Alone among Asian nations, Japan has steadfastly supported economic sanctions against Russia for its illegal annexation of the Crimean peninsula and ongoing three-year war in eastern Ukraine, which has killed 10,000 people.
Japan is also among the largest financial donors to Ukraine, providing $1.86 billion in economic grants or loans since the EuroMaidan Revolution that forced President Viktor Yanukovych to flee on Feb. 22, 2014.
It’s no wonder then that the media-friendly Japanese Ambassador Shigeki Sumi is frequently greeted with smiles and appreciation by Ukrainians.
“Now Japan is very well known in Ukraine,” Sumi said in an interview with the Kyiv Post from the Embassy of Japan, just off Khreshchatyk Street near European Square. “Although I don’t speak the Ukrainian language, sometimes people approach me when I am walking down the street and say: ‘Are you the Japanese ambassador? I saw your interview on TV. Thank you very much for all you are doing in Ukraine.”
It’s no wonder, also, that Sumi has great access to and frequent conversations with President Petro Poroshenko. Sumi hosted the president and First Lady Maryna Poroshenko at a private dinner in his official residence last September, several months after the Poroshenkos visited Japan.
“I think he’s working very hard for the betterment of Ukraine and it’s good,” Sumi said. “If you have this kind of family dinner, you get very close.”
In gratitude, Poroshenko designated 2017 as the Year of Japan in Ukraine, with a calendar of special events marking the relationship.
Peace, principles
As for Ukraine’s attempts to recover the Crimean peninsula and control of Russian-occupied areas of the eastern Donbas, Japan also knows something about long-running territorial disputes with Russia.
The two nations have been feuding since the end of World War II over four islands that Russia illegally annexed at the tail end of World War II, which ended with Japan’s announced surrender on Aug. 15, 1945. Russia calls them the Kuril Islands while Japan calls them the Northern Territories.
Just as in Japan’s 62-year-old quest to regain the islands, Ukraine’s success in recovering its lost territories will require patience, planning — and peace, the ambassador said.
“Everybody wants to get it solved as soon as possible. How can they solve it? Nobody wants to settle by war or fighting. Everyone wants peaceful a settlement. It’s nothing to do with patience. We have to have a concrete plan for settlement.”
Patience with Russia is wearing thin in the West.
Japan, as the world’s third-largest economy and a leading democracy, is part of the Group of Seven — or G7 — industrial democracies, including the United States, Canada, the United Kingdom, France, Germany and Italy. As the G7 summit hosted by Japan last summer, the group agreed to lift sanctions if the Minsk peace agreements are fulfilled and apply tougher sanctions on Moscow if the Kremlin escalates its war against Ukraine.
So far, Sumi said, nobody has come up with a better plan than the 2015 Minsk agreements, which require Moscow to end its financing of separatist proxies, withdraw its troops and weapons, return control of the eastern border to Ukraine and allow international monitors unfettered access.
“If somebody has an idea for an alternative to the Minsk peace agreement, I’d like to hear it,” Sumi said. “So far the Minsk agreement is the only concrete measure to which all the parties have agreed.”
No matter how long it takes, Japan will not waver, Sumi said, even if China and other nations don’t follow.
“In this world, we have rules and regulations. We are not living in a jungle,” Sumi said. “We should not change anything by military means or by force. All disputes should be settled by peaceful negotiations. I don’t think it has anything to do with economic gains or losses…If Japan stops upholding the principle, what will happen to world? If everybody started seizing territory by force, what will happen? I think that view is shared by all the Japanese people.”
Economic ties
Bilateral economic ties are not anywhere near what they could be. Ukraine and Japan are not each other’s leading trade or investment partners — not even close, not even in the top 10 list of nations.
There’s a huge mismatch between the size of the economies, with Japan’s 127 million people clocking in with a $4.8 trillion economy, dwarfing the output of Ukraine’s 40 million people, whose economic activity will be measured at only $100 billion this year, if it’s lucky.
Still, there is movement in the right direction.
For starters, relations at the highest levels of both governments appear to be reasonably active and cordial. Poroshenko visited Japan in 2016, a year after Japanese Prime Minister Shinzo Abe visited Kyiv.
This spring, Verkhovna Rada speaker Andriy Parubiy visited Japan while a large Japanese trade delegation came to Ukraine in March.
The Japanese trade delegation included 23 persons and 19 companies. It was organized by the Warsaw, Poland, office of JETRO, which stands for Japan External Trade Organization.
According to its official website, JETRO is a government-related organization “that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO’s core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small to medium size Japanese firms maximize their global export potential.”
Additionally, many of Japan’s leading companies are present in Ukraine’s market. Those include: Panasonic, Sony, Mitsubishi, Toyota, Honda, Auto International, Nissan Motor, Subaru, Canon, Olympus, Toshiba, JVC, Fujikura, Yazaki and Sumitomo Electric Bordnetze.
Since the EuroMaidan Revolution, Fujikura has been a new entry in the Japanese family of companies doing business in Ukraine, while two others —Yazaki and SEBN (Sumitomo Electric Bordnetze) — have expanded their investment, according to the embassy. All three companies supply the automotive industry.
And that’s no accident.
Japan’s prowess in making cars and Ukraine’s advantages to export-oriented manufacturers are a good fit in many ways. Ukraine’s free-trade agreement with the European Union, its educated workers and modest wages are pluses. “What the Japanese company produces here can be exported to European countries tax free. That is a benefit,” the ambassador said.
Altogether, Japan has invested $130 million in Ukraine cumulatively by the end of 2016, a slight dip from the previous year, while Japanese companies employ thousands of Ukrainians.
But there are built-in limitations. Japan and Ukraine are 8,000 kilometers apart and the number of Ukrainians in Japan and Japanese in Ukraine are counted most likely in the hundreds, rather than thousands.
Visa liberalization lies ahead, Sumi predicted. Also, Ukrainians with marketable skills can readily get work visas in Japan while business travelers only have to get visas on their first trips. He expects visa-free travel for short-term stays by Ukrainian tourists is not out of the question in the future.
Spurring investment
Explaining the low level of trade and investment between the two nations, Sumi said that “the reason is very simple. Ukraine does not know Japan and Japan does not know Ukraine. That is changing.”
In a competitive world environment for investment, Ukraine should “increase its public relations and increase its publicity,” he said. “Ukraine can’t sit and relax and wait for investment to come.”
He said Ukrainians “have to promote themselves more” and go to Japan and “sell the advantages of Ukraine.”
While, broadly speaking, Ukraine is “moving in the right direction” in fighting corruption and establishing rule of law, too many incidents of arbitrary abuses of government power are harming the investment climate, Sumi said.
While not naming companies, he said that it’s clear that some Ukrainian companies or vested interests are out to hurt Japanese competitors. Unexpected problems usually arise during licensing renewals or in disputes over taxation. While his intervention often helps Japanese companies prevail, “imagine how much money and energy we spend on this,” the ambassador said. “It’s not good for the business reputation of Ukraine.”
Japanese Ambassador to Ukraine Shigeki Sumi speaks with the Kyiv Post on May 16 in his office at the Japanese Embassy in Kyiv. He arrived for duty in Kyiv on Oct. 22, 2014. (Kostyantyn Chernichkin)
Big aid
More than $1 billion of Japan’s aid comes in the form of a no-interest loan to Ukraine to overhaul Kyiv’s Bortnytska sewage treatment plant to clean the Dnipro River, the prime source of drinking water for Ukrainians
“It’s making very good progress,” the ambassador said. Feasibility studies are “more or less finished” and competitive bids for construction should be held this year. If all goes well, construction could start next year and end by 2022.
Japan has also given some $400 million directly to Ukraine’s budget.
The rest of the $1.86 billion in post-revolution aid includes money for the purchase of 1,500 Toyota Prius police squad cars and new metro trains as well as humanitarian assistance, including help to hospitals.
Health issues
“Japan gives a lot of humanitarian assistance to hospitals and is interested in the area of health reform. It’s a must,” Sumi said. “Ukraine has still a very old-fashioned communist system. Regardless of the quality of the hospital, you get the same money from government. That’s strange. Very few nations in the world have this system.”
A much better allocation of insurance or government money is “payments for service,” he said. “I visited many hospitals in many areas. The conditions are very, very bad.”
The consequences are obvious. Japanese have one of the highest life expectancies in the world, at least 83 years, while Ukraine has among the lowest in Europe, at 71 years.
“There are many reasons,” the ambassador said. “One of the reasons is that Japan has a very good health care system” — one that focuses on prevention of illness and disease.
Other concerns
Sumi started his tenure on Oct. 22, 2014, eight months after the EuroMaidan Revolution ended on Feb. 22, 2014. When he arrived, he felt the passion and the will that drove the nation to depose a dictator.
“Sometimes I feel that passion has a little bit evaporated,” Sumi said. “Sometimes people do forget what they fought for. It’s very important to keep that passion and the will to be better.”
Another concern is the future of young people. He fears that many of the best and brightest Ukrainians have gone abroad for work or are looking for jobs elsewhere. If Ukraine’s economy can’t stop the exodus, he said, the consequences will be unfortunate for the future of the nation.
Enjoying his stay
Aside from the “endless common issues” he discusses with his Ukrainian counterparts, Sumi and his wife relax by enjoying music — operas, ballets and concerts. They can also be found walking in Kyiv’s botanical gardens or traveling to Sofiya Garden in the central Ukrainian city of Uman, 210 kilometers south of Kyiv.
“I don’t have many problems so far or any complaints,” Sumi said. “People are always very kind. We’re enjoying our time here.”
