- The Persian Gulf and Pacific Asia: From Indifference to Interdependence by Christopher Davidson
Christopher Davidson has written a concise historical and contemporary overview of the growing interdependence between the Persian Gulf and Pacific Asia regions. The book focuses on the budding relations between the six monarchies in the Pacific Gulf—Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Qatar, Bahrain, and Oman—and three of the most advanced economies of Pacific Asia—Japan, China, and South Korea. Davidson successfully demonstrates how the rapidly growing economies in the Pacific Asia region have been incentivized to seek greater cooperation with Persian Gulf states in order to secure the growing quantities of energy that are necessary to continue economic development. Likewise, as standards of living rise in the Persian Gulf there has been an increasing demand for technology, investment, and consumer goods from Pacific Asia.
Japan is shown to be an early pioneer in the establishment of relations between the two regions in the 1950s, as well as a source of generous Official Development Assistance (ODA) from the 1960s to the 1980s. China and South Korea followed suit by establishing trade relations in the 1980s and 1990s, respectively. The hydrocarbon trade has been at the center of the relations between these two regions. Davidson estimates that hydrocarbon trade between the two regions could be worth as much as $192.2 billion annually (p. 21). 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.
Despite the centrality of the hydrocarbon trade, Davidson reveals that there is an increasing volume of trade in non-hydrocarbon sectors between the two regions. The monarchies in the Persian Gulf have attempted to diversify their exports through the production of plastics and petrochemicals. Pacific Asian states have effectively found a new market to export their cars, heavy machinery, textiles, and electronics. Japan in particular has been the most important exporter to the Persian Gulf after [End Page 267] overtaking the United States and Germany. Nevertheless, it is expected that China will eventually supersede Japan as the main exporter in the region. The non-hydrocarbon trade between the two regions is estimated to be worth around $63 billion annually (p. 33).
The deepening of interdependence between the two regions has also led to increases of Foreign Direct Investment (FDI). Much FDI between the two regions continues to be dominated by hydrocarbon interests although signs of diversification are beginning to show. More specifically, Japan has sought to promote water-related investments in Saudi Arabia by financing a number of projects in the country. These investments are supplemented by efforts to cooperate with Saudi Arabia and the United Arab Emirates on solar energy production. South Korea on the other hand has spearheaded the movement towards nuclear energy production in the region. This is underscored by their successful bid to construct and maintain four light-water reactors for Abu Dhabi. China has been actively investing in greater refining capabilities in the Persian Gulf, although in a sign of diversifying interests, they have also been cooperating with Kuwait on agricultural sustainability and with Saudi Arabia on telecommunications infrastructure. The sovereign wealth funds from Persian Gulf states have also been actively investing in the Pacific Asia region. Much of their FDI has gone into buying stakes in existing oil companies from Japan, China, and South Korea.
A significant point that is highlighted throughout the book is the fact that despite increasing flows of trade and investments, there continues to be a lack of a security dimension in the relations between the two regions. Davidson points out that much of this is due to the fact that the Persian Gulf continues to be reliant on American and Western powers for a security umbrella, as well as the fact that there is lingering distrust between the two regions. In this...