Newsletter No. 593
Editorial-Opinion
April 29, 2007

 

SHINZO ABE IN THE PERSIAN GULF

This is the Golden Week holiday in Japan, and many senior government officials have deserted the capital to go on foreign tours. Prime Minister Shinzo Abe has, of course, made his first pilgrimage to Washington, and is now on a tour of Saudi Arabia, Kuwait, the UAE, Qatar, and Egypt. Foreign Minister Taro Aso also went to Washington, and then is expected to swing through Russia and Egypt. Meanwhile, METI Minister Akira Amari is visiting Uzbekistan, Kazakhstan, Saudi Arabia, and Brunei. All of these movements through Islamic countries are guaranteed to keep the Shingetsu Institute busy for the next few days.

Our first report will present an opinion piece published by Abdulaziz Sager, who is the chairman of the Gulf Research Center in Dubai (which we introduced in Shingetsu Newsletter No. 538.) The following opinion piece has appeared at The Peninsula Online and Arab News, among other places.

This piece covers a lot of ground, giving us a Gulf Arab view of Tokyo’s current policies in regard to the Arab-Israeli peace process, Japan-GCC relations, and the Iranian nuclear issue.

Japan’s Chance to Support Regional Peace
By Abdulaziz Sager

When Shinzo Abe succeeded Junichiro Koizumi as Japanese Prime Minister late last year, he was widely expected to make a foreign policy declaration, including a key statement on Tokyo’s Middle East policy. It isn’t an overstatement to suggest that there couldn’t have been a better message to deliver than his visit this week -- accompanied by a delegation of over 100 businessmen -- to Saudi Arabia, Kuwait, Qatar and the UAE, as well as Egypt.

Just how assertive the Japanese administration’s foreign policy is and how serious it is about the region was also evident in a defining speech by Minister for Foreign Affairs Taro Aso in February that expanded on his “Corridor of Peace and Prosperity” comments made a few months earlier. The minister listed three reasons highlighting the importance of the Middle East, including the Gulf Cooperation Council (GCC) countries, to Japan: Oil, economic transformation that is throwing up lucrative investment opportunities, and the value of Middle East stability for global peace.

In 2006, Japan was dependent on the Middle East for 89.2% of its imported crude oil, with the GCC countries accounting for 76.4%. It is well understood in Japan, like in most parts of economically-resurgent Asia, that the oil market would increasingly become a sellers’ market. As a major oil consumer, Tokyo realises the importance of maintaining a tangible presence in the Middle East. Explaining the need to strengthen Japan’s political engagement in the Middle East, Aso urged using economic, intellectual, and diplomatic resources, in an “all-Japan” effort.

In fact, the relationship between the GCC countries and Japan is one of mutual interest and respect. The region looks to Japan not just as a buyer of its oil, but as a great source of investment and reservoir of expertise. As a result of the increase in oil prices as well as economic expansion in the region and Japanese economic recovery, the GCC-Japan trade surged 39.1% in 2005 to US$88.5 billion, making Japan one of the biggest trading partners for the GCC. Mineral oil imports made up nearly 85% of its trade, with Japan importing about 1.2 billion barrels of crude oil from the region. Japan’s exports grew by about 15% to US$13 billion. Machinery and equipment accounted for a lion’s share -- US$10 billion. Of this, transport machinery was worth about US$7 billion. The UAE was Japan’s largest market, accounting for almost US$5 billion.

This economic engagement is bound to gain momentum as the GCC-Japan FTA negotiations, which began in September 2006 with a focus on agriculture and goods, reaches its logical conclusion. Further, economic diversification plans that are currently being implemented in the region require huge investments and expertise, both abundantly available in Japan.

Among the major joint ventures that are currently operational and worth noting are Rabigh Petrochemical Plant -- a US$9.8 billion joint venture between Aramco and Sumitomo Chemical; a stake in the Qatari RasGas by LNG Japan Corporation; the Dubai Metro project -- a consortium headed by Mitsubishi; and the marketing of ALBA-Aluminum by Sojitz.

One area of cooperation that will have wide ramifications is human resources development. As the region becomes increasingly aware of the need to encourage a knowledge economy, it is important to accelerate beyond the current arrangements such as the Saudi government and organisations like SABIC promoting scholarships to Japan for engineering courses, or Japan Cooperation Centre for the Middle East (JCCME) transferring software in educational methods, management skills and advanced technology to Bahraini organisations, or JCCME helping Qataris in productivity improvement skills.

On the road ahead, Japan must encourage discussion on storage facilities to overcome crisis situations by tapping the Gulf’s potential to be an energy solutions provider and exploring the question of managing strategic energy stockpiles. The GCC countries would also greatly benefit from Japan’s expertise on diversification into petrochemical and other heavy industries, especially aluminum and steel.

There is no doubt that oil and trade serve as key factors in shaping and altering the relations between Japan and the Gulf countries, but it is an oversimplification to analyse it only from this angle. There are several regional and international issues that are intertwined as well.

The GCC countries and Japan see eye to eye on the Palestinian-Israeli conflict, with Tokyo urging the international community to help achieve a just and comprehensive peace settlement based on the UN Security Council resolutions 242 and 338.

While the region, and the world at large, is grappling with efforts to stabilise Iraq, it is worth lauding the Japanese contribution to the cause. In 2005, Japan cancelled nearly US$7 billion of Iraqi debt, amounting to 80% of its claims. Further, it pledged about US$5 billion to support Iraq’s reconstruction effort. During the first week of April this year, Japan lent some US$850 million to visiting Iraqi Prime Minister Nouri Al-Maliki’s government in low-interest loans to fund the construction of an oil export facility in Basra. It will also fund fertiliser and oil refinery plants and help improve electricity generation.

It would be more enduring if Japan were to consider the possibility of forming a troika with Saudi Arabia and Turkey to convince Iran to step back from the brink. While Saudi Arabia has a direct stake, along with the other GCC countries, in denuclearising Iran, Turkey would be seen in a new light by the members of the European Union, which it is endeavoring to join, if it contributes positively to overcoming the current crisis.

Japan has the right credentials to take up this role as opposed to the European troika, which has been engaged in unsuccessful diplomatic negotiations with Iran leading to the current standoff. Besides the history of Hiroshima and Nagasaki, Japan has a strong record in promoting nuclear disarmament and nonproliferation. More importantly, with Iran supplying more than 15% of Japan’s oil, making it the third largest supplier, the two countries share an excellent economic rapport that can be converted into political capital.

Abe’s tour of the region will serve to recognise the GCC’s concerns with regard to the nuclear issue and the fallout of a possible conflict over the same, which are identical to the Japanese fear of expansion of the nuclear zone in its own surroundings. Tokyo is well equipped to advise Tehran about the virtues of accepting an inspection system involving the application of comprehensive safeguards, which Japan has been adhering to for decades.

If Japan’s desire to create a “Corridor of Peace and Prosperity,” on a route starting from the West Bank, across Jordan and beyond, leading to the Gulf states, is to materialise, Iran has to be a big part of that equation.