IEEJ：December 2017○ｃIEEJ 2017
Special Bulletin
A Japanese Perspective on the International Energy Landscape (353)

December 7, 2017

President Trump Recognizes Jerusalem as Israel’s Capital
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
Another grave event has come to shake the whole of the Middle East. On December 6, U.S.
President Donald Trump in his speech at the White House recognized Jerusalem as Israel’s capitaland announced a plan to move the U.S. embassy in Tel Aviv to Jerusalem. In the relatively shortspeech, Trump made four points – (1) the United States recognizes Jerusalem as the capital of Israel,(2) Washington starts preparations for moving the U.S. embassy from Tel Aviv to Jerusalem, (3) thedecision does not run counter to the U.S. commitment to peace in the Middle East, and (4) Vice
President Mike Pence will tour the Middle East for talks with relevant countries.
While Israel has claimed Jerusalem as its capital, with the Palestinian Authority, Israel’s
counterpart in Middle East peace negotiations, seeking to build a nation with East Jerusalem as itscapital, how to position or treat Jerusalem, the holy city for Judaism, Christianity and Islam, hasbeen politically sensitive. Trump’s predecessors had taken a very prudent attitude on the matter,
considering the United States’ position as a broker in the negotiations despite its basic support forIsrael. In 1995, Congress enacted the Jerusalem Embassy Act to move the U.S. embassy from Tel
Aviv to Jerusalem. However, Trump’s predecessors postponed the decision on the move every six
months due to their respective strategic considerations in accordance with the act.
In this sense, the decision by President Trump can be positioned as representing a bigchange in U.S. policy on the Middle East. In a bid to demonstrate Washington’s priority given topeace in the Middle East, President Trump in his speech said this decision was not intended toreflect a departure from Washington’s strong commitment to facilitating a lasting peace agreement.
However, he fell short of indicating what to do on peace in the Middle East. The departure fromthe policy of refraining from favoring any specific party to the sensitive Middle East peace
negotiations would lead the United States’ position as a broker in the negotiations to befundamentally damaged, many analysts say.
In fact, opposition to and concerns about the decision have grown among Palestinians,
Arabs and Middle Eastern countries. In telephone talks with President Trump before the decision,
Palestinian President Mahmoud Abbas was reportedly concerned that the U.S. embassy’s move toJerusalem would exert grave influences on the Middle East peace process and regional stability.
Jordan’s King Abdullah II and Saudi Arabia’s King Salman, who also received phone calls fromPresident Trump on the decision, expressed concerns over adverse effects of the decision on stability
in the Middle East. Public protests against the Trump decision have emerged in Arab society
including among Palestinians, indicating growing anti-American sentiments. Future relevant
developments have become a matter of grave concern.
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IEEJ：December 2017○ｃIEEJ 2017

Opposition to and concerns about the Trump decision are not limited to the Middle East.
British Prime Minister Theresa May and French President Emmanuel Macron have expressed theiropposition to the Trump decision to relocate the U.S. embassy to Jerusalem that they fear would
affect the Middle East peace process and regional stability. The United Nations and European Union
have taken similar attitudes. The international community as a whole is gravely concerned about theTrump decision in general.
Nevertheless, President Trump decided to recognize Jerusalem as Israel’s capital andrelocate the U.S. embassy to the city, indicating his inward-looking strategy to solidify his domestic
support base rather than his consideration on international affairs. Since his inauguration as president,
Trump has made few remarkable domestic achievements other than a corporate tax reform. His
recent Asian tour, on which the Trump administration placed great hopes in the absence of majordomestic achievements, reportedly fell short of gaining support within the United States.
Furthermore, it was also pointed out by some analysts that new developments involving the Russia
Gate scandal have prompted the Trump administration to seriously consider how to solidify its
support base. The view was that Trump might have thought that he should demonstrate his stance ofadhering to and implementing his campaign promises for the United States irrespective ofinternational opinions
The United States, a superpower, has willy-nilly played a key role in stabilizing the world.
However, the Trump decision has indicated a risk of the United States becoming inward-looking.
The Middle East peace problem has been a source of very diverse and complicated Middle Eastern
problems. The Trump decision has a great chance to add new risk factors to the Middle Eastern
situation that has already been fully fluid and uncertain. The Islamic State terrorist group stillthreatens to expand terrorist attacks even after areas under its control declined on allied attacks,
while civil wars continue in Yemen and Syria. Saudi Arabia is confronting Iran and has severed
diplomatic ties with Qatar. Saudi Crown Prince Mohammad bin Salman is concentrating power inhis hands. The current Middle Eastern situation thus features various problems that arecomplicatedly intertwined. Behind these problems are uncertainties about how President Trump’sMiddle Eastern policy would affect the region.
The biggest matter of concern involving the Trump decision is that discontent regarding
the Middle East peace problem could grow to seriously affect regional stability. In that process,anti-American sentiment could grow in a manner to reduce Washington’s influence on Middle
Eastern problems. Other problems include what parties would take advantage of a decline in or aloss of U.S. influences on the Middle East to expand their regional influences and how such change
would affect regional stability. Pro-American regimes in the Middle East have a risk of being
affected by growing anti-American sentiments.
Given that the Middle East is the energy supply center for the world, oil and natural
gas/LNG exports from the region in particular are significant for the international energy market’sstability. The international energy market has become a buyer’s market featuring robust supply andlow prices. Growing geopolitical risks in the Middle East have so far coexisted with lower energy
prices. However, the coexistence cannot be guaranteed to continue forever. We will have to pay
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IEEJ：December 2017○ｃIEEJ 2017much attention to the future course of the Middle East.
If the Middle East is destabilized to substantially boost international energy prices, it may
be viewed as a grave development to affect energy security. Then, the world could see the resurgenceof policies seen in the 1970s to phase out dependence on oil and the Middle East. Such development,
though bringing about a short-run benefit in the form of energy income growth for the Middle East,
would not be beneficial for the region over a long term. The Middle East’s peace is a significant
agenda that the world and the Middle East itself must tackle.

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