JAPAN MAY BE LOSING SWAY IN THE UAE

Is there trouble brewing in Japan’s relationship with the UAE? In late April the Yomiuri ran an article that suggested as much. This week Japan Focus posted an English translation. While reading this article, it is useful to keep in mind that the UAE was Japan’s largest single oil supplier between 1985 and 2004, and is still the number two supplier:

Japan and 120 other nations as well as four international organizations are competing through elaborate exhibitions at 2005 World Exposition Aichi. But it is not well known that the United Arab Emirates, the largest crude oil exporter to Japan, suddenly withdrew from the event. The UAE said in September 2003 it would not take part in the event, even though it previously had said otherwise. A senior UAE government official gave Japan no reason other than that it had been decided by the country's information and cultural affairs minister.

The royal family has virtually complete power in the UAE, which has no parliament and largely bases its decisions on human ties. Sources close to the Japanese government said some members of the UAE royal family may have changed their view of Japan. Few facts are known, and many incidents followed the UAE's decision.

Britain's Prince Charles and French President Jacques Chirac visited the UAE to attend the funeral of former UAE President Sheik Zayed bin Sultan al-Nahyan, who died in November. Kawaguchi Yoriko, a special assistant to the prime minister, also attended the ceremony. At the time, many nations saw a change in leadership as an opportunity to strengthen ties with the UAE. "It's difficult to say that Japan has a knack for dealing with oil-producing countries when it comes to diplomatic matters," a government official said.

Nahyan was seen as an ally of Japan. He awarded the rights to develop oil sites to Japanese oil companies, counterbalancing the sway of international oil majors. But Sheik Mohammed bin Zayed al-Nahyan, the UAE's new crown prince and Nahyan's third son, is the chief of staff of the UAE armed forces. He is said to have developed close ties with the U.S. military. Within the Japanese oil industry, some are concerned that the appointment of the new prince, who tends to favor industry giant Exxon Mobil of the United States, could change Japan-UAE relations.

UAE Energy Minister Mohammed bin Dhaen Al-Hamili also pledged to provide Japan with a stable oil supply, but hinted at a possible decline in otherwise favorable bilateral relations, saying, “The Japanese are not very well-known to the UAE public.”

Meanwhile, China is steadily establishing itself as a partner with the UAE. In December, Dragon Mart, a wholesale shopping complex of Chinese products, opened in Dubai. About 3,000 home appliance, textile and other Chinese companies are planning to set up operations in the UAE. Hatanaka Yoshiki, director of the energy and environment program of the International Development Center of Japan, said China was trying to deepen economic relations with the UAE due to the fact that their current relationship is one-sided—China buys oil from the UAE—and could be jeopardized in the face of unforeseen circumstances. It will be difficult for Japan, as the country's population continues to age, to return to the high economic growth it once enjoyed.

Naito Masahisa, the chairman of the Institute of Energy Economics, Japan, said Japan had little time left as a powerful country that could take advantage of its influence to secure oil from the Middle East. Japan will not be able to survive an energy war unless it breaks from an idea that was valid until several years ago, in which it was believed it could cope with surging oil prices by growing economically strong enough to pay more.