IEEJ: September 2012 All Right Reserved
Special Bulletin
A Japanese Perspective on the International Energy Landscape (102)September 6, 2012

Japan-U.S. Energy Problems as Seen in 3rd Armitage Report
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
A report of great interest for Japan—a nation that has been plagued with various key
domestic and external problems and put at a juncture—has been released. Titled “The U.S.-Japan
Alliance: Anchoring Stability in Asia,” it is also called “the Armitage report” after former Deputy
Secretary of State Richard Armitage, who is one of its key authors. It is also described as the thirdArmitage report following those published in 2000 and 2007.
What is the importance of the report for Japan? Given that the United States and,especially, Japan are facing tough conditions, the report recognizes that the present Japan-U.S.
alliance is in a tough situation. “The health and welfare of one of the world’s most important

alliances is endangered,” it says. Citing significant economic weight, capable military forces,
global vision, and demonstrated leadership on international concerns as requirements fortier-one countries, the report questions whether the Japanese government and people desire tomaintain Japan’s tier-one status. It goes so far as to say, “If tier-two status is good enough for
the Japanese people and their government, this report will not be of interest.” At the same time,
however, the report calmly analyzes Japan’s present real power, concludes Japan as “fullycapable of remaining a tier-one nation,” and makes clear the United States’ expectations ofJapan as its alliance partner, stating, “The United States needs a strong Japan no less than Japanneeds a strong United States.” The report also says, “Japan has been a leader in Asia in the pastand can continue to be in the future.”
As a matter of fact, Japan faces a mountain of complex and difficult problems, broadly
ranging from diplomatic challenges to economic, industrial, and energy problems. In this sense, thereport provides analyses and recommendations on key topics, including economics and trade,
relations with neighboring countries, and a new security strategy. Interestingly, energy security tops
the list of key topics. I may be able to say that the report emphasizes energy security as a very grave,urgent issue for the United States and, especially, Japan.
Furthermore, the nuclear energy problem remarkably comes first in the section on energy
security. All Japan’s nuclear plants were halted once as national worries about nuclear power
generation safety grew after the unprecedented combination of the March 2011 earthquake-tsunami
disaster and the Fukushima Daiichi nuclear plant accident. But Prime Minister Yoshihiko Noda
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decided to restart the third and fourth reactors of Kansai Electric Power Co.’s Ohi nuclear plantwhile enhancing their safety. The report evaluates the cautious resumption of nuclear generation as“the right and responsible step.” This is because the absence of nuclear generation is expected toforce Japan to expand oil, natural gas, and coal imports to the disadvantage of its economy, industry
and productivity. The report also points out that nuclear generation plays great roles in both energy
security and global warming prevention efforts as an increase in fossil fuel consumption would
inevitably boost carbon dioxide emissions.
As for external relations, the report recognizes that Japan is responsible for enhancing
nuclear generation safety in Asia and the rest of the world by taking maximum advantage of lessons
learned from the Fukushima accident at a time when China and other Asian developing countries goahead with large-scale nuclear generation programs. It also calls for close Japan-U.S. cooperation inthis respect, indicating that the United States is deeply interested in Japan’s nuclear generation
problem.
The second topic regarding energy security is natural gas. Given the ongoing shale gas
revolution in the United States and Japan’s growing dependence on natural gas after the “March11th” disaster, natural gas has become a major energy issue for Japan and the United States. Thepresent conditions of the two countries lead to the possibility of U.S. liquefied natural gas exports toJapan. In this regard, the report calls on the United States to take a positive stance on LNG exports toJapan and be an ally for Japan in securing natural resources.
The report, as a matter of course, points to economic, political and environmental
constraints and matters of concern on LNG exports to Japan. In particular, an institutional problem isthat LNG exports to Japan, which has no free trade agreement with the United States, are subject toU.S. government approval. Given this key point, the report says, “The United States should notresort to resource nationalism and should not inhibit private sector plans to export LNG.”
Considering that Japan is in a critical situation, the report demonstrates a stance of prioritizing astable LNG supply to Japan. The report essentially calls for reforming institutional and legal
constraints on LNG exports to Japan. The White House should at least support and prioritize LNGexports to Japan under present law, the report says.
The United States may be unprecedentedly concerned about the Japanese situation. Thereport can be interpreted as indicating that the United States has concerns and worries about Japan’s
future course while placing expectations on and supporting Japan as a key partner at a time when thebalance of power in the Asia-Pacific region is changing due to the rise of China.
In its conclusion, the report says, “It is our view that Japan is at a critical juncture.”

While viewing Japan as being able to maintain and demonstrate its power and leadership,
however, the report can be interpreted as giving some warning or request to Japan as a U.S. ally.
With the dynamic changes taking place throughout the Asia-Pacific region, it says, Japan will
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likely never have the same opportunity to remain a tier-one country and help guide the fate ofthe region. Japan thus now faces a crucial test.
Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/whatsnew/JPOIEL.html

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