‘Enlightened self-interest’ spurs Japan’s deepening economic security ties with ASEAN amid Iran war

TOKYO – Going beyond mere “chequebook diplomacy”, Japan has been deepening its ties with South-east Asia since the Iran war in what analysts describe as “enlightened self-interest”, aiming to help both itself and ASEAN weather the current global instability.

One headline policy is the Partnership On Wide Energy and Resources Resilience (POWERR Asia), announced by Prime Minister Sanae Takaichi on April 15 at a meeting attended by ASEAN leaders, including Singapore’s Prime Minister Lawrence Wong. It pledged US$10 billion (S$12.8 billion) in financing support – equal to the cost of the 1.2 billion barrels of crude oil that ASEAN imports annually.

“Japan is once again assuming the role of troubleshooter, offering solutions to problems faced by its ASEAN partners,” Professor Heng Yee Kuang of the University of Tokyo’s Graduate School of Public Policy told The Straits Times.

This is not just charity, however. Japanese factories rely heavily on imports from ASEAN, and any disruption there hits home. Thus the idea of “enlightened self-interest”, which suggests that helping its neighbours also ensures Japan’s own well-being.

While Japanese aid in the past might have come with implicit expectations of a return, such as securing access for its companies in the recipient country, Tokyo’s latest moves are markedly different because of the clear direct benefit to Japan’s manufacturers and society back home.

This comes as the Iran war is starting to be felt in Japan in various ways, with companies complaining of a shortage of naphtha – a component of plastic and industrial ink that is derived from crude oil. Hospitals, too, fear a shortage of medical gloves, dialysis tubes, catheters and syringes that are made using naphtha.

The problems potentially run far deeper. Japan’s reliance on ASEAN manufacturers for petrochemical-derived products – such as 50 per cent of its ethylene, 38 per cent of plastic containers and 35 per cent of rubber tyres – means any disruption of crude oil supply to ASEAN would be a direct hit to Japan.

Dr Takashi Terada, an expert on Japan-ASEAN ties at Doshisha University, felt that the outreach was “driven above all by a heightened awareness of shared vulnerability”.

“Japan and ASEAN are now deeply connected through production networks, logistics systems, and energy demand,” he told ST. “Any fuel shortage, port disruption, or energy-price shock would therefore quickly reverberate back into Japan’s own economy,” he said.

POWERR Asia, ultimately, aims to keep supply chains moving. By helping ASEAN manufacturers survive the current crisis, it also protects jobs and strengthens economies across ASEAN. It also protects Japan from dire shortages.

The initiative is part of the expanded Japan’s Free and Open Indo-Pacific (FOIP) vision that was announced in 2016 as a geopolitical tool to maintain maritime strategy and promote free trade.

Maritime security is still an important part of the FOIP, with the Nikkei newspaper reporting on May 16 that Japan intends to share real-time vessel monitoring data with South-east Asian countries to defend sea lanes.

However, in Hanoi on May 2, Ms Takaichi announced an upgrade to the FOIP to have an equally strong emphasis on economic security.

It aims to secure supplies of energy and critical raw materials, she said.

The medium- to-long-term goal, she added, is to “build regional oil stockpiling and release systems, advance energy conservation and, using Japanese technology, develop and disseminate new energy sources”.

Associate Professor Kei Koga of Nanyang Technological University in Singapore told ST that this could contribute to building a more effective energy framework for Asia that does not depend too heavily on any single source or supply route.

Dr Mie Oba of Kanagawa University further noted that Japan has the capacity to manufacture and export refined petroleum products, and is thus able to play a key role in strengthening the energy sharing system.

As Dr Terada put it: “The FOIP is no longer only about the security of sea lanes; it is increasingly about the security of everyday life, industrial production, and economic resilience.”

In this regard, the true value of POWERR Asia, he added, will only be evident long after the Iran war: “Its strategic importance lies less in extinguishing the current crisis than in reducing ASEAN’s vulnerability to the next one.”

This effort to build a regional energy security network contrasts with China’s approach to the energy crisis. China briefly suspended its refined petroleum exports to protect its domestic reserves after the war broke out in Iran. But it subsequently resumed limited exports after inventories in the country stabilised.

To contribute to regional energy security, China exported energy supplies to neighbouring Philippines and Vietnam. It also works with countries through the Belt And Road Initiative to build renewable infrastructure, such as a cross-border grid project with Laos. Yet these efforts, arguably, do not directly address the immediate pain points as ASEAN industries suffer from a shortage of raw materials.

In contrast, without engaging in moral grandstanding, Japan’s approach makes it appear as a “constructive and reliable partner” that offers practical fixes for real-world problems, noted Prof Koga.

Further, given Japan’s blossoming relationship with South Korea, an erstwhile geopolitical rival, it has come to involve Seoul in its Indo-Pacific outreach. Experts noted how such collaboration would have been unthinkable years ago, when they were jostling for geopolitical influence.

On May 19, when Ms Takaichi met South Korean President Lee Jae Myung for the fourth time in seven months, they vowed to, among other things, “jointly explore the tangible actions to contribute to securing energy supply chains, including those for petroleum products” through POWERR Asia.

Professor Leif-Eric Easley at Ewha Womans University in Seoul felt it was significant for Ms Takaichi to welcome South Korea as a partner with which Japan can work together in ASEAN.

This, he said, could increase the region’s “long-term resilience against future risks of conflict and disruption around global economic choke points”.

And this sends a powerful message of cooperation amid global turmoil, combining their respective resources and complementary strengths, experts said.

“When ties are strained, ASEAN countries must treat them as separate, and sometimes competing, partners. But when they cooperate, they appear instead as two advanced industrial neighbours working together to provide regional public goods,” Dr Terada said. He further noted that Australia, with its vast natural resources, could be the final piece of the puzzle in creating a secure energy network for Asia.

What is clear is that the unfolding energy crisis has been a wake-up call for Japan and has spurred it into architecting a more resilient Indo-Pacific region.

In so doing, the regional power which is already regarded by ASEAN as the most trusted power in the annual ISEAS – Yusof Ishak Institute survey, will gain more points.

“ASEAN countries appreciate Japan taking a more realistic approach rather than a moral-driven approach... this will win it a lot of diplomatic goodwill,” said senior analyst Asuka Tatebayashi, of Mizuho Bank’s global strategic advisory department.