That is the word, as we read Arab News (at https://www.arabnews.jp/en/uncategorized/article_146218/) with the headline ‘The dawning of a new era in Japan-Saudi Arabia relations’, there is no real puzzlement. As America goes on with its “We’re doing great”, often merely repeated in all the media, the reality is different ‘Too many ‘life long allies and great friends’ are seeking greener fields as they are in deep fear of getting scuttled alongside the good ship fairytale (oops America). So this article was not really a surprise. As we are given “Based on the idea of leading the international community from division to cooperation, I have decided to visit Saudi Arabia, which plays a crucial role for peace, stability and prosperity not only in the Middle East but throughout the world. Saudi Arabia has achieved some remarkable developments under Vision 2030, led by Crown Prince Mohammed bin Salman, through undertaking extensive economic and social reforms, such as the diversification of industries and decarbonization. I believe that it is of great significance that my first visit to the Middle East as foreign minister of Japan is marked by this visit to Saudi Arabia.” This is not a love letter, but a setting of recognizing that Japan requires a more stable friend and optional long standing ally and Saudi Arabia likes the market of 125 million people. Not as much as America or Europe, but nothing to be sneered at and Japan sees the need for this union, if only to do something about the $8.84 trillion debt as of January 2025. They haven’t reached the point of no return yet and whilst everyone merely swallows the “we’re doing great line” Japan knows better and Iwaya Takeshi, Japans current Minister for Foreign Affairs sees opportunity for Japan and as we are given “Japan and Saudi Arabia are strategic partners that are this year celebrating the 70th anniversary of the establishment of their diplomatic relations. Since the establishment of diplomatic relations in 1955, bilateral relations have developed in various fields. In particular, the friendly relations between the imperial family of Japan and the royal family of Saudi Arabia have been an important pillar.” This is continued with “In February, I signed with Saudi Foreign Minister Prince Faisal bin Farhan a memorandum for establishing a strategic partnership council, which will be chaired by the leaders of the two countries. This will be a vital framework to further strengthen our cooperation for the future of our two countries under the guidance of our respective leaders.” You might think this is all simple coating the setting, but it is not. You see Japan imports approximately $84.95 billion a year from America, with as I see it $3 billion in Organic chemicals, half a billion in Articles of iron or steel and $124 billion in Machinery, nuclear reactors, boilers. Items they can get from the kingdom of Saudi Arabia, optionally without tariff and I reckon that in the setting of Vision 2030 Saudi Arabia will be really happy to supply and the latter part will be discussed below. They will not get it all, but that is a setting where America loses another $20,000,000,000 in revenue and they have such a good economy, they can lose this setting, no worries. Well, can they really?
You see, the second article (at https://oilprice.com/Latest-Energy-News/World-News/Is-Saudi-Arabia-Preparing-for-Another-Oil-Price-War.html) OilPrice dot com gives us ‘Is Saudi Arabia Preparing for Another Oil Price War?’ The setting deteriorates for America. When we see “US benchmark WTI crude is down nearly 4% as Saudi Arabia reports emerge that not only can the Saudis sustain today’s low oil prices, but output increases are likely to be announced next week, for June output, sources speaking to both Reuters and Bloomberg have indicated. On Wednesday, Reuters cited five unnamed sources as saying that the Saudis have no intention of boosting oil markets with further supply cuts, as Riyadh’s budget can tolerate sustained low prices.” This is bad news for America, you see, they rely on the ‘profits’ and resale from the Brent Oil range of profit making and that is about to come under fire, even if it is only 3%-5%, that is a drain of a lot. As we are given “Oil had dropped over 2% amid demand worries and expectations of increased supply from OPEC+, with Saudi Arabia signaling it can tolerate lower prices and may push for more output at the May 5 meeting. Additional pressure came from growing production in non-OPEC nations like Guyana.” (Source: Trading Economics), we need to realise that another drop in revenue will make people relying on this push the panic button (even as Douglas Adams told them: ‘Don’t Panic’), I reckon that is not a venue that America will follow. And as Japan moves more and more to Saudi Arabia, the chance is that more oil will come from Saudi Arabia, as well as a lot more than the three topics I raised. So how much will America lose from their long standing friend and Ally Japan? Even at 10% the slowdown of the $84.95 billion a year will be close to immeasurable. I reckon that it could go up to an estimate max of 30% (which is a little over 25 billion), but add to that the shift in oil, it becomes serious money. As I see it Saudi Foreign Minister Prince Faisal bin Farhan Al Saud earned his daily dose of lamb shawarma today. (It might be chicken shawarma). There is a massive shift happening and as I see it, according to Irwin Stelzer of the Times, America is going strong, so how are these simple ‘facts’ overlooked? Too far in the future? The new memorandum was drawn up in February, and as I see it, these two giants (meaning Japan and Saudi Arabia) could set a beginning to scuttle the good ship America. This is not a given, but in a trade war it will be more than about getting more revenue on one side, it is the other side that is overlooked and as I see it, this partnership could definitely set ill winds to the barometer of the America economy.
So have a great day and enjoy your Sushi with Japanese Sobacha tea today.
Lawrence van Rijn - Law Lord to be 