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DE RUEHKO #3357/01 1692355
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O 182355Z JUN 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3364
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C O N F I D E N T I A L TOKYO 003357 
 
SIPDIS 
 
SIPDIS 
 
PLEASE PASS TO AID/ENE DAA LUTEN 
 
E.O. 12958: DECL: 06/14/2026 
TAGS: PREL ETRD ECON EAID AADP SENV XH ZL ZS JA
SUBJECT: JAPAN-CENTRAL AND SOUTH EASTERN EUROPE RELATIONS: 
FOCUS ON INVESTMENT, ENERGY SECURITY AND FURTHER 
INVOLVEMENT IN KOSOVO 
 
Classified By: Deputy Chief of Mission Joe Donovan. Reasons: 1.4(b/d) 
 
¶1. (C) Summary.  In a recent review of Japan's relations with 
Central Europe, MOFA officials related that ties with Poland, 
Czech Republic, Hungary and Slovakia are moving away from 
assistance and toward direct investment.  Japan's 
relationship with Romania and Bulgaria is largely focused on 
energy security and reducing dependence on Russian oil.  In 
the Balkans, Japan's ODA centers on "peace consolidation" and 
economic development.  Prime Minister Koizumi considers 
Ukraine's President Yushchenko a hero, and views Ukraine as a 
possible counterweight to Russia.  Finally, MOFA officials 
said that Japan is coming "more into line" with the United 
States and the EU regarding Belarus' human rights situation, 
but admitted that Tokyo is waiting for the U.S. and EU to 
take the lead.  End summary. 
 
Visegrad Four: From ODA to FDI 
------------------------------ 
 
¶2. (C) Japan is in the process of phasing out its Official 
Development Assistance (ODA) to the Visegrad Four (Poland, 
Czech Republic, Hungary and Slovakia) and projects 2007 as 
the end date of all ODA to these countries, MOFA Central and 
South Eastern Europe Division Principal Deputy Director 
Tatsuya Machida told Embassy Tokyo Political Officer Kathleen 
Szpila recently.  In contrast, Japan's foreign direct 
investment (FDI) is growing rapidly.  It has almost doubled 
to Poland in the past three years.  There are now a total of 
63 Japanese companies in Poland, 63 in the Czech Republic and 
59 in Hungary.  Japan's current plan is to explore further 
investment opportunities using organizations such as the 
Poland-Japan Economic Committee, which was established to 
facilitate better communication and stronger relations 
between the business sectors of the two countries.  Machida 
believes the political relationship between Japan and the 
Visegrad Four is strong, commenting that the Four are "more 
pro-Japan than the original EU member states." 
 
¶3. (C) In a separate meeting, MOFA Economic Integration 
Division Principal Deputy Director Kaname Araki concurred 
that Japan's investment in the Visegrad Four is increasing, 
but observed that it remains low compared to that of China. 
EU accession and the subsequent harmonization of laws and 
regulations have made investment in these countries easier, 
Araki observed.  He singled out Hungary as actively trying to 
attract more FDI from Japan; however, he continued, the lack 
of qualified workers with a "Japanese-style work ethic" poses 
a constant hurdle for Japanese businesses operating in the 
region.  Japan also needs to convince the Visegrad Four that 
the Japanese market is just as profitable as China and, 
contrary to what these countries may think, not 
protectionist. 
 
Romania and Bulgaria: Bringing Oil to the Black Sea 
--------------------------------------------- ------ 
 
¶4. (C) Japan supports Romania's and Bulgaria's EU accession, 
Machida noted.  Japan hopes both countries will become better 
trading partners through the creation of modern legal 
frameworks.  Much of the focus of Japan's relationship with 
the two countries has been on energy security, including USD 
180 million in assistance to construct a new container 
terminal in Romania's South Constanta Port and USD 1.28 
million in assistance to expand the Bulgarian Port of 
Bourgas, both located on the Black Sea.  Both projects are 
intended to facilitate the completion of the pipeline from 
the Caspian Sea through the Black Sea in order to reduce 
Eastern Europe's dependence on Russian oil.  Machida pointed 
to the NATO Foreign Ministerial conference as an opportunity 
for Japan to coordinate with Romania and Bulgaria on energy 
security issues. 
 
¶5. (C) Japan has also successfully established bilateral MOUs 
 
 
with Bulgaria and Romania to implement the Clean Development 
Mechanism (CDM) to reduce carbon dioxide emissions, explained 
Machida.  These non-binding MOUs clear the way for Japanese 
companies to invest in emissions control equipment in new 
Bulgarian and Romanian factories in return for Japan 
receiving credit for emissions reduction under the Kyoto 
Protocol. 
 
Balkans: The Focus on Kosovo 
---------------------------- 
 
¶6. (C) Japan currently has three embassies in the Balkans - 
in Croatia, Slovenia and Serbia - while Japan's missions in 
Vienna and Rome cover Macedonia and Albania, respectively. 
Total ODA for the Balkan region was close to USD 1.07 billion 
in 2004 and focused on "peace consolidation," economic 
development and regional cooperation.  Kosovo independence is 
not a question of "if" it will happen, but of "how" it will 
happen, Machida noted.  He expressed concern about the rights 
and status of minorities within Kosovo and dismay that the 
Serbian government's inflexible stance has stalled 
negotiations.  Japan appears sympathetic to the Albanians, 
Machida continued, but its official position is "neutral." 
Overall, Japan views Kosovo as a global issue and not 
strictly an EU problem.  Machida relayed that Japan's 
objectives in Kosovo are to be included in contact groups, to 
maintain close contact with the UN and, once Kosovo is 
stable, to re-double its economic investment efforts. 
 
Ukraine: Possible Counterweight to Russia 
----------------------------------------- 
 
¶7. (C) Since "Koizumi loves heros," and he views Yushchenko 
as the hero of the Orange Revolution, Ukrainian President 
Viktor Yushchenko's July 2005 trip to Japan produced a "very 
good meeting" that fostered a positive relationship between 
Prime Minister Koizumi and Yushchenko, Machida observed.  The 
creation of the Ministerial-level Japan-Ukraine Cooperation 
Committee demonstrates Japan's desire to create a deeper 
relationship with Ukraine.  Yushchenko follows a middle road 
between Russia and EU, claimed Machida, and is not as 
EU-centric as he is sometimes portrayed.  Machida expressed 
concern at possible friction between Ukraine and Russia, 
citing the recent disruption of gas supplies to Ukraine as 
highlighting the weaknesses in European energy security and 
its vulnerability to Russia's whims.  Japan views Ukraine as 
a possible counter to Russia in the upcoming G-8 summit, and 
is currently seeking high-level talks with Ukraine on the 
margins of the G-8.  Japan's ODA contribution of USD 1.71 
million in 2005 targeted the development of Ukraine's 
transport infrastructure. 
 
Belarus: Considering Sanctions 
------------------------------ 
 
¶8. (C) Japan is coming "more in line" with the United States 
and European Union regarding the human rights situation in 
Belarus, Machida stated.  After the recent Belarus 
presidential elections, Japan issued a press statement urging 
the Belarus authorities to pursue democratic principles, and 
expressed regret that many undemocratic acts were observed 
during the election.  Two official "calls of concern" were 
placed to the Belarussian Charg in Tokyo that, according to 
Machida, signaled a tougher response.  The Japanese Embassy 
in Minsk declined an invitation to attend President 
Aleksander Lukashenko's inauguration.  Japan has carefully 
been reviewing its options with regards to possible sanctions 
against Belarus, confided Machida, but is waiting for the 
United States and the EU to take the lead.  While official 
contact may be dwindling, Japan still operates its 
people-to-people exchanges with Belarus; in 2005 a 
Belarussian journalist and democracy activist came to Japan 
and this year Japan plans to host a Belarussian professor. 
SCHIEFFER