27 September 2012. PenzaNews. Foreign Minister of China Yang Jiechi and Japanese Foreign Minister Koichiro Gemba held tense talks on the issue of territorial dispute over the Diaoyu (Senkaku) Islands at the annual United Nations summit in New York. Though the countries failed to reach consensus on territorial ownership of the archipelago, the parties expressed their intention to continue the dialogue on this issue.

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The territorial dispute, which escalated after the Japanese government bought three of five islands from their private Japanese owner, seriously hurt relations between Beijing and Tokyo putting China-Japan economic and trade ties at risk. Large-scale anti-Japanese protests were held across many Chinese cities: protesters targeted Japanese supermarkets, restaurants and factories. According to media reports, the actions went beyond the countries of the dispute and took place in New York and Rome.

According to Senior Fellow for Japan Studies at Council on Foreign Relations Sheila Smith it is the worst crisis between Japan and China to date.

“The diplomatic relationship between Tokyo and Beijing is worsening. China cancelled the ceremony commemorating the 40th anniversary of normalizing relations. Moreover, exchanges between local governments, youth groups and even high level business leaders have also been put off,” the expert reminded.

She noted that deterioration of the situation can set the countries back as “Beijing is signaling it is will to return to the deep freeze” that used to characterize Sino-Japanese relations. Until recently, Chinese ships were near Japanese territorial waters, and this, according to the analyst, intensified the maritime standoff and increased the possibility for accidents and miscalculation.

“If there is a loss of life – either by China or Japan – this situation will become very difficult for political leaders to manage,” said Sheila Smith and added that popular sentiments in both countries are running high.

According to the analyst, an international forum is the best idea for dispute resolution.

“UNCLOS can also play a more assertive role in providing a venue for dispute resolution. Likewise, the ASEAN states have developed a code of conduct that can be used as a reference point. Other countries can also play a positive role in encouraging and creating venues for deliberation. Perhaps most important for Russia will be its management of its own territorial dispute with Japan,” said ECFR Senior Fellow for Japan Studies.

In her opinion, further pressure on the country by neighbors will result in a stronger effort to defend sovereignty claims, and this is not a constructive direction for any of the nations of Northeast Asia. A downward spiral of arming across territorial boundaries will in this case result in a naval arms race, one that cannot be won by any one country and can only lead to destabilizing the entire region.

“Calming the latent territorial disputes in Northeast Asia will require calm, rational diplomacy all around the region. Backing Japan into a corner, or encouraging domestic critics in Tokyo who would like to use this to attack the current government, can only result in an escalation of tensions. It is time for careful and constructive regional diplomacy to build confidence in the peaceful desires of all the countries in the region,” Sheila Smith emphasized.

Tetsuo Kotani, Research Fellow at Japan Institute of International Affairs also called the situation very difficult and stressed that “the bilateral relations between China and Japan are the worst in 40 years.”

“Both governments will try to ease the tension but I do not rule out the possibility of armed conflict,” the expert said in an interview with news agency “PenzaNews.”

According to him, China may take tougher economic policy to restrict Japan-China trade, which is not in the interest of either side.

“The dialogue between the two countries will continue but it will take more time to stabilize the situation. I think both sides need to take careful and self-restraint behavior,” said Tetsuo Kotani and added that the governments should discuss the joint management of fishery and seabed resources.

In his opinion, the United States should clarify its interpretation of ownership of the island, because the US government returned those islands to Japan in 1972.

In turn, Research Fellow at Institute of World Economics and Politics of Chinese Academy of Social Sciences Xu Jin suggested that “the Japanese government has to shoulder all the responsibility because it is the initiator of these round of crisis.”

“The two countries may take more diplomatic and economic measures to confront the opposite side. We cannot exclude the possibility of economic sanctions, military friction or armed conflict,” the analyst emphasized.

According to him, there is only one way to go: the Japanese government has to cancel its decision to purchase the island and go back to where it stood one year ago.

“Before we find mutually acceptable solutions, the Japanese government has to cancel its purchase of the island as the prerequisite. If this cannot be done, the crisis will continue and may escalate to a higher level. Territorial disputes are very difficult to solve. The feasible way to the concerning parties is to freeze them and maintain the status-quo,” Xu Jin stated.

Moreover, the expert stressed that he is against the domestic violence targeting the civilians and properties made in Japan or with a Japanese brand.

Masashi Nishihara, President of Japanese Research Institute for Peace and Security shared the opinion that territorial disputes are not easy to solve and stressed that “neither side wants to give in at the moment.”

“We may even see armed clashes between Japan and China, although the conflicts will probably not become too serious, as the United States will back Japan and China does not want to confront the US,” the expert said.

Analyzing potential steps on the way out of the crisis, Masashi Nishihara noted that China should first withdraw from the waters around the Senkakus its coast guard vessels and fishing boats which are suspected to disguise naval officers, so that a peaceful atmosphere will be restored.

“The Japanese government stressed that the disputes should be settled peacefully. However, I cannot see an immediate solution since China does not appear ready to withdraw its coast guard vessels and fishing boats from the disputed waters and Japan is not willing to revoke its decision to nationalize the islands,” said President of Research Institute for Peace and Security.

Moreover, he suggested that China’s motive is not just to gain the Senkakus but also to “regain” the whole Okinawa islands chain, which China calls the Rukyu islands.

“A growing number of Chinese argue that the Okinawa islands chain should belong to their country. For them, the Senkakus are the first step to expand its influence eastward to the Pacific. Japan has to stand firm to resist China’s territorial claims,” Masashi Nishihara emphasized.

According to Brian Bridges, Professor at the Department of Political Science at Lingnan University in Hong Kong, there is now a desire on both sides to lower the temperature and calm the situation, although the rhetoric from both governments on the respective territorial claims still seems quite tough.

“Both Japan and China have domestic imperatives that require such an approach. While the Chinese government cannot afford to appear too “soft” on this issue, it also does not want too many demonstrators on the streets in the run-up to the highly sensitive Party Congress, which is expected to be held sometime within the next few weeks. The Chinese leadership also does not want to damage its broader image internationally through allowing scenes of violent mayhem being perpetrated by demonstrators,” the expert noted.

“The Japanese government miscalculated the degree of Chinese resentment at the “nationalization” project, which ironically was actually undertaken by the Noda administration to pre-empt a move by Tokyo Governor Ishihara which could have resulted in more provocative activities on the islands. The Noda administration faces an election challenge in the near future, with two of the opposition parties led by politicians who advocate tougher actions against China, so Noda will wish to shift public focus back to more crucial domestic issues, where his policies are proving painful but potentially more effective in the medium-term,” added Brian Bridges.

Moreover, recourse to the International Court of Justice requires both sides to agree in advance that they will accept the Court’s decision (which is unlikely in the current mood) while the most likely mediator, the United States, is not seen as being completely neutral, given its security treaty with Japan.

In addition, the expert noted that the dialogue initiated at the level of Foreign Ministers, should continue.

“There will be no early breakthrough, but trying to return to the previous status of keeping the issue “suspended” will have to be the way forward in the medium-term. For this purpose, the Japanese government will have to ensure that the islands remain as they are, with no attempts to construct facilities or habitation on them,” Brian Bridges said.

Then, according to him, China will have to accept that it cannot change the occupational status quo at the moment and allow the economic “sanctions” being imposed to quietly fall away.

“Neither Japan nor China can afford to allow the dispute to edge them closer to war, but this is going to remain a tense relationship for some time to come,” the analyst concluded.

The Senkaku (Diaoyu) Islands are a group of uninhabited islands in the East China Sea 170 km northeast of Taiwan. The islands are a sore point in foreign relations between Japan and China.

China claims that these islands were discovered by the country in 1371. The archipelago is marked as Chinese territory on the Japanese maps dated 1783 and 1785.

In 1895, Japan took control of the islands, in accordance with the Treaty of Shimonoseki that ended the first Sino-Japanese War.

After World War II, Japan lost all the territories it gained since the late 19th century – the Senkaku Islands were under US jurisdiction.

In 1972, the United States reverted them to Japanese control. China does not agree with this decision and believes that the islands should be returned to China in accordance with the Cairo Declaration of 1943, which deprived Japan of its conquered territories.

According to some reports, interest in the archipelago increased when significant gas reserves were identified there.

The dispute flared up again after the Japanese government bought three of five islands from their private Japanese owner on 11 September 2012, leading to protests in 85 cities of China.