This report traces the factors that have perpetuated the territorial dispute between Russia and Japan, and the consequences of stalemate or settlement for U.S.-Japan relations. The U.S. and Japan are now at odds over Russia, since the U.S. has pressured Japan to join the rest of the G-7 in providing economic assistance to Russia. This situation is likely to worsen if Yeltsin falls. If he survives, Gelman recommends that the U.S. encourage Japan to renew (and improve) the offer of economic aid in exchange for the Northern Territories that had been made to Gorbachev in 1991. He notes that both Japan and the U.S. have strong incentives for maintaining the U.S.-Japan alliance, including offsetting economic tensions, reassuring Japan's Asian neighbors, and deterring nuclear proliferation in Japan and Korea.
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