UAE–Japan Relations: Energy, Trade, and Diplomacy

Introduction

In an era when American influence in the world is waning, the bipolarity of the Cold War years is being replaced by regional partnerships that are mutually beneficial for all stakeholders. One important international partnership that has emerged over the past half century is the relationship between the United Arab Emirates (UAE) and Japan. Both countries have expanded their diplomatic presence in each other's capitals and invested heavily in exports—most especially oil and gas flowing to Japan—while the UAE imports electronics, vehicles, and various types of machinery from Japan. International analysts predict that this strategic partnership will continue to expand for the foreseeable future.

The purpose of this research paper is to provide an overview of the history of relations between Japan and the UAE. A discussion of the origins of this modern relationship is followed by a description of its historic evolution. In addition, an analysis of the implications of these trends for both countries is followed by an examination of the weak points in their relations and how to strengthen them in the future. Finally, a summary of key findings is presented in the conclusion.

Overview of UAE–Japan Relations

Both the UAE and Japan have open economies, high per capita income levels, and impressive annual trade surpluses. The UAE has also succeeded in diversifying its economy so that the portion of GDP derived from oil and gas exports has been reduced by 30% in recent years (UAE economy, 2019). Furthermore, the UAE has taken steps to promote itself as a global trade hub, an initiative that has fueled increasing interest on the part of Japan, which remains highly reliant on oil and gas exports from the UAE. In this regard, U.S. analysts report that, "Scarce in critical natural resources, Japan has long been dependent on imported energy and raw materials. After the complete shutdown of Japan's nuclear reactors following the earthquake and tsunami disaster in 2011, Japan's industrial sector has become even more dependent than before on imported fossil fuels" (Japan economy, 2019, para. 4).

Japan is one of the UAE's most important export partners, accounting for nearly 10% of its annual export trade (UAE economy, 2019). Japan has become one of the largest economies in the world, and its revenue levels are expected to remain stable for the foreseeable future. Former Prime Minister Shinzo Abe committed the Japanese government to improving the efficiency of the country's oil and gas industries, and these initiatives are expected to further enhance ongoing economic development efforts. Against this backdrop, both the UAE and Japan have recognized the importance of establishing and strengthening bilateral relations, and these efforts have expanded significantly over the past half century.

Some salient demographic and economic statistics for the UAE and Japan are presented in Table 1 below to provide an overview of their current status.

Table 1: Salient Demographic and Economic Statistics for the UAE and Japan

Population: UAE — 9,701,315; Japan — 126,168,156. Religions: UAE — Muslim (official) 76%, Christian 9%, other 15%; Japan — Shintoism 70.4%, Buddhism 69.8%, Christianity 1.5%, other 6.9% (note: total adherents exceed 100% because many people practice both Shintoism and Buddhism). Per capita GDP: UAE — $68,600; Japan — $62,900. Life expectancy: UAE — 79.7 years; Japan — 85.5 years. Unemployment rate: UAE — 12.1%; Japan — 5.1%. Languages: UAE — Arabic (official), Persian, English, Hindi, Urdu; Japan — Japanese. Source: CIA World Factbook (2019).

As can be seen from Table 1, while Japan has a far larger population than the UAE, both countries have comparable per capita GDP rates and both enjoy enviable longevity rates. In reality, this is where the similarities between the UAE and Japan largely end, making the historic evolution of the relations between these two countries especially interesting.

Historic Evolution of the Relationship

Japan's relationship with the UAE predates the country's actual founding in 1971. In sharp contrast to Japan's millennia of existence, the UAE is a virtual newcomer on the global scene—but one which Japanese leadership singled out from the outset as a valuable trading partner, most especially to secure future supplies of oil and gas. Japan was among the first movers to establish relations with the UAE (Garcia, 2015). In this regard, the Japanese ambassador to the UAE emphasized in 2016 that:

"Japan and the UAE have always enjoyed an amicable relationship even before the formation of the UAE. The relationship started in the oil and gas sector more than 40 years ago. Since then, it has significantly expanded, diversified, and become multi-layered into many other sectors such as renewable energy, environment, education, science and technology, security, finance, tourism, and others." (Fujiki, 2016, para. 4)

In fact, fully four years prior to the formation of the UAE in 1971, Japan had already established economic relations with the emerging nation: three Japanese oil companies obtained concessions through an international tender by Abu Dhabi in its oilfields in 1967 (Mustafa, 2013). Given the still relatively weak nature of Japan's economy at the time, these investments and efforts to develop closer political and economic ties with the UAE were especially significant and clearly point to the futurist outlook of Japanese leadership during the 1960s and 1970s.

As early as the 1950s, Japan implemented a generous Official Development Assistance program that continued throughout the 1960s to the 1980s (Garcia, 2018). The motivation behind these early efforts was based in large part on Japan's oil and gas needs and the UAE's proven reserves. Trade levels between Japan and countries in the UAE's region have been estimated to be worth more than $192 billion each year (Garcia, 2015).

The early trends also reflected the growing tendency among Western nations to obtain their oil and gas needs domestically or through international trade with countries outside of the Persian Gulf, while Pacific Asian countries were strengthening their relations with countries such as the UAE to secure their growing energy needs (Garcia, 2015). Garcia reports that:

"Key to this relation is the fact that unlike Western countries, which are actively seeking energy diversification away from the Persian Gulf, the Pacific Asian states are deepening their energy dependency on the region. As a result, Persian Gulf states have come to see the Pacific Asia region as a more lucrative market." (Garcia, 2015, p. 268)

By virtually any measure—except cross-cultural exchanges, as discussed below—the UAE and Japan have continuously strengthened ties over the past 50-plus years, and this interdependence is expected to continue to increase in the future (Garcia, 2015). Japan's reliance on the UAE for most of its energy needs is also expected to change in nature, if not in demand levels, as efforts to diversify the UAE's oil and gas industry provide new opportunities for UAE-based alternative energy providers to gain market share and supply Japan with more environmentally friendly renewable resources (Garcia, 2015).

Furthermore, both the UAE and Japan have increased the number of diplomatic missions in each other's countries and have provided higher-ranking ministry officials authorized to engage in formal negotiations. As Garcia points out, "This is a reflection of the growing importance each side has bestowed on the other" (2015, p. 269). In April 2013, Prime Minister Abe made his first personal diplomatic visit to the UAE (Japan in depth, 2013), the tenth such diplomatic mission from Japan to the UAE since 2001 (Mustafa, 2013). In addition, the UAE foreign minister met with the Japanese prime minister during an official visit in 2013 (Garcia, 2015). Officials from both countries emphasized the importance of continuing to strengthen relations and to further diversify the various ways the two countries are already cooperating to their mutual benefit (Mustafa, 2013).

While the UAE is not the only country in the region where Japan has developed an extensive diplomatic presence, it is among the most important for Japan's energy stability (Mustafa, 2013). As Mustafa notes, "Fully aware of its status as a country with hardly any energy resources, Japan has engaged in energy diplomacy and investment in oilfields in the Middle East [and] recognized the UAE immediately upon the creation of the federation on December 2, 1971" (2013, para. 4).

The interest in establishing close political and economic ties between Japan and the UAE even predates the establishment of the nation in 1971, indicating that both countries recognize the mutual strategic value of this close relationship. One Japanese trade official noted that, "The UAE had been a major pillar of Japan's energy policy since 1967 and his country was determined to enhance the long-standing cooperation and economic relations between the two" (as cited in Mustafa, 2013, para. 6). Approximately 40% of all oil produced in the UAE over the past half century has been exported to Japan (Mustafa, 2013). Importantly, Japan's importation of oil from the UAE has continued regardless of international political circumstances, such as the October 1973 war in the Middle East, which caused sharp fluctuations in the oil market and an oil shock that adversely affected many Western nations (Mustafa, 2013) while greatly benefiting oil-producing nations such as the UAE (Habibi, 2013).

In 1972, Japan was among the first countries to establish formal diplomatic relations with the UAE, which was quickly followed by the establishment of a UAE embassy in Tokyo in December 1973 and a Japanese embassy in the UAE in April 1974 (Mustafa, 2013). A further sign of the close relationship between the two countries is the fact that more than 3,500 Japanese expatriates now live and work in the UAE, and UAE exports to Japan exceed $22 billion annually, comprised primarily of crude oil and natural gas. Reciprocally, UAE imports from Japan amount to nearly $7 billion annually, comprised mainly of electronics, vehicles, and various types of machinery (Mustafa, 2013). Beyond these indicators, the two countries also increased commercial flights between Tokyo's Narita Airport and Abu Dhabi and Dubai to 14 per week, and an additional Abu Dhabi–Haneda route was inaugurated in 2012 (Mustafa, 2013).

With respect to international security, Japan and the UAE have also been strategic partners in their efforts to reduce international tensions through nuclear disarmament and encouraging the nonproliferation of additional nuclear weapons (Japan in depth, 2013). The UAE and Japan agreed to continue pursuing these global goals during their summit meeting in 2011, and the UAE minister of interior undersecretary and the Japanese deputy director general also entered into agreements concerning security and anti-drug interdictions (Mustafa, 2013).

There are also other considerations involved in the increasingly close ties between the UAE and Japan. One international analyst concludes that, "Abe hopes to enhance the stable supply of energy from these nations to Japan by bolstering relations with them, and to use that as a bargaining chip in negotiations over the import of shale gas from North America and of oil and natural gas from Russia" (Japan in depth, 2013, p. 3). Taken together, the historic evolution of the relations between the UAE and Japan only dates back to the late 1960s, but both countries have made continuous and substantive efforts to solidify and further improve their relations during this time.

Conclusion

The research showed that even as Japan was recovering from its devastation in World War II, the country's leadership was carefully evaluating potential strategic partners in the Middle East that could help meet its growing energy needs. The research also showed that while Japan has sought improved relations with other countries in the region—most especially Qatar, Saudi Arabia, and Kuwait—its primary focus has remained on developing strong political, diplomatic, and economic ties with the United Arab Emirates. Both countries have taken calculated steps to achieve closer ties, including exchanging greater numbers of diplomats with higher seniority levels who are authorized to conduct trade negotiations and identify additional opportunities for cooperation in areas beyond oil and gas.

The research was consistent in showing that trade between the UAE and Japan has expanded to include a wide array of products made possible largely through the bilateral efforts to strengthen ties between the two countries. In the final analysis, it is reasonable to conclude that the political leaders of both Japan and the UAE recognize the importance of their current relations and the need to continue improving them through additional investments by Japan in the diversifying UAE economy—investments that will help the UAE purchase even more goods and services from Japanese enterprises in the future.

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