Japan's ambassador to Moscow will temporarily return to Tokyo in what amounts to retaliatory measures by the Japanese government for a trip by the Russian president to disputed islands in the far north.

Japan will also consider a review of economic cooperation with Russia. But with joint energy development projects under way, the Japanese side will be unable to impose strong sanctions without risking damage to its own corporate sector.Prime Minister Naoto Kan's government looked cautious at first about a response to Russian President Dmitry Medvedev's visit Monday to Kunashiri, one of the four islands known in Japan as the Northern Territories. Chief Cabinet Secretary Yoshito Sengoku said that afternoon that the cabinet would need "a few days" to decide on any actions.

Then came the backlash from domestic critics. Kan and senior cabinet ministers appear to have reckoned that doing nothing would further erode the cabinet's position. The prime minister met Tuesday with Sengoku and Foreign Minister Seiji Maehara before deciding to summon Ambassador Masaharu Kono back to Tokyo.

"There were a lot of options," a senior Foreign Ministry official said. "We had to think, 'How far are we going to push this?'"

In fact, Japan has few viable options. In a meeting Tuesday morning, Maehara and other top Foreign Ministry officials discussed halting lending for Sakhalin 2, an offshore oil and gas project in the Russian Far East. The government-backed Japan Bank for International Cooperation is putting up 3.7 billion dollars of the 5.3 billion dollars in syndicated financing agreed to in 2008.

Trading houses Mitsui & Co. (8031) and Mitsubishi Corp. (8058) hold stakes in the joint venture running the project. A loan freeze could "self-destruct" on Japan, warns a senior official in the Ministry of Economy, Trade and Industry. And if Japan appears ready to pull out of the project, resource-hungry China will "step right in to take our place," a senior Foreign Ministry official says.

Japan could hold up ratification of a bilateral nuclear energy pact. Russia is counting on technical cooperation from Japanese firms like Toshiba Corp. (6502). Japan, which envisions Russian companies processing uranium fuel for Japanese reactors, would have to rework its nuclear strategy.

Some officials entertained the idea of canceling a Kan-Medvedev meeting at next week's Asia-Pacific Economic Cooperation summit in Yokohama. But the Prime Minister's Office shot down such a move, which would hardly befit Japan's role as host country. Sengoku said Tuesday that the meeting will be held "as scheduled."

Even in pulling Kono, the government appears to have shown some consideration for the Russian side by stopping short of a formal recall.