GRM 2010 GRM 2011

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The Role of Japan and the Potential for Cooperation with the GCC for the Stability and Prosperity of the Indian Ocean Rim Region
Paper Proposal Text :
This paper aims to discuss the political, economic, and security role of Japan and its potential cooperation with GCC for the stability and prosperity of the Indian Ocean Rim Region (hereafter, IOR).

Japan is a financial power which has sought to invest more in the industrial and other sectors in emerging states. Japan’s current account balance was a surplus of US$138.7 billion (at the rate of US$1 = ¥120) in 2015, reaching its highest level in five years and far surpassing the country’s trade deficit, which amounted to only US$5.4 billion (17 percent of the previous year’s trade deficit). These figures clearly indicate that Japan has recovered from the damage of the Great East Japan Earthquake in the arena of global finance and trade. The largest portion of the surplus is transfer balance shared by dividends from investment to affiliated companies in overseas and foreign stock. Japan’s net balance of external assets was US$2.827 trillion at the end of 2015—ranked first in the world for the twenty-fifth straight year. Japanese foreign investments totaled US$12.6 trillion worldwide, including US$141 billion in India and US$4.9 billion in Saudi Arabia at the end of 2015.

Japan has invested more in India than all but three other investors, and its investment is growing every year. In May 2015, the Japanese government announced an action plan to double the amount of Japan’s investment in India within five years. It is well known that India has forecast to have sustainable economic growth, but it still lacks competitiveness as a global industrial base. The economic complementarity of India and Japan is high in the industrial sector, even though the volume of bilateral trade between the two countries is still one-twentieth that of China and Japan; an example is Multi Suzuki Co. Ltd., which first invested in India in 1982, has maintained the largest share of the automobile sales market in India, and announced a plan to build the Japan-India Institute for Manufacturing in November 2016.

Earlier studies have not provided a comprehensive picture of Japan’s policy in the IOR. This paper will provide an overview of Japan’s policy in ASEAN, its bilateral relations with India, the
African policy known as Tokyo International Conference on African Development (TICAD), Japan’s relationship with GCC states, and its strong ties with China; and will then synthesize these various elements to clarify the performance and future prospects of Japan’s strategy in the
IOR. Japan’s involvement in the region has often been discussed in the context of competition with
India and China, but this paper will attempt to fill the gap left by preceding studies to clarify Japan’s contributions to achieve stability and economic development in the IOR.

The IOR has prospects for stability and prosperity, but it must first overcome the lack of a stable regional framework. The peaceful rise of India has been widely recognized, but despite being the regional power, India has not invested in regionalism in the IOR until recently. Globalizing China now reaches throughout South Asia, Africa, and the Middle East. It is a matter of serious concern for GCC states and others whether China brings about peace and stability in the region, partly owing to the downgrading relative advantage of the U.S. navy. If the clash of India and China were to occur in the IOR, GCC states would be trapped in their political divides and involved in conflicts and would lose opportunities for investment. Conflicts between Pakistan and India could trigger this scenario. Another undesirable scenario would be an increase in support within the IOR for terrorism and Iranian proliferation of weapons of mass destruction.

Japan has committed to the marine security of the IOR. This began with marine mine-sweeping activity by Marine Self Defense Force (MSDF) in the Arabian Gulf after the
Kuwait liberation war in 1991. MSDF was dispatched to counter marine terrorism in the IOR after 2002 and then switched its mission to counter piracy in the sea of Somalia and the Gulf of Aden, which continues today. Japan has also joined in the Malabar marine exercises since 2007 and is confident in the peaceful rise of India and its leadership in the IOR.

States should prevent the IOR from becoming a route for proliferation. Japan is a front state against North Korea and can have impact on countermeasures against cooperation between North
Korea and Iran on the Asian side. Forty-five percent of North Korean trade was with Iran from
1995 to 2004. In September 2016, Japanese Prime Minister Shinzo Abe met with Iranian President Hasan Rouhani and sought to end Iran’s military relations with North Korea. Japan is one of the eleven founder states of Proliferation Security Initiative (PSI), which originated in 2003, and joins its international exercise every year. Japan also organized a joint exercise called Pacific Shield 12 in July 2012 that included India and Australia from the IOR.
The GCC and Japan have an opportunity to expand their cooperation to oppose terrorism and relations between North Korea and Iran, promote joint investment, and work together in the cultural sector. Japanese investment by Isuzu Motors Ltd. launched the first automobile factory in Saudi Arabia in 2012, which seems likely to have facilitated announcements of similar transfers of technology by Chinese, Indian, and other automobile makers. This Japan-Saudi joint fund will hedge the serious risk posed by the Justice Against Sponsors of Terrorism Act (JASTA) passed by the U.S. Congress in 2016 and enable Saudi investment in the U.S. under the cover of Japan’s private sector.
The private and public sectors of Japan feel they are inexperienced in the IOR and are eager to build trusted partnerships. Japan’s economy will be stable thanks to the development of artificial intelligence, the entrance of more foreign labor, and investment abroad. Japan’s investment in the IOR will grow in coming years, and Japan has the potential to increase its engagement in such sectors as disaster relief, financial investment, technological transfer, tourism, the marine economy, and security cooperation in the IOR.