Economic relations between Japan and Russia are entering a difficult period

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Japanese companies continue to suspend operations in Russia as the country faces mounting sanctions.

An expert says the move pushes economic relations between Japan and Russia into a new ice age.

Saito Daisuke is the Moscow-based director of the Japan Association for Trade with Russia and the NIS.

He says the sanctions aren’t the only reason Japanese companies in Russia are suspending operations.

Saito says the other factors are the halt in the supply of raw materials due to logistical disruptions resulting from the sanctions, and a price revision following a drop in the Russian ruble.

Companies will be forced to make tough decisions about whether to continue or exit.

Saito predicts that the exodus of Japanese companies whose main activity is in Russia will continue. Their number can even decrease by almost 50%.

Another concern is Russian President Vladimir Putin’s threat to seize the assets of departing foreign companies.

Saito believes Putin is trying to stem the exodus in a bid to maintain local jobs and social stability.

He notes the possibility for the authorities to intensify the pressure on these companies.

Saito says officials could try to block by imposing time-consuming but arbitrary procedures. Or they could try to prevent companies from pulling their production facilities out of Russia.

Hefty fines may also be on the horizon.

He says a pessimistic view holds that efforts have failed over the past three decades to integrate Russia into the global economy and develop economic ties between it and Japan.

A survey by the Japanese Foreign Ministry shows that 421 Japanese companies were in Russia in October 2020.

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