Is Japan Still A Friend?

For decades in the Cold War Japan was seen as the U.S.'s strongest ally against communism in Asia. In part this was because the alliance was forced and now that Japan is freeing themselves and forging an "independent foreign policy"they are moving away from that policy.

That independent foreign policy has taken a shift away from the U.S. In fact, Shinzo Abe has not made one single visit to the U.S. Without that basic reinforcement of relations the comments from Japanese defense minister on the Iraq War are much more scathing. What's more the Democratic congress has been fairly assertive, in general, particularly against Japan. The recent resolution on "comfort women" in Korea during Japanese occupation could lead to a huge downturn in U.S.-Japanese relations.

Even worse, the agreement on North Korea has neglected the views of Japan on the abduction issue and pushed the Korean peninsula towards a negotiated reunification, putting a unified Korea strongly in Chinese courts, a unified Korea that will also likely have by then the means to build an aircraft carrier and may end up retaining North Korean nuclear weapons.

It's understandable, then, that Japan would be worried about our alliance with them, in spite of pushes towards deeper alliance. Japan's move towards a more aggressive and independent foreign policy compounded with possible worsening of American relations could throw Japan into Russia's good graces. Should Japan and Russia resolve the dispute over the Kuril islands. This had recently led to an uptick in tensions between the two, but Abe has made it clear he wishes to resolve the issue.

Some steps towards a resolution could be seen as Japan becomes increasingly reliant on Russian energy. In fact, Russian Gazprom is working with Japanese natural gas companies to develop new technology. Not only that but Russia has approved an oil pipeline from Eastern Siberia to the Pacific, in order to supply Japan with oil and intends to have it finished by 2012. Russia is even working to enrich uranium for Japan's nuclear power plants. Both the natural gas and nuclear deals are working through Gazprom and Atomprom, which are both controlled by Russia's government.

Japan's thirst for energy may lead to an expansion of Japanese relations with Iran. Japan has already stated that they won't sacrifice their oil deals with Iran because of sanctions. Oddly, while a great deal of attention is given to China's ties with Iran, Japan still receives much of its oil imports from Iran. In fact, Iran is its third major source and a fourth of Iran's oil exports go to Japan.

Not only is Japan pushing towards Iran, but also India. Out of a desire to counter China's growing strength Japan is searching for stronger ties with India. A similar desire motivates Japan's Russian relations. Relations with India are being used by Japan to do more than counter China, though. Japan can secure a stronger position for itself globally by expanding into India's massive markets. Also, cooperating together, Japan and India could make moves on reducing Chinese influence in Southeast Asia.

Should the United State Congress pressure Japan on past war crimes and the revising of history textbooks, it could lead to a downturn in Japanese-American relations. As Japan moves closer to India and Russia and looks to expand its energy resources, the country could begin moving into the Russian axis.

The dangers there are obvious. A remilitarized Japan, a resurgent Russia, and the growing powers of Iran and India, put together make a deadly combination. This is not even to consider their economic clout. Japan and Russia have the second and third largest cash reserves respectively. Together with India they'd have combined reserves of $1.2 trillion.

Japan, looking to remilitarize, could consider the Russian Su PAK FA a viable aircraft should the JSF not be given to them. While unspeakable now, Japanese involvement in the project could be a huge boon and lead to it emerging as a fighter even greater than the F-22. India, Japan, and Russia also have one common enemy: China. Russia has tried to woo China for all it's worth, but ultimately China has shown little interest in doing anything more than purchasing some Russian weapons and energy and expanding economic relations. There are no indications China is looking at Russia in anticipation of some great alliance against the West, since China actually strongly values its ties with the West.

If Japan thinks America is moving towards aligning with China and starts pressuring Japan to make concession to the Chinese, Japan may finally snub the U.S. and turn from friend to foe.

The Russian Energy Monopoly

Another resource monopoly has emerged in Russia, this one in aluminum and is now the largest aluminum producer in the world.

Russia’s Anti-Monopoly Service gave final approval to a three-way merger that would create the world’s biggest aluminum producer, the companies involved in the deal said on Wednesday, Feb. 14.

At the start of the month EU regulators also cleared the deal, which will see Russia’s biggest aluminum producer, Rusal, absorb rival SUAL and the alumina assets of Swiss-based commodities trader Glencore.

The Federal Anti-Monopoly Service agreed to the merger in principle in January, and analysts had predicted that the Russian approval would be a formality.
“Today’s announcement ... is of great significance, supporting the creation of Russia’s first transnational corporation and the new leader of the global aluminum industry,” Rusal CEO Alexander Bulygin said in a statement released jointly with the other two companies. “We are now ready to round off the merger and plan to close the deal in the near future,” he was quoted by the Associated Press as saying.

The article goes on further to say:

The new company will be the world’s largest aluminum producer — with nearly 4 million tons of aluminum per year, or about 12 percent of global output — surpassing current industry leader, U.S.-based Alcoa Inc.

This is just one in a growing number of recent mergers and acquisitions putting Russian companies in a position of incredibly strength over natural resources.

The most well known is the massive monopoly of Gazprom which has also made several acquisitions solidifying their position in the oil markets, natural gas markets, electricity market, and most recently, the coal market. Even further, Gazprom has made purchases in many other areas like the news media. With a market capitalization of over $300 billion May of last year, Gazprom is the third-largest company in the world behind only General Electric and Exxon Mobil. In addition to more and more acquisitions being made by Gazprom, should the Russian government order for a merger of Gazprom and Rosneft, with a market capitalization of $100 billion and a possibility of reach $110 billion, Gazprom would immediately become the second-largest company in the world at least, easily beating General Electric's $375 billion in capitalization and would, at around $420 billion, put Gazprom within striking distance of Exxon Mobil's $438 billion. However, with all the purchases since May of last year, Gazprom is almost guaranteed to exceed that at sometime. In fact, there are already aims being given for Gazprom to achieve an amazing $1 trillion of market capitalization in 2021.

However, this is just the beginning. While Gazprom is without doubt the largest and scariest of Russian monopolies, the development of other equally significant monopolies should not be so easily ignored. The most recent development was the formation of Atomprom which, much like Gazprom for the gas industry, is going to have complete control over the entire nuclear industry inside Russia. From reactors to uranium, Atomprom would regulate all nuclear activities within and without Russia. Following this merger was a deal in India for four nuclear reactors and another deal for cooperation with the Gulf Cooperative Council, headed by Saudi Arabia, and ongoing plans to build an additional five reactors in Iran after completion of Bushehr.

Russia is also apparently working towards domination in the metals market. Aside from several acquisitions by Evraz, NLMK, and a possible move by Severstal there is also a move by Russia's arms export company Rosboronexport to gain control over significant titanium producing company to put defense-related metals under state control.

This all can have heavy consequences in the world. In relation to Gazprom, the company currently controls 25% of Europe's natural gas and 40% of the EU's gas comes from Russia, which is expected to be 60% by 2030. Russia as a whole has the world's largest natural gas reserves followed by Iran and then Qatar. With regards to oil Gazprom controls the world's third-largest oil fields beat only by Iran and Saudi Arabia. In the uranium sector Russia is also a major supplier to Europe, providing 40% of all uranium supplied to Europe. A deal with Kazakhstan and Kyrgyzstan to develop a Kazakh uranium deposit, Kazakhstan having 25% of the world's uranium. In coal Russia is second-largest in deposits behind India.

Russia's goal in all these acquisitions and deals is to assert itself as a major controller of energy making it almost impossible for any country to meet its energy needs without having to go through Russia. It is in fact a stated goal of Gazprom to become "a global energy firm with full vertical integration" and they're well on their way to meeting that goal.

Towards that end Russia is also increasing it's influence with the other major energy producers. Aside from arms sales to Venezuela, Iran, and potentially Saudi Arabia in an agreement reached in the first visit by a Russian president to the kingdom, there is also the whispers of Russia forming, together with Iran, Qatar, and Algeria, a natural gas cartel.

With Russia's established dealing with major oil producers, the aforementioned deals with Kazakhstan, and the formation of a natural gas organization, whether it serves as a cartel or not, would give Russia significant leverage over energy-starved countries like China and the U.S. No surprise should there be then, that there is an emerging competition between the three. Kazakhstan, due to its land-locked position, has long been forced to send its pipelines to Europe through Russia, essentially being surrendered to Russian influence. However, China's position right on Kazakhstan's border is helping to alleviate this problem with the first pipeline direct from Kazakhstan to China that was started up two years ago. Kazakhstan is also taking part in the Baku-Tbilisi-Ceyhan pipeline by transporting oil on tankers to Baku which is then put into the pipeline. This pipeline will do a great deal to reduce European reliance on Russian oil and gas. The deal will ultimately be free of Russian influence.

Turkmenistan may be the next crucial shift against Russia's stranglehold on the energy markets. Recent elections in the country following the death of longtime dictator Niyazov have opened up the possibility of a shift by Turkmenistan. Tukrmenistan previously signed an agreement with China to provide natural gas to the country. Azerbaijan has also talked of providing Turkmenistan's energy to the West, though no agreement has been made yet.

Should the planned March meetings of the GECF, Gas-Exporting Countries Forum, meet an agreement on forming an organized natural gas body, it will put at least 58% of the world's natural gas under the Russian umbrella. Desire to break such a monopoly on energy is going to encourage more ambitious plans like the BTC pipeline and Kazakh-China pipeline. Central Asia is currently emerging as the major flashpoint for this ongoing energy war, with many countries moving further away from unstable Middle-East supplies. The last logical place to look is in Africa, which will require significant movements by foreign powers to stabilize the potentially resource-rich continent. Newly-formed Africom, African Command, of the U.S. and major agreements between China and African countries towards political, economic, and strategic cooperation are reflecting that both major powers are seeing the writing on the wall.

Prepare for Enlightenment

This being my maiden post I think the purpose of this blog should be made clear.

I am a current high school student, but highly conscious of political matters. Unlike most people, old and young alike, this strays far from the bread-and-butter politics. While I do have interest in the mass media events and highly publicized stories, I also take a particular interest in more fringe stories.

I have taken it upon myself to understand the situations in the world and their implications. To understand a basic idea of what this blog is about the following quote from Sergei Ivanov should suffice:

The times of the Cold War, when everything was predictable and measured-out, were like a paradise in comparison with the present day.

This blog is to help understand this time. The world today is jumbled and messy, not unlike the Cold War, however, unlike the Cold War the borders are more blurry and motives less clear. Though termed the time of Pax Americana the post-Soviet era bears greater resemblance to the buildup to World War I with the formation of alliance systems and increased militarization.

My purpose for writing this is to increase awareness of the dangers posed by this shift in the nature of geopolitics.