Saudi-Japanese relationship: The missing strategic pivot
In a few weeks’ time, Japanese Prime Minister Shinzo Abe will visit Saudi Arabia with an avowed objective of fostering the cordial relationship between the two countries.
That is exactly where the relationship has always been — cordial and businesslike without cultivating strategic opportunities.
The relationship between the two countries has been dominated by trade except for Japanese oil involvement in the neutral zone, which the Japanese mercantilist tendencies prevented from using as a springboard for a broader economic relationship with the Kingdom.
Aside from small investments in one of SABIC (Saudi Basic Industries Corporation) affiliates and the Sumotomo partnership with Saudi Aramco in PetroRabigh, the Japanese investment and involvement in the Saudi economy is limited in scope and depth.
Japan seems to be finally ready to alter its outlook. Japan elected Abe for a second time as prime minister with a clear tilt to the right; Abe comes to the post in a new strategic context vis-a-vis the relationship with China and the US and by implication the Middle East.
Japan has always frustrated its proponents and foes alike.
Kissinger was frustrated with the Japanese role and dubbed it as an economic animal.
The Japanese have always been methodical and seem unlikely to have changed dramatically, yet hopes remain.
The rise of China, the saber rattling by North Korea, the uneasy relationship with South Korea, the changing relationship dynamic with the US, and finally the crucial economic developments may have finally conspired to alter the Japanese conduct.
The tectonic shift in regional and international context comes on the back of intractable economic and demographic challenges for Japan.
The economic implications are significant where Japan just embarked on an expansive monetary policy.
Japanese large but domestic debt has kept it out of the limelight, but the new policy is bound to change that.
It is very difficult to predict how Japan’s set of relationships will evolve because the economic environment and the alliance with the US are bound to evolve.
One possibility is that the new Abe administration might forge a new strategic orientation to the Middle East where energy, markets, and a complimentary relationship with the US and possible competition with China might tilt Japan’s strategic orientation toward Gulf states, particularly Saudi Arabia.
It is time for Japan and Saudi Arabia to forge a new strategic relationship that is broader than trade.
Commercial interest is a good platform but not sufficient.
The shrewd strategic observer, Lee Kuan Yew, said long ago that Japan could rearm if the maritime sea lanes are threatened.
Many Japanese companies possess technological expertise and need capital and markets.
Saudi Arabia has a need for technology and has capital, and is the largest market in the region.
The Kingdom also can be helpful for Japanese companies to reach Africa. There are many such opportunities.
The Japanese need to shed their caution and take risks on the region and cultivate stronger links and stop seeing the relationship as transactional.
For Saudis, Japan has always been greatly admired for its development role model but even the social capital can be exhausted if Japanese decision-makers do not appreciate the strategic advantage at the expense of transactional objectives. The onus is also on Saudis to lay groundwork for a structural perspective to attract Japanese companies.
It is time for Japan to take serious steps to forge a more lasting strategic relationship with Saudi Arabia.
Investment banks, chambers of commerce, and methodical government institutions can help to bridge the gap, but they would not be able to do it without government prodding.
Should Japanese leaders fail to see the need, Saudi Arabia would need to emulate Japan by seeing matters with transactional mindset and attempt with others in the all-important Asian countries.
— Fawaz H. Al-Fawaz is a Riyadh-based economic consultant