Newsletter No. 578
News-Analysis
April 9, 2007

 

The following is a round-up of stories on Japan-GCC relations, in particular, Qatar and the UAE.

JAPAN LOBBIES QATAR NOT TO JOIN NATURAL GAS EXPORT CARTEL

We have already discussed Japan’s strong relationship with Qatar. The Daily Yomiuri reports today that Tokyo is attempting to leverage that connection in order to defeat plans to create a natural gas suppliers’ cartel similar to the OPEC oil cartel.

Today in Doha will open a meeting of the Gas Exporting Countries Forum (GECF), which will discuss the creation of an OPEC-like cartel for natural gas. Japan is currently the world’s largest importer of natural gas.

The proposal apparently came from Iranian Supreme Leader Ayatollah Ali Khamenei, and Russian President Vladimir Putin quickly became intrigued. Algeria has also added its approval to the concept. But, on the other hand, Indonesia and Australia have been cool to the proposal.

As for Qatar, they have agreed to discuss the idea in Doha. The most interesting sentence in the Yomiuri report was as follows: “On learning of the drive to establish a cartel, the Economy, Trade and Industry Ministry sent a ranking official to Qatar in February to convey the government's concerns about the plan.” Clearly, the Japanese government does not want to see any cartel formed, and is trying to persuade Qatar not to cooperate.

Analysts point out that it will probably be difficult to form a strong natural gas cartel for a variety of structural reasons.

PEARLS OF THE GULF

One aspect of Japan-Persian Gulf relations that is often forgotten -- and has never been properly studied -- is the pearl connection. Before there was oil, there were pearls, and that used to form the basis of the economies of the Arab countries of the Gulf.

It was Japan that killed the Persian Gulf pearl economy. A handful of Japanese inventors -- Kokichi Mikimoto, Tatsuhei Mise, and Tokichi Nishikawa -- had discovered how artificially culture pearls by the 1910s. These men became associated with the Mitsubishi zaibatsu, and by the 1930s Japanese pearls were flooding into the world market, collapsing the Persian Gulf economies. Fortunately for them, however, oil exporting soon came to their rescue.

Now, Dubai has announced plans to revive the Persian Gulf pearl industry through the Dubai Multi Commodities Centre and partners from Australia and Japan. Bloomberg reports the comments of Tawfiq Farah, the executive director of the Centre: “Policymakers and public officials here are very comfortable talking about pearls: they're like camels and falcons -- a (regional) legacy… You meet a number of older people in town who remember their fathers diving for pearls and started out in trading by being involved in the pearl business.”

Currently, Hong Kong is the world center for the pearl trade.

JAPANESE EXPORTS TO THE GCC STATES SOAR

Gulf News reports that figures collected by the Dubai Chamber of Commerce and Industry show that Japan’s exports to the UAE expanded from about US$3.1 billion in 2002 to almost US$6 billion in 2006. This is annual growth rate of about 37%.

The growth rates for Japanese exports to some of the other GCC states in the same period (2002-2006) were as follows:

37% -- Qatar
27% -- Bahrain
5% -- Saudi Arabia

The average rate of growth in Japanese exports to the six GCC states was 13%.