FOCUS : Japan to Go Even Slower on Soviet Investment : Trade: Worries about political stability override the possibly lucrative opportunities.

The breakup of the Soviet Union may create business opportunities in Russia and other republics over the long term, but Japanese investors say that for the time being political instability has actually increased the risks of making an investment.

“Over the short term there is going to be a lot of confusion,” said Takashi Murakami, head of the economic studies division of the Japan Assn. for Trade With the Soviet Union and Central-Eastern Europe, a business group that does research on the region and helps to coordinate trade and investment projects. “For the moment we don’t know whom we are dealing with.”

Efforts to move Russia more rapidly toward a market economy, for example, are met in Japan with mixed feelings. “Up to now we just trusted the center, but if Russia moves towards privatization and you are dealing with stock companies, you have to raise the question of how trustworthy they are,” said Murakami.

Japanese companies are already having trouble collecting $500 million that Soviet institutions owe them. There are fears that the level of unpaid debts could easily double by year-end.

“While we are happy about the coup’s failure, the question of political risk becomes basic to any investment decision,” said Kiyoshi Inagaki, an expert on the Soviet Union at Mitsubishi Research Institute. He said that with ethnic problems, relations between republics and numerous questions of basic administration to deal with, “it is going to take at least a year to sort these things out.”

Japan’s primary interest in the Soviet Union is its natural resources.

A major question for Japanese investors is how quickly Russia takes over control of natural resources and becomes the sole negotiator on large projects.

One test will come Oct. 5, when the Soviet Union announces who will win the bid to work on a $10-billion project to develop oil and gas off Sakhalin, an island on Russia’s Eastern coast. Mitsui & Co., which recently tendered a bid jointly with McDermott International and Marathon Oil Co., both of the United States, said Russia’s strong role in the negotiations helped speed the project.

“If Russia plays a stronger role in the project (following the coup failure), we think things could move even faster,” a Mitsui spokesman said.

Japan has resisted calls from Germany and other nations to approve aid to the Soviet Union beyond the small amounts of technical and humanitarian aid already granted. Japan first wants the return of four islands occupied by the Soviets since World War II.

If Japan does agree to offer more aid, it is likely to insist that the aid be used for specific projects with a high likelihood of a quick return.

The most likely area for new investment is Russian oil fields, where relatively small investments in new equipment and technology could quickly and significantly boost production. An estimated 22,000 oil wells in the Soviet Union are out of operation because of problems with equipment.

“This may be an area where Western aid would be appropriate,” said Murakami.