NBR Analysis: Volume 12

1. Japan’s Energy Angst and the Caspian Great Game

NBR ANALYSIS Kent E. Calder Japan’s Energy Angst and the Caspian Great Game VOLUME 12, NUMBER 1, MARCH 2001 THE NATIONAL BUREAU OF ASIAN RESEARCH [This page intentionally left blank.] Foreword Japan, an importer of 99 percent of the oil it consumes, is acutely aware of its dependence on the unstable Middle East for its energy security. Moreover, the rapidly increasing demand for Persian Gulf energy among its NortheastAsian neighbors is compounding Japan’s energy angst. Developing new oil and gas resources such as those in the Caspian region, therefore, has become an important part of Japan’s geostrategic calculus. Japanese involvement in Caspian region energy projects could help curb its reliance on the Middle East, while also boosting Japan’s geopolitical influence beyond its traditional EastAsian sphere.This intriguing mix of economic and geopolitical considerations has motivated Japan’s interest in CentralAsia over the past several years. To assess Japan’s role in the competition for access to the Caspian’s energy reserves, Kent Calder, director of Princeton University’s Program on U.S.-Japan Relations and former special advisor to U.S.Ambassadors Thomas Foley and Walter Mondale, identifies the various forces motivating Japan’s entry into the Caspian Great Game and outlines several possible scenarios for the future of Japanese involvement in the region. Professor Calder argues that, despite its early hesitance to make formal overtures to the Caspian region, Japan is now the largest bilateral foreign aid donor to each of the energy-rich countries of the Caspian and is heavily involved with bilateral aid to the energy-poor countries of the region as well. Japan is acutely tuned to most U.S. objectives in the region, but, as Calder demonstrates, it has made a significant deviation by seeking to improve and deepen relations with Iran. While Calder predicts that over the next decade Japanese involvement in the Caspian region is likely to outstrip levels in the past, he also states that the contours for that involvement will be profoundly affected by how the relationship with Iran develops and Washington’s policy towardTehran. 3 Richard J. Ellings President The National Bureau of Asian Research This paper was commissioned as part of NBR’s ongoing program on oil and gas in the former Soviet Union. NBR is grateful to the Henry M. Jackson Foundation and the International Research and Exchanges Board (IREX) for their generous support of the project.As with all NBR studies, the author is solely responsible for the content of his paper. 4 Japan’s Energy Angst and the Caspian Great Game Kent E. Calder Energy is the catalyst behind Japan’s involvement in the Caspian region. Japan currently imports 99 percent of its daily oil consumption, and its neighbors in Northeast Asia are becoming increasingly dependent on imported energy as well. Japan’s unease at the rising Asian demand for, and dependence on, oil and gas from the Persian Gulf is compounded by the economic reality that its principal geostrategic ally, the United States, is moving in precisely the opposite direction. This intriguing mix of economic and geopolitical forces is combining Japan’s longstanding energy angst with a rising desire for political influence beyond its immediate region, transforming its emerging relationships in Central Asia. Although Japan was late in initiating overtures to the Caspian states, it is now the largest bilateral donor to each of the major prospective energy producers of the Caspian region. Moreover, powerful interests in Japan clearly have an economic stake in the realization of Caspian energy development quite apart from the nation’s energy needs, and a massive project such as a trans-Asian pipeline network could hardly be achieved without the active commitment of Japanese financial and industrial power. Looking to the future, expanding Japanese-Central Asian interaction over the next decade is likely to substantially outstrip levels of the past and will be profoundly affected by Japan’s relations with Iran. Should trans-Iranian access routes to Central Asia grow politically acceptable in the United States, and should global energy prices remain buoyant, Japanese involvement in the Caspian region could well surge by a quantum magnitude. Currently the director of Princeton University’s Program on U.S.-Japan Relations and a tenured Princeton faculty member, Kent Calder has previously served as special advisor to U.S. Ambassadors Thomas Foley and Walter Mondale, as lecturer on government at Harvard University, and as Japan chair at...