Territorial disputes and military drills
Vladimir Putin visited Etorofu on August 13, marking his first trip to any of the four islands Tokyo calls the Northern Territories. Prime Minister Sanae Takaichi called the trip "absolutely unacceptable." Foreign Minister Toshimitsu Motegi summoned Russian ambassador Nikolay Nozdrev to receive a formal protest. During a Shanghai Cooperation Organization meeting in Kyrgyzstan on September 2, Putin stated the slide in relations was "entirely Japan’s fault." Chief Cabinet Secretary Minoru Kihara retorted that the damage traces to Russian aggression against Ukraine. The 1855 Treaty of Shimoda placed the contested islands on the Japanese side, while the 1956 joint declaration, which marked its 70th anniversary on October 19, promised Shikotan and the Habomais back to Japan once a peace treaty is signed. For seventy years after the conflict, no Russian official governed Etorofu, Kunashiri, Shikotan, or the Habomai islets. Neither side can claim to be the original inhabitant because the local Ainu people hold that title. Moscow’s title rests on the spoils of a war it joined in its final days, which Tokyo still regards as an unlawful seizure.
Russia’s defense ministry conducted exercises a week before the August 13 visit using 60 warships, 30 aircraft, and 13,000 personnel. These drills included live firing around the disputed islands in the Sea of Japan, the Sea of Okhotsk, and the north-western Pacific. In September, Maria Zakharova demanded that Japan send home the US Army’s Typhon launchers stationed on Kyushu and demanded that Tokyo accept the outcome of the Second World War including its territorial aspects concerning the southern Kuril Islands. This posturing looks weak because military spending reached 44% of all federal spending in the first half of 2026. Janis Kluge of the German Institute for International and Security Affairs reports these costs hit RUB 10.7 trillion ($133bn). The military performance carries a higher price as Japan pursues steady rearmament. Current Washington waivers covering certain energy cargoes run until December 18, 2026.
Economic strain and energy dependencies
Russia faces a deficit that exceeds the finance ministry plan by 70% as net oil tax receipts fell 22% in August. Moscow relies on Japanese energy money to sustain its eastern presence. Mitsui and Mitsubishi own 12.5% and 10% of Sakhalin Energy, respectively. Japanese consortia also own 30% of Sakhalin-1. Sakhalin-2 meets roughly 9% of Japan’s LNG needs. In September, Moscow trimmed the volume of the project’s gas set aside for its own Far East, leaving more available for export. Japanese opinion of Russia, never warm, curdled after the 2022 invasion, and no prime minister could sell a thaw at home.
| Stakeholder | Ownership/Need |
|---|---|
| Mitsui | 12.5% of Sakhalin Energy |
| Mitsubishi | 10% of Sakhalin Energy |
| Japanese Consortia | 30% of Sakhalin-1 |
| Japan | 9% of LNG from Sakhalin-2 |
China negotiates with Russia as a creditor rather than a friend. Sergey Vakulenko of the Carnegie Russia Eurasia Center says the Russian break-even at the border is $125 per 1,000 cubic metres. Chinese officials plan to sign for Power of Siberia 2 at a price near the domestic tariff of $50 per 1,000 cubic metres. This means Russia sells gas to China at a 39% discount compared to other Gazprom clients. Beijing continues to cultivate contacts across Russia’s elite with an eye to whoever follows Putin. The dependence is lopsided. Tokyo keeps its door ajar because energy security demands it, though Japanese utilities like JERA say they could source replacement LNG at a higher cost if forced to. Russia has far fewer places to send Sakhalin’s output after losing Europe.
