Newsletter No. 233
April 8, 2006

 

CROWN PRINCE SULTAN IN JAPAN

The three-day visit of Saudi Crown Prince Sultan bin Abd al-Aziz al-Saud concluded yesterday. Judging by the wide range of issues discussed in the final statement, it seems to have gone very well.

Photo: The Crown Prince and the Prime Minister
Source: Kantei

In terms of substance, METI Minister Toshihiro Nikai reaffirmed Japan’s intention to pursue FTA talks with the GCC this year, and even suggested that Japan and Saudi Arabia sign a separate bilateral investment agreement. The Mainichi states that talks were actually held on this matter in 2000, but that they were dropped due to some kind of reluctance on the Saudi side.
However, a variety of important issues were touched upon during the visit, as will be apparent from reading the joint declaration below.

Several major dailies ran large paid advertisements celebrating the visit of Crown Prince Sultan, but regular news stories were harder to find. One exception was the Nihon Keizai Shinbun, which ran an editorial on the 6th entitled, “Don’t Miss this Opportunity to Strengthen Ties with the Saudis.” It was mainly an encouragement to the Japanese business community to take a closer look at mutual investment between Japan and Saudi Arabia.

Below I have attached two related articles that have just appeared in the Arab press, as well as the unusually substantial joint declaration that was issued by the two governments on April 6th. The following editorial appeared in Beirut’s Daily Star newspaper today:

EASTWARD SHIFT OF SAUDI PERSPECTIVE ONLY MAKES SENSE
Daily Star Editorial

In recent years, Saudi Arabia, which has long enjoyed a "special relationship" with the United States, has been expanding its strategic and economic alliances with other states. Since assuming the throne, King Abdullah bin Abdel-Aziz has been directing the kingdom's focus away from the West and toward the countries of the East. This shift was highlighted by the fact that King Abdullah's first foreign destination after assuming the throne in August 2005 was China. The monarch's first foreign tour - which also took him to India, Malaysia and Pakistan - symbolized the kingdom's shift away from its Westward orientation. This week Saudi Crown Prince Sultan bin Abdel-Aziz carried the kingdom's eastward thrust further in Tokyo, where he agreed to start talks on a free-trade agreement between Japan and the Gulf Cooperation Council.

Economic ties between the Muslim world and the East are ancient, and have expanded since the first Muslim merchants made their fortunes from maritime trade and the overland caravans across Central Asia. But in recent years, Gulf states have made considerable effort to further strengthen these ties. Since the 1990s, the energy-rich Gulf states have looked increasingly toward the East for investment opportunities and oil windfalls that were once almost exclusively invested in the West are now being directed toward countries in the East.

The choice to look to the East in part reflects the growing economic importance of these states, particularly China and India, as their appetites for energy increase. But alliances based on oil have rapidly expanded into broader trade partnerships. Saudi leaders seem to recognize that the countries of the East can also serve as more than just trade partners. With their high-performing economies, these states can offer valuable lessons in modernization. Both China and India have implemented economic reforms, achieving the kind of rapid economic growth that Saudi Arabia hopes to emulate.

The kingdom's decision to send Saudi students to the East also reflects an understanding that the region can offer the treasures of both trade and knowledge. The Saudi Education Ministry announced in March that the kingdom would send more students to countries like China, India, Singapore, Malaysia and South Korea, as well as Australia, for higher studies. On Friday, Prince Sultan also announced that the kingdom will pay for students to study in Japan. The Prophet Mohammad instructed his followers to "go in quest of knowledge, even unto China." The kingdom's increasing cooperation with the countries of the East makes it all the easier for young Saudis to do just that.

SAUDI ARABIA-JAPAN RELATIONS
Arab News
By Abdulaziz Sager

The timing and the leader involved in the visit to take Saudi-Japanese relations to the next level could not have been better - the two countries commemorated the 50th anniversary of diplomatic ties last year and Prince Sultan, then defense and aviation minister, was the first high-ranking Saudi official to visit Japan in 1960. In choosing Japan for his first foreign tour since assuming new office, Crown Prince Sultan is following King Abdullah’s trend of Riyadh making a concerted effort toward further warming relations with its Asian neighbors.

The importance of this visit lies in the two countries being heavyweights in their own right. Japan is a powerhouse with the world's second largest economy, accounting for approximately one-seventh of the world's GDP and contributing to about 10 percent of the world's exports and imports. It is also the world's third largest oil-consuming nation, accounting for over seven percent of global demand, apart from being a technological giant. On the other hand, Saudi Arabia is a major power in the Gulf and Middle East, as well as the Organization of Petroleum Exporting Countries by virtue of being the largest oil producer in the world at about nine million barrels a day.

At the bilateral level, Japan is the Kingdom's second largest trading partner and investor, after the United States [1]. Saudi Arabia supplies about one-third of Japan's energy needs [2], with its imports amounting to about four million barrels a day.

Among the mega bilateral deals signed recently is the $10-billion PetroRabigh project -- an integrated refining and petrochemical complex 200 kilometers from Jeddah -- between Saudi Aramco and Sumitomo Chemical.

Saudi Arabia also could benefit from Japanese investment. With the Kingdom becoming the latest member of the World Trade Organization and the World Bank ranking in terms of attractiveness for foreign direct investment jumping from 67 to 38 in one year, the Kingdom could tap Japanese investors for the nearly $800 billion investments in various sectors over the next decade. Saudi Arabia is looking for investments and partnerships in desalination plants, water, power, health, education, infrastructure, information technology, civil aviation and railroads, many of the areas in which the Japanese also have the expertise.

In the political sphere, former Japanese Prime Minister Ryutaro Hashimoto called for "Comprehensive Partnership Toward the 21st Century" when he visited Saudi Arabia in 1997. In 1998, the two sides signed the "Japan-Saudi Arabia Cooperation Agenda." And, in 2004, the two countries set up two Parliamentary Friendship Committees to promote their interests and hold consultations on a range of regional and international issues.

The relationship between the two countries is not limited to the bilateral level, but is international in scope. There is no doubt that oil served as a key factor in shaping and altering the relations between Japan and the Gulf countries, but it is an oversimplification to analyze it solely from the energy perspective. With time, Tokyo gradually concentrated its effort in diversifying potential cooperation with the region, including increased investment and human contact, thereby laying grounds for closer interdependence. In fact, it will not be an exaggeration to suggest that one of the characteristics of Japan's relations with the region lies in the fact that they were often determined less by issues of bilateral concerns, and more by wider regional and international developments.

In the realm of international relations and regional issues, Japan and Saudi Arabia see eye to eye on the Palestinian crisis, with Tokyo urging the international community to help achieve a comprehensive settlement based on the UN Security Council resolutions 242 and 338, and more recently encouraging the recognition of the Hamas government following the group's sweeping victory in the parliamentary elections in January. Apart from being a regular donor, Japan dispatched a team to help monitor the elections and also provided about $1 million to facilitate the vote in Palestine.

With regard to the Gulf, Tokyo has sought to redefine its security interests since September 2001. As laid out in the 2002 Okamoto Report, Japan's future Middle East diplomacy would be involved in supporting "the removal of the threat of global terrorism originating in the Middle East", and work for "energy security, through the promotion of friendship with Gulf nations, such as Saudi Arabia". The report also committed Japan to "aiding Iranian moderates in their efforts at reform".

The change was evident in Japanese military being engaged in Iraq's non-combat spheres, making it Tokyo's first deployment overseas since World War II [3]. In 2005, Japan cancelled nearly $7 billion of Iraqi debt, amounting to 80 percent of its claims. Further, it pledged about $5 billion to support Iraq's reconstruction effort. Apart from an eye on oil, the reconstruction mission may have been a way of the pacifist nation exerting global clout beyond being a mere aid donor, but Japan's plans to pull its troops from Iraq as early as May and no later than end-2006 will be another dent in the US-led coalition's efforts to stabilize Iraq.

The other worrying factor is Iran, which supplies more than 15 percent of Japan's oil [4], making it the third-largest supplier. In 2004, Tokyo struck a $2-billion deal with Tehran to grant a Japanese consortium rights to develop the Azadegan oilfield. Despite nuclear proliferation concerns, Tokyo's rationalization for signing the deal was that Tehran had agreed to accept additional inspections from the International Atomic Energy Agency. But the whole issue has been laid bare since then. Saudi Arabia could impress upon Japan the concerns of the Gulf Cooperation Council countries with regard to the nuclear issue and the fallout of a possible conflict over the same. These concerns are identical to the Japanese fear of expansion of the nuclear zone. Tokyo could advise Tehran of the virtues of accepting an inspection system involving the application of comprehensive safeguards, which it has been adhering to for decades.

Japan also cannot ignore Iran's connections with North Korea not only in the nuclear arena, but also in the exchange of missile technology. Iran's Shahab 3 missile is reportedly a North Korean Nodong. Statistics suggest that North Korea now has about 200 Nodongs threatening Japan.

At another level, Saudi Arabia's growing ties with China could become a vehicle of better communication between Beijing and Tokyo in the future. Japan and China are increasingly economically interdependent, but their relations are uncomfortably poised. Political tensions, territorial rivalries, competition over energy resources, and military build-ups provide the ingredients for a 21st-century Oriental remake of the Cold War, which will serve the region no good. Since Saudi Arabia is a key contributor to the economies of both countries, offers a platform to both to be co-investors, and maintains an equitable political relationship, Riyadh could play the role of an honest powerbroker in case of a crisis.

Summarizing the existing and impending ties, Japanese Prime Minister Junichiro Koizumi highlighted last year the "historic and unshakable relations" and added, "We look far ahead into the future where our excellent relations will be even more essential to international society."
In an era of rising oil demand coincided with very high prices and security volatility in the neighborhood of both countries, the importance of Saudi-Japanese relationship at the bilateral and international levels could not have been better expressed.

Abdulaziz Sager is the Chairman of the Gulf Research Center in Dubai.

[1] Actually, Japan is the number one recent investor in Saudi Arabia. See Shingetsu Newsletter No. 154 of January 2006.

[2] The exact figure for last year was 29.0%.

[3] This is not true: Japan has made several overseas deployments of the SDF since the 1990s, beginning with the Cambodian mission.

[4] The 2005 figure was actually 13.8%, and will probably be lower in 2006.

JOINT STATEMENT: TOWARDS THE BUILDING OF A STRATEGIC AND MULTILAYERED PARTNERSHIP BETWEEN JAPAN AND THE KINGDOM OF SAUDI ARABIA
Tokyo, April 6th, 2006

At the invitation of His Excellency (HE) Junichiro Koizumi, Prime Minister of Japan, His Royal Highness (HRH) the Crown Prince Sultan Bin Abdulaziz Al-Saud, Deputy Prime Minister, Minister for Defense and Aviation, the Inspector General of the Kingdom of Saudi Arabia, made an official visit to Japan from April 5 to 7, 2006, corresponding to 7 to 9 Rabi'l 1427H.

His Imperial Highness (HIH) the Crown Prince of Japan received HRH the Crown Prince Sultan Bin Abdulaziz Al-Saud upon his arrival at the airport.

His Majesty (HM) the Emperor of Japan met with HRH the Crown Prince Sultan Bin Abdulaziz Al-Saud at the court luncheon hosted by HM the Emperor in the honor of HRH the Crown Prince at the Imperial Palace.

HRH the Crown Prince Sultan and HE Junichiro Koizumi, Prime Minister of Japan, held a meeting in Tokyo on April 6, 2006 and issued the following statement.

1) Both sides recalled that the first visit by HRH the Crown Prince Sultan Bin Abdulaziz Al-Saud to Japan in 1960 in his capacity as Minister for Transportation and Communication, which was the first Royal visit from Saudi Arabia to Japan, opened the pages of the history of the friendly ties between the Royal family of the Kingdom of Saudi Arabia and the Imperial family of Japan, and that the Royal and Imperial visits between the two countries, including the visits of HM King Faisal in 1971 and then HRH Crown Prince Abdullah in 1998, as well as the visits of then Their Imperial Highnesses (TIH) the Crown Prince and Crown Princess of Japan in 1981 and TIH the Crown Prince and Crown Princess of Japan in 1994 and that of HIH the Crown Prince of Japan in 2005, further enhanced the close ties.

2) Recognizing that relations of amity between the two countries have been mutually beneficial, and especially that various activities and events on the occasion of the 50th Anniversary of establishing the diplomatic relations have made a tremendous contribution to strengthening the bilateral ties, both sides expressed their firm determination to further advance their prosperous relations. Towards that end, noting the great significance of the visit of HRH Crown Prince Sultan Bin Abdulaziz Al-Saud to Japan, which has provided a historic opportunity to build a strategic partnership, "Memorandum on Policy Consultations between the Ministry of Foreign Affairs of Japan and the Ministry of Foreign Affairs of the Kingdom of Saudi Arabia" was signed.

3) Both sides shared the intention to further promote strategic dialogues at all levels in various fields, such as economics, culture, environment and aviation transportation for consolidating their partnership. Both sides also expressed their willingness to promote high-level political dialogues, including those between Foreign Ministers.

4) Both sides shared the view that further development of economic relations is a main driving force towards a strategic and multi-layered partnership between Japan and Saudi Arabia, while noting with satisfaction the recent development of economic and commercial activities between the two countries. The Japanese side congratulated Saudi Arabia on its accession to the World Trade Organization (WTO), which would further expand business opportunity in Saudi Arabia. The Japanese side also welcomed the announcement of the opening of a Saudi commercial bureau in Tokyo.

5) Both sides welcomed the significant increase of mutual investment between Japan and Saudi Arabia, including Rabigh Petrochemical Project by Sumitomo Chemical Co., Ltd. and Saudi Aramco (Saudi Arabian Oil Company), Sharq Project by SPDC Ltd. (Saudi Petrochemicals Development Company) and SABIC (Saudi Basic Industries Corporation), and Saudi Aramco's investment to Showa Shell Sekiyu K. K. In a similar vein, both sides welcomed the cooperation between Saudi and Japanese businessmen, paying particular attention to the positive outcomes of the activities within the framework of the Japanese-Saudi Business Council Joint Meeting.

6) Towards further developing the economic relations between Japan and Saudi Arabia, both sides underlined the importance of making efforts mainly at two levels simultaneously. First, both sides expressed their willingness to vitalize discussions on how to further promote mutual investments, and readiness to resume negotiations on bilateral agreement on protection and promotion of investment. Second, on a regional level, both sides welcomed the decision to launch formal negotiations on an Free Trade Agreement (FTA) covering trade in goods and services between Japan and the GCC (Gulf Cooperation Council) States and to hold a preparatory meeting in May 2006, recognizing that the Japan-GCC FTA would contribute to further strengthening the economic and business relations between Japan and Saudi Arabia as well as between Japan and the GCC States as a whole.

7) Both sides shared the view that the stability of the world oil market is a cornerstone for the sound growth of the world economy. In this regard, the Japanese side expressed its appreciation for the significant roles being played by Saudi Arabia - the largest, reliable and secured exporter of oil to the world as well as to Japan and the leading figure of Organization of the Petroleum Exporting Countries (OPEC). Both sides recognized the importance to further promote bilateral cooperation through close dialogues on energy field, based on mutually complementary relationship between Saudi Arabia with its largest hydrocarbon resource in the world and Japan with its advanced energy-related technologies. The Saudi side expressed its intention to continue to assure stable oil supply to Japan, and the Japanese side expressed its appreciation for this. Both sides also welcomed the successful inauguration, by the Custodian of the two Holy Mosques, King Abdullah Bin Abdulaziz Al-Saud, of the International Energy Forum (IEF) headquarters in Riyadh, stressing its role to enhance transparency of the world oil market. In this regard, both sides reaffirmed their determination to cooperate with each other at the upcoming 2nd International Energy Business Forum (IEBF) and the 10th IEF on 22-24 April.

8) Both sides recognized the importance of multi-layered economic relations based on mutual benefits, and shared the view on the key role of the Joint Committee. In this connection, both sides expressed their aspiration to hold the next meeting as early as possible.

9) The Saudi side expressed its gratitude for the technical assistance which Japan has so far provided, mainly through Japan International Cooperation Agency (JICA), in various fields of human resources development to implement the Japan-Saudi Cooperation Agenda. Both sides welcomed, as a role model of vocational training, the successful achievement of the Saudi Japanese Automobile High Institute (SJAHI) project, which was a fruitful outcome of coordinated efforts by the governments and private sectors of both countries. The Saudi side also expressed its appreciation for the other projects such as the project of High Institute for Plastics Fabrication (HIPF) and the project of Training on Female Enterpriser Promotion.

10) Both sides confirmed that mutual understanding and respect of different cultures and civilizations are the bedrock for this rapidly globalizing world. In this connection, the Japanese side expressed its support for the call by the Custodian of the Two Holy Mosques, King Abdullah Bin Abdulaziz Al-Saud to condemn the idea of the clash of civilizations and to replace it by the idea of constructive, peaceful co-existence between all civilizations, and his call that relations between countries and nations should be a stage of a true dialogue in which every side respects other side. In this context, the Saudi side noted that Japan has been making important contributions to promoting mutual understanding between various civilizations, among which are Islamic, Asian and Western. The Saudi side expressed its appreciation for Japan's consistent enlightened position to combat prejudiced stereotypes and to promote understanding between cultures and civilizations.

11) Both sides noted the importance of the Japan-Arab Dialogue Forum, of which the two countries are the core members and which have so far held three meetings - the first in Tokyo, Japan, the second in Alexandria, Egypt and the third in Riyadh, Saudi Arabia - in promoting Japan-Arab mutual understanding, and welcomed that the fourth meeting will be held in Tokyo in May 2006. The Saudi side also appreciated other initiatives by Japan in this regard, such as Inter-Civilizational Dialogue and Dispatch of Japan-Middle East Cultural Exchanges and Dialogue Mission, both of which have contributed to deepening mutual understanding between Japan and the Middle East. The Japanese side expressed its appreciation for the significant roles played by King Saud University in promoting Japanese language education, as well as by the Arabic Islamic Institute in Tokyo in teaching the Arabic language and introducing the Islamic culture to the Japanese society.

12) Both sides underlined the pivotal importance of Japan-Saudi coordinated joint efforts for peace and stability in the entire Middle East, on such issues as follows.

13) As for the Middle East peace process, both sides emphasized that just and comprehensive solution of the Arab-Israeli conflict would be a significant contribution to the stability and prosperity in the Middle East region and would eliminate a main source of tension and threat to international peace and security. Both sides expressed their support for the creation of an independent and viable Palestinian state, stressing the importance of both the peace initiative by the Custodian of the Two Holy Mosques, King Abdullah Bin Abdulaziz Al-Saud, which was adopted at the Arab summit in 2002, and the Roadmap. Both sides, while confirming their continued support for the Palestinians, stressed the importance of realizing just and comprehensive peace, accepting the result of the elections held in January 2006 as a step towards building a democratic Palestinian state in accordance with relevant United Nations Security Council's resolutions including 242 and 338, and continuing to provide humanitarian assistance to the Palestinian people.

14) Reaffirming the commitment of the two countries to help the Iraqi people in achieving their aspirations for better future, both sides decided to closely coordinate with each other to support achieving stability and territorial integrity and promoting its national unity and equality among all groups of the Iraqi people, so that they could take advantage of optimum benefits from its resources. The Saudi side expressed its appreciation to Japan's significant contributions for reconstruction and stability of Iraq.

15) Both sides, appreciating the importance of Afghanistan's transition to peace and security, stressed the importance of their ongoing joint efforts in Afghanistan to help achieving that end.

16) Both sides stressed the importance of urging all the states in the Middle East to accede to the Treaty of Non-Proliferation of Nuclear Weapons and making the Middle East a region free from all weapons of mass destruction and their delivery means in conformity with relevant internationally legitimate resolutions. Both sides also confirmed the importance of supporting the international diplomatic efforts which aim at non-proliferation of nuclear weapons as well as working for a diplomatic solution to the Iranian nuclear issue.

17) Both sides reiterated their condemnation against terrorism in all its forms as a threat to the international peace and security, and shared the view that the international community must be united in fighting against terrorism. In this context, both sides reaffirmed their firm commitment to implementing the counter-terrorism conventions and protocols, and relevant United Nations (UN) Security Council resolutions. The Japanese side appreciated Saudi's initiatives on counter-terrorism, including the hosting of the Counter-Terrorism International Conference held in Riyadh in February 2005, in which Japan also participated. Both sides stressed the importance of the recommendations of the Conference including the proposal by the Custodian of the Two Holy Mosques, King Abdullah Bin Abdulaziz Al-Saud to establish an International Counter Terrorism Center as well as the urgent need to conclude the negotiations of the Comprehensive Convention on International Terrorism to promote international cooperation on counter-terrorism.

18) Both sides shared the view that the United Nations must be comprehensively reformed to reflect new realities of the 21st century, recognizing increasingly important role of the United Nations in promoting world peace, stability and prosperity. Both sides also affirmed cooperation toward renewing and revitalizing the UN organs including the General Assembly, the Secretariat, the Economic and Social Council and the Security Council based on the World Summit Outcome Document adopted last September. Especially, both sides shared the view that early reform during the current session of the UN General Assembly is necessary, recognizing that Security Council reform is an essential element of such overall reform. The Saudi side expressed its support for Japan's permanent membership in the Security Council when the expected reforms of the Council include the enlargement of its membership. Japan expressed its deep gratitude for the support of Saudi Arabia.