Russia Considering Making The Kuril Islands A Free Trade Zone

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Russia’s Kuril Islands, lying just 45 km north of Japan’s Hokkaido Island, are possibly to be awarded free trade zone status. Discussions are currently underway, according to Valeri Limarenko, the Governor of the administrating Sakhalin Region has said.

The Kuril Islands are disputed with Japan claiming four of the most southern islands, including two of the largest. The Kuril Island of Iturup had been the base for the Japanese air force attack on Peral Harbour. Russia has occupied them since the end of World War Two after defeating the Japanese Army in particularly difficult conditions – thousands of Russian and Japanese troops died in the conflict. Consequently, families on both sides regard the area as sacred and wish to honor their dead. It is an emotive subject for both Governments to deal with; negotiations have been continuing.

The possibility of providing the Kuril Islands with Free Trade status, while remaining Russian may be seen as an acceptable alternative arrangement by Tokyo as it would open the islands to commercial opportunities and an increase in Japanese investment, in addition to making it easier for Japanese nationals to visit.

Russian Prime Minister Mikhail Mishustin has also stated that the introduction of a tax-free zone could help local companies in importing required equipment and other goods. The Kurils are volcanic, covering an area of about 10,500 sq.km and have a population of 20,000. They lie in highly productive fishing grounds.

Itrup Island

Limarenko, Sakhalin’s Governor said “This is a pleasant surprise for us. This statement was made in the presence of businessmen dealing with fisheries. What can this provide to Sakhalin and the Kurils? In the first instance, there will be more investments, and we certainly endeavor to bring investments to our land. We are working on the diversification of the economy of Sakhalin and the Kuril Islands in particular. Fish processing can be doubled, tripled; a serious step can be made in tourism development, and we have everything we need to take such steps.”

Ebeko Volcano, Ebeko Island

Russian Prime Minister Mikhail Mishustin said earlier that he would shortly present proposals on benefits for investors in the Kuril Islands. Discussions will need to consider Japanese views, although there have been encouraging signs of some form of rapprochement: negotiations on a proposed 45 km bridge to link the Kurils with Japan would join Cape Crillon on the Russian island of Sakhalin to Cape Soya at the northern tip of Hokkaido island, Japan. With ferry services to the Russian mainland from Kunashir Island (which also has an airport) this means that it would be possible to take a train journey from Tokyo to London. Ferry services also run to the Kurils from Hokkaido.

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