding the islands' return, while sound trucks draped with similar banners blared anti-Russian slogans.

"Japanese people, wake up," said one banner.

"We demand the return of all four islands," said another.

Police were trying to keep the protestors from getting close to the embassy, where security was tight.

Officials have said Putin and Koizumi were unlikely to sign any joint political statements on the territorial row, but more progress was expected on the economic side.

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Russia and Japan have stubbornly refused to budge from their long-held positions on the Pacific islands, which Russia occupied at the end of the war.

Japan has said it will not sign a peace treaty unless they are returned. Russia has offered to hand over two of the four islands, but Japan has rejected the proposal.

Putin, seeking to assuage Japanese fears that China would benefit most from a planned oil pipeline from Siberia, also confirmed Moscow would build the pipeline to the Pacific coast.

"We plan to build the pipeline to the Pacific coast with eventual supplies to the Asia-Pacifc region including Japan," Putin said in his speech at the investors' forum.

State pipeline monopoly Transneft is building the pipeline in two stages. It expects to finish the first stage at Skovorodino, far from the coast but close to China, in 2008.

Japan is keen to win a guarantee that Russia will carry on construction to a port in the Pacific, while China wants the pipeline to head south into its industrial north.

No date has been set for the second stage, and Putin gave no timetable or other specifics.

Putin wants to squeeze more money from Japanese firms to invest in Russia's oil-rich Siberian region, as well its fast-growing machinery and high-tech sectors.

Moscow and Tokyo have long sought to put economic incentives above politics and Putin and Koizumi will use the symbolism of this year's 150th anniversary of trade relations to boost trade between Japan, Asia's No.1 economy, and Russia, the world's No.2 oil exporter.

Current trade turnover between them is heading toward $10 billion a year, still a tiny fraction of Japan's trade with China or the United States.