4 November 2015

Masaki IshikawaDirector,

Japan-Russia Economic Affairs Division,European Affairs Bureau,

Ministry of Foreign Affairs

Putin, 22%

Person Besides Putin, 53%

No Idea, 26%

Russian domestic politics

June 2015

December 2013

Who do you want to be the next President ?

（Source：Levada center）

Approval rating for the President Putin

Putin, 66%

Person Besides Putin, 23%

No Idea, 11%

84

60

65

70

75

80

85

90

95

Jan‐11

May‐11

Sep‐11

Jan‐12

May‐12

Sep‐12

Jan‐13

May‐13

Sep‐13

Jan‐14

May‐14

Sep‐14

Jan‐15

May‐15

Sep‐15

May 2012Returning to President

May 2014Annexation of Crimea

September 2015

K-ISHIKAWA

30

40

50

60

70

80250

500

750

1000

1250

1500

6/1 8/1 10/1 12/1 2/1 4/1 6/1 8/1 10/1

6.48.2 8.5

5.2

▲ 7.8

4.5

4.33.4

1.30.6

▲ 3.3?

▲ 10

▲ 5

0

5

10

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Stock  (RTS index)

Brent crude oil 

( USD/ barrel in brackets)

Ruble (per USD. (official rate))

Current Russian Economy

Recent Stock, Ruble and Crude oil

Russian stock prices and ruble exchange rates significantly affected by the plunge in crude oil prior.,  Ex. 33.6 RUB/USD (28 June 2014) ⇒62.3RUB/USD (9 October 2015)

Inflation rate in Russia in 2014 reached 11.4% (6.5% in 2013). Inflation on food products accelerated since August 2014, after introduction of the retaliatory measures against the US and EU. 

（USD/barrel）

（RUB/USD）（index）

856.4

62.3

33.61421.1

Recent Inflation rate（%）

49.5

(125)

(100)

(75)

(50)

(25)

115.2

Recent GDP growth rateSource: the Federal State of  Statistics Service

Estimate rate in 2015・EDM ▲3.3%・BoR ▲3.9 ‐ ▲4.4%

GDP growth rate in 2014GDP growth rate in 2014 :0.6% (Feb 2)

(In hundred million $)

Source: Bank of Russia (BoR), the Ministry of Finance

▲89 ▲3

437878

▲1336

▲575▲308

▲814

▲539▲610

▲ 1541▲ 2000

▲ 1500

▲ 1000

▲ 500

0

500

1000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

The Lehman collapse

Recent Capital OutflowNet capital outflow in 2014：154.1bil $ (2.5 times since last year)  （published in March 27）

Source: BoR

External debt (as of March 2015)

Up to 1 year 1‐2  year(s) Over2 years

Gov & BoR 55 14 384

Bank section 410 185 947

Non‐bank 706 507 2352

Total 1170 706 3683

ForeignReserve(as of the end of Sep.）

3685

Reserve fund(as of the end of Sep.)

705

16.9 15.8

23.3

18.1

0

5

10

15

20

25

Jan‐13

Mar‐13

May‐13

Jul‐13

Sep‐13

Nov‐13

Jan‐14

Mar‐14

May‐14

Jul‐14

Sep‐14

Nov‐14

Jan‐15

Mar‐15

May‐15

Jul‐15

総合

食料品Total

Food products 

Russian External debt, Foreign currency reserve, Reserve fund

(In hundred million $)

Agreement achieved on the package of measures for implementation of the Minsk Agreement including ceasefire and withdrawal of heavy weapons, starting on 15 February. The four leaders published announcement on their approval of the agreement.

Normandy format Meetings on Ukraine crisis

The first contact of the leaders of Russia and Ukraine after the Ukraine crisis in February : realized upon initiative of French President.

First Summit （6 June, 2014,  on the margin of the 70th anniversary ceremony of Operation Overload）

Second Summit （17 October, 2014, on  the margin of the ACEM Summit at Millan）

Bilateral meeting between Russia and Ukraine was also held. Moderate progress on gas transaction and the borderline control between Ukrainian army and the separatist armed forces achieved.

Third Summit （11‐12 February, 2015, at Minsk）

“Normandy format meeting” (France, Germany, Russia and Ukraine) was first held in June 2014 on the margin of the 70th anniversary ceremony of Operation Overload at Normandy. Four summit meetings have been held. Minister’s level early November.

Agreement Reached on the start of withdrawal of light weapons and others. Total elections discussed separatists later announced on the postponement of the elections. Possible extension of implementation deadline of the Minsk Agreement discussed.

Fourth Summit （2 October, 2015, at Paris）

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Relationship between Russia and main countries （Russian public opinion）

USA‐Russia relations Japan‐Russia relations

EU ‐Russia relations China ‐Russia relations

September,2014

October,2015

September,2014

October,2015

（Source：Levada center）

Friendly

Good‐neighbor

Normal, calm

Cold

Tensed

Hostile

Difficult to answer

Less than 1%

Less than 1%

crude oil 31%

petroleum products23%natural gas

11%

LNG1%

coal2%

others32%

Export Portfolio

0

500

1000

Estimated gas production極東

東シベリア

シュトックマン

欧州部

トムスク州

ヤマル半島

チュメニ州

Dwindling population in    the Far East

1991：8.06 mill.→2014：6.23 mill.

Slowing down of economic growth 2007：8.5%→2011：4.3%→2012：3.4%

→2013：1.3%→2014：0.6%

Economy & Energy resources

Billion cubic meter

8.5%

5.2%

▲ 7.8%

4.5%

4.3% 3.4%1.3% 0.6%

72.34

99.67

61.9579.48

94.88 94.05 97.9893.17

0

30

60

90

120

150

▲ 10%

▲ 5%

0%

5%

10%

15%

2007年 2008年 2009年 2010年 2011年 2012年 2013年 2014年

GDP Growth rate WTI ($)

The Far EastEastern Siberia

ShtokmanEuropean Russia

Tomsk OblastYamal Peninsula

Tyumen Oblast

Heavy dependence on energy

2/3 of exports half the federal revenue

Oil & Gas production in Western Siberia has reached its peak

Oil & Gas fields in the Arctic Ocean & Eastern Siberia still undeveloped.

President Putin eager to work on development of the Far East & Eastern Siberia “ National and priviate business resources should 

be utilized for achieving strategic goals, such as development of 

Siberia & the Far East. This is our national priority in the 21st 

century” Presidential Address to the Federal Assembly in 

December 2013 .

Russia expects cooperation with Japan

K-ISHIKAWA

（１）Participants: 2,500 participants from Russia and 32 countries including Japan, China and South Korea.（２）Main participants: Russia : President Putin, First Deputy Prime Minister Shuvalov, Deputy Prime Minister Trutnev, other Ministers, Chief of Staff of the Presidential Executive Office Ivanov, Head of Gazprom Miller, CEO of Rosneft Igor SechinChina : Vice Premier Wang Yang and 10 Ministers, Korea : Minister of Trade, Industry and Energy Yoon Sang‐jick, Cambodia and Vietnam : Vice Prime Ministers and others（３）Purpose of the Forum: Russia made a public appeal on attracting measures of the territory of preceding development and the free port of Vladivostok, as well as potential of the Far East region. Russia called for domestic and foreign investment in the region on energy, transport infrastructure, urban development, agriculture and others. Over 80 business contracts, amounts 1.3 trillion rubles, was signed at the forum.（４）Etc.: Over 50 Japanese businessmen, (Chairman of  Mitsui & Co., Ltd Ijima, Chairman of Mitsubishi Corporation Kojima, and President of Marubeni Corporation Kokubun, and others) attended.

１ Overview of the forum

First Eastern Economic Forum in Vladivostok （September 3‐5, 2015 ）

The Asia‐Pacific region remains an engine of the world economy. It is strategically meaningful for Russia to strengthen its relationship with the countries in the region. Constructing Energy Bridge with those countries is a common strategic issue.Russia will pursue coordination between the Eurasian Economic Union (EEU) and the Silk Road Economic 

Belt. It will modernize and expand its transporting infrastructure including infrastructure via Kazakhstan, Trans‐Siberian Railway and Baikal‐Amur Railway. It will also pursue to utilize the Northern Sea Route.Preferential treatment of the free port of Vladivostok will apply to all the main ports in the southern area 

of Maritime region, with providing simplified immigration and visa procedures, special benefit under the taxation system.

２ Points for the President Putin’s speech （September 4）

(1) Hosted by ROTOBO and Business Russia. About 200 participants attended.Japan : Ambassador Extraordinary and Plenipotentiary Harada, Special Adviser to the Minister of METI Ishiguro, Vice‐Minister for International Affairs of MAFF Matsushima, President of ROTOBO Murayama (Chairman of the Board of Directors of Kawasaki Heavy Industries, Ltd.), Chairman Emeritus of JGC Group Shigehisa, President of The Hokkaido Bank,Ltd. Sekihachi, Senior Managing Director of JBIC Maeda and others.Russia : Deputy Minister of Eonomic Delopment of the Russian Federation Voskresensky, Deputy Minister of Foreign Affairs Morgulov, President of Business Russia Repik and others.

(2) Overview of the sessionThe Japanese side pointed out Russia’s necessity to improve complicated and non‐transparent custom and license procedures as well as transportation infrastructure. Some participants made forward‐looking remarks to promote cooperation on areas including energy, transportation, and agriculture. Russian side explained its legal and other actions aimed at attracting investment from Japan, expressing its intention further to promote its cooperation.The cession was held in very friendly atmosphere throughout the meeting, which bring people to have reasonable expectation for Japan‐Russian future economic cooperation.

３ Country dialogue: RUSSIA‐JAPAN（September 4）

4

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Trend of Japan‐Russia Trade / Numbers of Japanese Companies in Russia

(Date based on “Trade Statistics of Japan” Ministry of Finance Japan)

476 553 540 606

505 483 555 555 528 694

955

1,178

1,596

2,507

3,104

1,132

2,115

2,455

2,665

3,377

3,590

4.75.9 5.0 5.0 3.9 4.2 5.2 4.6 4.2

6.08.8

10.7

13.7

21.3

29.8

12.1

24.0

30.733.5

34.8

34.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(billion USD)(billion JPY) Japan-Russia Trade

Export of Japan (A)

Import of Japan (B)

Total: JPY （A+B）

Total: USD

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 2014105 185 192 211 231 269 296 302 349 373 406 427 444 447 425 425 466－ +80 +7 +19 +20 +38 +27 +6 +47 +24 +33 +21 +17 +3 -22 -22 +41

（source: "Annual Report of Statistics on Japanese Nationals Overseas" Ministry of Foreign Affairs Japan）

The Number of Japanese Companies Advancing to Russia

The number of the compan iesOver the previous year

ロシアへの輸入

ロシアからの輸出

0

100

200

300

400

2014 2015

Russia’s trade with major countries（Jan‐Jul 2015）Source：FSSSUnit ： 100 million USD

0

50

100

150

2014 2015

0

50

100

150

2014 20150

5

10

15

20

2014 2015

0

100

200

300

400

500

2014 2015

With Germany

With UK With France With Canada

0

50

100

150

200

250

2014 2015

With US

182

129

0

50

100

150

200

250

2014 2015

182

With Japan

129

With Italy

273

300

0

200

400

600

2014 2015

With China518

360

0

1000

2000

3000

4000

5000

6000

2014 2015

Total trade

4,716

3,115

412

196

123

70

117

66

15

7

‐29.2% ‐29.4%‐33.9%

‐34.6%‐30.4% ‐33.8%

‐43.4% ‐43.9%‐50.9%

Russian export

Russian import

K-ISHIKAWA

Kozmino

Daqing

Tynda

Skovorodino

Khabarovsk

Komsomolsk‐on‐Amur

De‐Kastri

Prigorodnoye

Vladivostok

Tayshet

Ust‐Kut

Aldan

Lensk

Irkutsk

Nakhodka

Cooperation Between Japan-Russia in Oil and Natural Gas

： Existing Oil Pipelines： Existing Gas Pipelines

： Gas Pipelines Under construction

Chayanda Gas Field

Kovykta Gas Field

Magadan

Eastern Siberia-Pacific OceanOil Pipeline

Co-exploration of Gas/Oil Field in East Siberia

Yamal LNG Project

Vladivostok LNG Project

Far East LNG ProjectSKV Gas Pipeline

Sakhalin Project

Oil Field In the Okhotsk Sea

Siberian power Pipeline

Sakhalin-2 LNG Plant

St.Peterburg

Moscow

KrasnoyarskChelyabinsk

Khantia‐mansia

Primorsky

Khabarovsk

Japan‐Russia Cooperation in Energy Efficiency

◆Co‐generation Project

Source：Kawasaki heavy Industries Ltd.

◆City and Housing Plan 

through use of technology for energy efficiencySource：

Nikken Sekkei Ltd.

12

◆Wind energy for Micro-grid

in isolated communities

Source：MITSUI & Co., Ltd. KOMAI HALTEC Inc.

Ust‐Kamchatka

K-ISHIKAWA

Recent Events in Japan‐Russia Relations

Apr. 29th Prime Minister Abe’s visit to Russia(Japan-Russia Summit Meeting with President Putin)Jun. 17th Japan-Russia Summit Meeting on the occasion of G8 Summit in Lough ErneSep. 5th Japan-Russia Summit Meeting on the occasion of G20 Summit in Saint-Petersburg Oct. 7th Japan-Russia Summit Meeting on the occasion of Bali APECNov. 1st -2nd Visit of Foreign Minister Lavrov and Defense Minister Shoigu to Japan, holding ”2+2”

Jan. 31st Japan-Russia Deputy Ministerial Negotiation on a Peace Treaty (Tokyo) Feb. 7th -8th Prime Minister Abe’s attendance at the opening ceremony of the Sochi 2014 XXII Olympic winter games.Oct. 17th Japan-Russia Summit Meeting on the occasion of the Asia-Europe Meeting (ASEM) 10 Summit MeetingNov. 9th Japan-Russia Summit Meeting on the occasion of Beijing APEC

Feb. 12nd Japan-Russia Deputy Ministerial Consultations (Moscow)May.18th Co.Chairs’ meeting of the Trade and Investment Subcommittee (Deputy Ministerial Consultations on economy)May.21st Prime Minister Abe receives courtesy call from Chairman of State Duma NaryshikinJun. 24th Telephone talks between Prime Minister Abe and President PutinJul.3rd Japan-Russia Director-General Consultations (Moscow)Jul.6th Secretary General of National Security Secretariat Yachi’s visit to RussiaSep.21st -22nd Foreign Minister Kishida’s visit to Russia (Moscow)

Japan-Russia Foreign Ministers’ Meeting and Japan-Russia Intergovernmental Committee on Trade and Economy .

Sep.24th Secretary of the Security Council Patrushev’s visit to Japan Sep.28th Japan-Russia Summit Meeting on the occasion of the United Nations General Assembly (New York) Oct. 5th Japan-Russia Advisory Council on modernization of Russian Economy with Deputy Prime Minister Dvorkovich (Tokyo)

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