By: Pragathi Kowndinya, Research Analyst, GSDN

The year was 2012. Shinzo Abe returned to power as the Prime Minister of Japan. Ever since he occupied the position, he firmly and persistently reiterated in the august ‘National Diet’ of Japan regarding resetting the bilateral relations with the Russian Federation. This was an acute shift from the traditional approach towards its historical rival. Accordingly, Abe envisioned a ‘New Approach’ to formalize ties with Russia. Even the 2016 ‘Diplomatic Bluebook’ of Japan reflected Abe’s geopolitical vision towards Russia which stated that the ‘development of ties with Russia contributes to Japanese interests and to regional peace and prosperity’. However, despite these strategic manoeuvring by Abe, the relations between hitherto rival nations remained low and cold. Series of geopolitical gambits didn’t yield a tangible and acute solution to the historical hustle.

The relations further plunged down with Shinzo Abe stepping down from power. With the outbreak of the Russia-Ukraine War, the animosity among the orthodox rivals was further fuelled. Since then, Japan has imposed a series of sanctions on Russia and has outrightly criticized Russia’s military action in Ukraine and has claimed it as ‘an effort to threaten the post-Cold War world order’. The efforts to revamp the relations thus have reached a stalemate and the diplomatic tone towards Russia has radically changed in the latest Diplomatic Bluebooks of Japan. This deadlock has not just thwarted all the previous diplomatic endeavours to restore ties but can also lead to geopolitical repercussions in Asia, Indo-Pacific and beyond.

Tracing the Roots of the Tensions

• Tussle for hegemony in East Asia

The Sea of Japan (a marginal sea of the Western Pacific Ocean) separates the Russian Far East and the Japanese Archipelago. Japan and Russia had cordial commercial and diplomatic relations in the 1850’s. However, cordiality began to turn into contestations as both the nations urged to exercise their geopolitical and territorial ambitions in the region. By the 17th century Russia had established control over the entire Siberian region. However, Russia’s ambition of expansionism further towards East Asia was hindered by the mighty Japanese empire. The two nations thus contested to control Manchuria and Korea, which led to the outbreak of Russo-Japan War in 1904-1905 when Japan launched a surprise attack on the Pacific fleet of Russia.

The war ended with the ‘Treaty of Portsmouth’ which upheld the Japanese interests in Korea and other parts of East Asia. Thereby Japan emerged as a great power and epicentre of the geopolitical dynamics of Asia. The relations between Japan and the Soviet Union in the aftermath of Communist takeover of Russia from the Tsars Empire in 1917, is also characterized as hostile and indecisive. When Japan took full control of Manchuria in 1931, the USSR extended support to China to protect the Manchurian province. The Soviet Union decisively defeated Japan in 1939 in the Nomonhan (a tiny landscape in Manchurian province) Incident as the Japan controlled Manchurian region and the neighbouring USSR backed Mongolia fought over the border conflicts. Here on, Japan decided to not have any confrontation with the USSR and allied with Britain, USA and other western partners.

• Offshoots entangling the Yalta Conference

In 1945, the USA, USSR and Britain convened over the Yalta Conference to negotiate the post-war plans. The key outcome of the conference was the decision to permit the USSR to attack Japan as a gesture to appreciate Germany’s surrender in the war. Russia’s war on Japan was also rewarded with territorial concessions and influence for the former in the Far East. This was a strategic move by the allied powers to annihilate the axis powers. With this USSR not just aimed to regain the territories lost to Japan including the South Sakhalin and Kuril Islands but also aspired to spike its stakes and influence in the post-war geopolitical order.

As per the agreement, the USSR declared war on Japan on August 08, 1945, two days after the Hiroshima incident and a day before the bombings on Nagasaki. These series of atrocities against Japan by the allied powers came to a grinding halt with the surrender of Japan on 15^th August 1945.

• The pacification process

In the post-war era, Japan was in the complete custody of the USA. This annoyed the USSR, thus, it refused to sign the 1951 peace treaty that restored normalcy and peace between Japan and the Allied Powers. This prolonged the tense atmosphere between the USSR and Japan. However, in 1956 Soviet-Japanese Joint Declaration was inked to end the hostility and re-establish diplomatic relations. This declaration also gave impetus to discuss a permanent peace treaty and resolve territorial apprehensions.

However, these peace efforts were derailed amidst the Cold War bipolarities. Also, Japan and Russia are unable to strike a practical and tangible peace treaty even to this day, due to their respective territorial claims over the Kuril Islands, in the Northern part of Japan.

• The chaos during Cold War

The Japan-Russia tensions accelerated further as a proxy of the cold war bipolarity. Japan, which was an ally of the USA, was deemed by the latter as a bulwark to suspend communist expansionism in Asia. As a fallout of the Cold War, USSR made military build-up in the Pacific region in the vicinity of Japan. On the other hand, Japan was compelled by the United States to check the Soviet expansion in the Asia-Pacific in the aftermath of Soviet annexation of Afghanistan in 1979. During the Reagan administration in Washington DC, Tokyo sharply aligned with the US to propagate the narrative of ‘Soviet threat’. Japan welcomed the presence of the US military forces in the Western Pacific and pledged to thwart the perils propelling from the USSR camp.

In the 1980’s Tokyo imposed a series of economic sanctions on the USSR for the latter’s Afghan invasion. Japan continued to strongly oppose the stationing of the Soviet troops in the Kuril Island chain (the Northern territories) which was captured by the USSR during the ultimate days of the Second World War. Japan reiterated the Soviet presence in the Kuril Islands as evidence for the latter’s expansionist and unfair hegemonic motives.

With Mikhail Gorbachev assuming power as the President of the USSR, a comparatively flexible diplomatic stance was seen towards Japan. However, the deadlock over the suzerainty of Kuril Islands (Northern territories) was still a pivotal gridlock in the path of unlocking normalcy and peace among the nations and the leaders also emphasized that the economic and diplomatic deadlock cannot be rectified until the issue over the Kuril Islands is been solved. Meanwhile, even Japan didn’t express any strategic interest towards resolving disputes and restoring relations with the USSR and was highly tilted towards its western allies.

Post-Cold War: A Citation to Reset the Ties

With the end of the Cold War and the disintegration of the USSR, Boris Yelstin occupied the helm in the Russian Federation. President Yelstin met his Japanese counterpart Prime Minister Ryutaro Hashimoto and both of them resolved to navigate the territorial disputes over the Northern territories in a peaceful and mutually acceptable way. The leaders also unveiled the ambitious ‘Hashimoto-Yeltsin Plan’ in 1998 which aimed at promoting economic cooperation and financial assistance among the nations.

Despite spurring limited economic cooperation during this period specifically as an impact of personal bonhomie among the leaders, a lasting solution to the territorial disputes couldn’t be achieved. Infact, in 1998 Russia proposed to give Japan a special status over the Kuril Islands with Moscow being a transitory legal regime. Regardless of these efforts, an enduring solution to the historical territorial disputes couldn’t be realized due to change in leadership and other geopolitical and geoeconomic reasons. These territorial differences over the Kuril Islands (Northern territories) are a major reason for the freeze of relations in economic, trade and other realms, even for this day.

The Strategic Game of Alliances and Geopolitical Agilities

One of the significant impediments that are prevalent across the globe, for restoring the bilateral tensions between any two states, is the way in which the global power alliances and partnerships have been crafted. The rivalry between two nations can deepen not because of mere bilateral factors but also due to the larger geopolitical or geoeconomic repercussions.

• The ripple effect of Russia-Ukraine conflict

With respect to Japan-Russia tensions, the relations between the two states have hit a new low, as a spill-over effect of the Russia-Ukraine conflict. The 2022 Diplomatic Bluebook of Japan strongly condemned Russia’s invasion of Ukraine. Then Prime Minister of Japan Fumio Kishida claimed that ‘it can no longer carry-on the relations with Russia in the same way it used to’ thereby Tokyo joined other G-7 nations and imposed a series of stringent economic sanctions on Russia.

For example, it banned the ability of the IMF and World Bank to finance Russia. Japan joined the G-7 countries to isolate Russia from the international financial system and removed certain Russian banks from the SWIFT arrangements. It also prohibited the Japanese companies from making new investments in Russia and revoked MFN status acclaimed to Russia. Japan has also referred Moscow to the International Criminal Court (ICC).

In the backdrop of the Russia-Ukraine War, Tokyo also revived the debate with respect to the authority over the Northern Territories and has aggressively exclaimed that it is ‘an inherent of Japan, but is currently occupied by Russia illegally’. In retaliation, Russia has conducted military exercises in the disputed Islands of Northern territories and has fired missiles in the Sea of Japan. Further, Moscow has designated Japan as an ‘unfriendly country’ and has withdrawn from the ‘Japan-Russia Dialogue’. This reversion to a hard-line approach by both the nations has made the decades of ‘New Approach’ diplomatic efforts go in vain and futile and the relations between Tokyo and Moscow are lowest since the post-cold war world order.

• Ignitions due to Geopolitical Nexus

The ideological affiliations of the respective states and the bloc politics indeed impact the bilateral relations. Though 21st century geopolitics is defined as multipolar and multi-alignment in nature, ideological and strategic tilt is definitely witnessed among the global power players. Such geopolitical dispositions severely impact on a broader spectrum, leading to security concerns, economic repercussions and other geopolitical vulnerabilities. The tensions between Japan and Russia are not indifferent from this geopolitical game.     

The spiking alliance between the USA & Japan and voicing out for the autonomy of Taiwan on the one hand, an ‘all weather partnership’ evolving between Russia and China on the other end, surge of relations between Russia and North Korea in terms of military and economic cooperation and rising geopolitical animosity and trade wars between the US and China are clearly encapsulating an ideological and geopolitical bifurcation in the Asia-Pacific domain. As an impact, the Russia-Japan tensions are also soaring to new heights who are technically placed in opposite geopolitical camps.

For example, Shinzo Abe’s ‘New Approach’ was frequently opposed by the Obama administration in Washington DC. Overcoming all the obstacles from both within the home and abroad Abe was firm in resetting ties with Russia. Infact, the core objective of Abe’s ‘New Approach’ towards Russia was not just to break the orthodoxy and restore relations with Moscow, but also had larger geopolitical ambitions. Abe perceived that by re-establishing ties with Russia the spiralling nexus between Moscow and Beijing can be broken; thereby the revolutionizing Chinese expansionism in Asia can be counterbalanced. However, Abe’s vision of restoring balance of power in the Asia Pacific wasn’t fruitful and with the outbreak of Russia-Ukraine war the bilateral relations slipped down to much more awful frontiers.

Robert D. Kaplan in his renowned work “The Revenge of Geography’ exclaims, “Geography and history demonstrate that we can never discount Russia. Russia’s partial resurgence in our own age following the dissolution of the Soviet empire is part of an old story”. The historical tensions between Moscow and Tokyo, thus, cannot be ever understated. With Washington DC seeking to end the Russia-Ukraine conflict and normal ties with Russia under Trump 2.0, Japan might encounter a newer set of challenges to align and balance its strategic interests with both the USA and Russia. With growing Chinese military might and maritime presence in the South China Sea and in other regions of East Asia and Beijing’s unhindered support to Russia and North Korea can further foil Japan’s interests and strategic autonomy in the region.

Not just that, any counter-measures, from Tokyo’s club, can ultimately make the entire Indo-Pacific and Asian landscape volatile, harming the collective security and balance of power of the region! ‘Anarchy’ being an unsaid rule of the international system, the sovereign geopolitical players, thus, be vigilant of the fact that the orthodox bilateral tensions should not manifest anywhere else in the world, in any form, either on land or in air or in the blue oceans. Instead, global peace, security and prosperity should be the ultimate motto of the geopolitical bulwarks either across respective geographic borders or in the larger geopolitical latitude.             

By: Sandhya Ladwal, Research Analyst, GSDN

In recent years, Vietnam has emerged as a dynamic player on the global manufacturing stage, capturing the attention of businesses and investors alike. With its strategic location in Southeast Asia. Vietnam is rapidly transforming into an attractive alternative to traditional manufacturing powerhouses. As companies seek to diversify their supply chains and minimize risks, the country’s robust infrastructure, favorable trade agreements, and competitive labor costs have positioned it as the new heart of global manufacturing. Vietnam is fast becoming a pivotal hub in the world of manufacturing.

Introduction

As the world grapples with shifting economic landscapes and the need for resilient supply chains, Vietnam has emerged as a formidable player in the arena of global manufacturing. With a unique blend of competitive labor costs, strategic geographic location, and government initiatives aimed at fostering foreign investment, Vietnam has positioned itself as a viable alternative to traditional manufacturing powerhouses like China. The Vietnamese government has invested heavily in modernizing transportation networks, enhancing logistics capabilities, and establishing free trade agreements that open the door to international markets. This proactive approach has not only attracted foreign direct investment but has also encouraged local businesses to innovate and scale their operations.

Moreover, the COVID-19 pandemic has underscored the importance of diversification in global supply chains. Many companies are reevaluating their dependence on a single market, prompting them to seek out alternative manufacturing hubs.

Economic Growth of Vietnam

Vietnam’s rapid ascent as a manufacturing powerhouse is underpinned by several key economic growth drivers that have catalyzed its transformation into a global manufacturing hub. One of the most significant factors is the country’s strategic positioning in Southeast Asia, providing easy access to major shipping routes and trade markets. This geographical advantage allows manufacturers to streamline logistics, reduce costs, and enhance delivery times, making Vietnam an attractive option for both foreign and domestic investors.

Another crucial driver is the Vietnamese government’s commitment to economic reform and liberalization. The Doi Moi reforms initiated in the late 1980s have paved the way for a more market-oriented economy, encouraging foreign direct investment (FDI) and facilitating the establishment of free trade agreements. Notably, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) have opened doors to new markets while reducing tariffs, creating a favorable environment for exports.

Furthermore, the ongoing shift in global supply chains—accelerated by factors such as the U.S.-China trade tensions and the COVID-19 pandemic—has prompted many companies to diversify their production bases. As businesses seek to mitigate risks and reduce reliance on a single country, Vietnam has emerged as a preferred destination due to its competitive labor costs, improving infrastructure, and supportive business environment.

Foreign Direct Investment Attracting Global Players

Foreign Direct Investment (FDI) has emerged as a pivotal catalyst in Vietnam’s ascent as a global manufacturing powerhouse. As multinational corporations seek to diversify their supply chains and reduce reliance on traditional manufacturing hubs, Vietnam stands out as an attractive alternative due to its strategic location, competitive labor costs, and improving infrastructure.

The companies from various sectors ranging from electronics and textiles to automotive and consumer goods are increasingly pouring capital into Vietnam. Notable brands such as Samsung, Intel, and Nike have expanded their operations, contributing to a robust manufacturing ecosystem. This influx of investment has created jobs, technological transfer, and skill development, lifted the overall economic landscape and enhanced Vietnam’s competitive edge in the global market.

Moreover, Vietnam’s participation in numerous free trade agreements (FTAs) has opened doors to new markets, making it an even more enticing destination for FDI. By reducing tariffs and eliminating trade barriers, these agreements enable foreign companies to access not only the Vietnamese market but also broader Southeast Asian consumers. Vietnam into the global manufacturing spotlight. As the country continues to attract global players, it solidifies its position as a key player in the supply chain landscape, shaping the future of manufacturing on an international scale.

The Future of Vietnam’s Global Supply Chain

As we look toward the future, Vietnam stands poised to solidify its role as a key player in the global supply chain. The country has been experiencing a remarkable transformation, driven by a confluence of factors that position it as a formidable alternative to traditional manufacturing hubs like China. With its strategic location in Southeast Asia, a growing workforce, and favorable investment climate, Vietnam is attracting businesses looking to diversify their supply chains and reduce dependency on any single market.

Vietnam’s commitment to improving its infrastructure is paving the way for more efficient logistics and transportation networks. The government has invested heavily in upgrading ports, roads, and railways, which are crucial for facilitating the swift movement of goods. This enhanced connectivity not only supports domestic businesses but also positions Vietnam as an attractive location for foreign direct investment (FDI), as companies seek to capitalize on streamlined supply chains.

Trade agreements are also playing a pivotal role in Vietnam’s ascent. The country has entered into numerous free trade agreements (FTAs) with key markets, including the European Union and countries within the Asia-Pacific region. These agreements reduce tariffs and open up new markets for Vietnamese exports, further integrating the country into the global economy. As companies around the world seek to mitigate risks and embrace a more resilient supply chain strategy, Vietnam’s position as a reliable manufacturing partner will only grow stronger.

Vietnam is set to emerge as a cornerstone of global production, driving economic growth and development for years to come. By embracing strategic investments and fostering a culture of innovation, Vietnam is not just adapting to the global market is shaping them.

Conclusion

The exploration of Vietnam’s remarkable ascent as the new heart of global manufacturing, it’s clear that this dynamic nation has positioned itself as a formidable player on the world stage. With its strategic geographical location, a young and skilled workforce, and a commitment to innovation and sustainability, Vietnam is not just an alternative to traditional manufacturing hubs; it is redefining the landscape of global production. As businesses and investors turn their eyes towards this vibrant economy, the potential for growth and collaboration is immense. Whether you’re an entrepreneur seeking new opportunities or a consumer curious about the origins of your favorite products, Vietnam’s rise is a story worth watching.