Korea beats the world to $20 billion nuclear jackpot

South Korea has beaten the US, Europe and Japan at their own game to land the country's first international nuclear power project.

Korea Electric Power Corporation (Kepco) has won a contract to build and operate four nuclear reactors in the United Arab Emirates, beating out rival bids from a U.S.-Japanese consortium comprising General Electric and Hitachi, as well as a French team of GdF Suez, Areva, and Total.

Construction of the reactors alone is expected to be worth more than $20 billion, not to mention Kepco will be in the driving seat for future lucrative service contracts. This deal, announced Dec. 28, marks the first full-scale nuclear development in the Arab country.

Although Japan’s main bid failed to be accepted by the UAE government, it is nonetheless a junior partner in the Korean consortium through Westinghouse and Toshiba Power Systems. These companies apparently possess patented technologies necessary to build third-generation light water reactors.

David Adam Stott reported for the Shingetsu Institute that Japan had become the fourth major player to sign a nuclear cooperation agreement with the UAE on January 19, 2009. This followed a week-long visit by a UAE delegation, led by Muhammad al-Hammadi, CEO of the Emirates Nuclear Energy Corporation, to Tokyo in December 2008 to meet representatives of Mitsubishi Heavy Industries, visit a nuclear power plant, and tour Hitachi and Toshiba nuclear factories.

Westinghouse is to supply equipment, engineering, and fuel-service contracts to the Korean consortium. The precise value of these Japan-affiliated contracts is unclear, but is likely to be substantial.

Michael Penn

APP Nonresident Senior Fellow

Executive Director, Shingetsu Institute

Largest Japanese delegation to Iraq in 20 years

Koichi Takemasa, Japan State Secretary for Foreign Affairs (pictured), toured Iraq and Jordan mid-December to enhance the DPJ government's political and economic relations.

On the 20th, Takemasa attended the Second Japan-Iraq Business Forum, which was held at Baghdad Airport. A high-level delegation of Iraqi officials, led by Prime Minister Nuri al-Maliki, greeted the 100-strong Japanese delegation, by far the largest Japanese business group to visit Iraq since the Persian Gulf Crisis of 1990.

Prime Minister al-Maliki said his country had become a constitutional democracy, and he called on Japanese firms to help with Iraq’s postwar reconstruction, saying the country presented a great business opportunity: “We want Japan to use its experience of rehabilitation from World War II.

“This forum represents a landmark in the history of investment conferences that we have held thus far… Your presence in Baghdad, at this particular time, is a very important message to terrorists who are still trying to disrupt the process of rebuilding and reconstruction through criminal bombings aimed at intimidating and preventing foreign companies from entering the Iraqi market.”

The forum included meetings between Iraqi and Japanese businesspeople and a seminar on doing business in Iraq. Thirty-one Japanese companies sent representatives.

Before heading to Jordan, Takemasa spent one evening at the Japanese Embassy compound in central Baghdad. He held separate talks with Iraqi Parliament Speaker Ayad al-Samarrai as well as the two Iraqi vice-presidents, Adel Abdul Mahdi and Tariq al-Hashimi.

After leaving Iraq on the 21st, Koichi Takemasa traveled by plane to Jordan. One of the main tasks of the visit was to meet Samir Rifai, the new Prime Minister and Defence Minister of Jordan. He also held meetings with Foreign Minister Nasser Judeh and Minister of Planning and International Cooperation Jafar Hassan, and visited the Baqaa Palestinian Refugee Camp.

The meeting with Jordan's Prime Minister Samir Rifai lasted about an hour. The Jordanian leader praised Japan's role in the peace process—especially the Corridor of Peace and Prosperity initiative, and celebrated the close relations that Jordan has traditionally enjoyed with Japan. Rifai added that Jordan was intent on implementing a number of mega-projects such as the Red-Dead Canal, a proposed railway project to link the Gulf region with Europe through Jordan and the kingdom’s nuclear power program. Takemasa responded that he prayed for the success of Jordanian economic reform plans and would strive to resolve the Palestinian issue.

It was the meeting with Minister of Planning and International Cooperation Jafar Hassan which attracted the most attention from the media. Hassan told reporters that Jordan and Japan were studying the possibility of cooperating on a number of development projects worth $104 million while noting that Japanese financial and technical assistance to the kingdom stood at $24.8 million last year. Another major topic was the issue of nuclear cooperation, with Hassan urging Japan to sign a more concrete nuclear agreement with Jordan.

At the Baqaa Refugee Camp, Takemasa visited one of the camp’s eight schools and met the four JICA volunteers working there. He also inspected the facilities of a medical clinic that had received some Japanese financial aid.

Michael Penn

APP, Nonresident Senior Fellow

Executive Director, Shingetsu Institute

First visit of Turkmenistan head of state to Japan

Turkmen President Gurbanguly Berdimuhamedov visited Japan from December 16th to 18^th. It was the first time for a head of state of Turkmenistan to come to Japan. During his stay, he met with both Emperor Akihito and Prime Minister Yukio Hatoyama and was honored as a state guest.

Berdimuhamedov’s meeting with Hatoyama was held at the Kantei on the evening of the 16th. They met for about 45 minutes and discussed a range of subjects. Business relations were high on the agenda. In particular, the Turkmen leader was thankful for Japan’s anticipated support in upgrading the facilities at Turkmenbashi port. Japanese companies are preparing proposals for the reconstruction of the international seaport with a view to turning it into an “ultra-modern” facility.

The Japanese government and private companies have also been invited to join large-scale projects such as the construction of the Turkmen section of the new transcontinental North-South railway, the creation of a national tourist zone at Avaza on the Caspian Sea coast, and possibly the opening of a Japanese Information Center for High Technologies in Turkmenistan. Berdimuhamedov commented, “Turkmenistan welcomes the participation of Japanese partners in the development of national economy and intends to increase this effective collaboration.

First meeting of the Japan-Arab Economic Forum

The first meeting of the Japan-Arab Economic Forum was held in Tokyo from the evening of December 6th to the 8th. The event was attended by Foreign Minister Katsuya Okada, METI Minister Masayuki Naoshima, Arab League Secretary-General Amr Moussa, and scores of diplomats and businessmen.

The main objective of the Forum is “to strengthen mutual economic relations between Japan and Arab countries through cooperation in a wide range of fields such as trade, investment, energy, technology, and human resources development.” Media reports highlighted possible Japanese investment in the water development industry. METI Minister Naoshima told reporters, “Arab nations face a chronic problem of water shortages. We will hold intergovernmental dialogues to accelerate and smooth efforts to solve the problem.” The METI minister also pledged further cooperation in the fields of solar-electricity panels and water-desalination systems.

For his part, Arab League Secretary-General Amr Moussa added, “We are looking to develop this Japan-Arab Economic Forum to include all aspects of international cooperation at a time when we are facing the new challenges imposed by globalization and the global financial crisis as well as climate change.”

According to Kyodo News, Japan is the Arab countries’ third-biggest trading partner after the European Union and the United States. The trade volume between the two sides expanded to US$184 billion in 2008 from US$48 billion in 2003, while Japanese investment in Arab states stood at about US$3.1 billion in compared with around US$1 billion in 2004. A Japanese official stated, “The Arab countries have shifted their focus to how to attract investment from advanced and major developing economies like Japan and China after being damaged by the global economic crisis.”

One participant in the Forum told the Shingetsu Institute that Arab states may be beginning to “look east” in their economic policies because economic relations between Arab states and the United States have more or less reached their limit. The rise of China is concentrating Arab minds in the direction of East Asia, and this has certain benefits for Japan as well, should it decide to seize the opportunity.

Michael Penn
APP, Nonresident Senior Fellow
Executive Director, Shingetsu Institute

Japan examines Sudan and Mindanao policy

The main developments in Japanese-Islamic relations in the first week of December took place in regard to the Horn of Africa and the Mindanao peace process. Major preparations were also underway for the Japan-Arab Economic Forum of December 7th and 8th.

As for the Horn of Africa, the new DPJ government appeared to be formulating their policies toward this unstable region. There were comments by Foreign Minister Katsuya Okada and Chief Cabinet Secretary Hirofumi Hirano indicating that Japan might send a several-hundred-strong GSDF peacekeeping force to southern Sudan next spring, although Defense Minister Toshimi Kitazawa downplayed the suggestion.

Meanwhile, Defense Vice-Minister Kazuya Shimba departed Japan on the 7th for an extended tour of Djibouti—where Japan now possesses its first overseas military base—and Bahrain as part of an inspection of MSDF missions in the Indian Ocean and the Gulf of Aden. Overall, Foreign Minister Okada, in particular, seems eager to have Japan participate more actively in southern Sudan, but Somalia policies have yet to depart from the lines laid down by the previous LDP administration.

The establishment of the International Contact Group (ICG) on the Mindanao peace process was formally declared on the 2nd with Japan as a key member. Peace talks between Manila and the Moro Islamic Liberation Front (MILF) are scheduled to take place on the 8th and 9th in Kuala Lumpur. The ICG is intended to guarantee all agreements in the peace process of the two negotiating parties.

The MILF was particularly eager to see Japan as a member of the ICG due to the perception that they have played a fair-minded role in this dispute and have been a major contributor of crucial aid to the Bangsamoro people. It remains unclear how the massacre in the province of Maguindanao on November 23rd and the declaration of martial law on December 5th will affect the larger peace process.

Michael Penn
APP, Nonresident Senior Fellow
Executive Director, Shingetsu Institute