Japan Officials Met Metals, LNG Firms in Unusual Moscow Talks

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(Bloomberg) — Japanese officials who visited Moscow last week met commodity exporters along with Russian government representatives in a rare high-level commercial contact between their countries since President Vladimir Putin ordered the 2022 full scale invasion of Ukraine.

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The talks underscored the importance Tokyo and Moscow place on keeping channels of communication open even as Russia’s economy remains under unprecedented Western sanctions over the war. The stated purpose of the May 26-27 visit was to discuss the protection of assets belonging to Japanese companies operating in Russia. 

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The Japanese officials took part in a gathering with Russian businesses, including producers of fertilizers, palladium and aluminum and other metals, as well as suppliers of liquefied natural gas and oil, in addition to meeting their government counterparts, according to people familiar with the matter, who asked not to be identified because the information isn’t public.

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The Russian side took the meetings as an acknowledgment by Japanese officials that the geopolitical environment remains challenging, while leaving open the possibility of restoring broader economic engagement should conditions change, people said.

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The government in Tokyo has repeatedly said the visit wasn’t unprecedented, saying it had sent officials to Russia multiple times a year since the war started. The agenda this time didn’t include new economic cooperation between the two nations, Hidehiko Ishii, director of the Russia division at Japan’s Ministry of Economy, Trade and Industry, said in a June 3 interview. 

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The delegation met with Russia’s Ministry of Economic Development, the Ministry of Industry and Trade and business organizations, and some Japanese companies participated in the discussions, Ishii said, declining to name them or to say how many were involved. 

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The Russian government press service didn’t respond to a request for comment.

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Even as the US and its Group of Seven allies have sought to isolate Russia economically during more than four years of war, the meeting indiciates that some of Washington’s closest partners continue to find it difficult to completely sever ties because of Russia’s role in global commodity markets. The talks also highlight Moscow’s desire to preserve relationships in markets where its presence has diminished, amid Russia’s growing economic dependence on China.

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Prior to the May visit, Japan’s trade ministry said the nation will continue to coordinate with G7 allies on sanctions against Russia and that “the current situation doesn’t allow for pursuing new forms of cooperation with Russia.”

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Still, Asia’s second biggest economy buys LNG from the Russian Sakhalin-2 project under a sanctions waiver. The Iran war that started at the end of February also affected energy-security calculations for Japan, which sourced more than 90% of its crude oil imports from the Middle East. 

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The Middle East conflict also highlighted the risk of disruptions to supplies of fertilizers and aluminum, prompting some Japanese companies to tap Russian suppliers. None of those commodity shipments are subject to sanctions. 

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Dozens of Japanese companies, including Mitsui & Co. and Mitsui O.S.K. Lines, continue operating in Russia, according to a tracker by the Yale School of Management.

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