IEEJ：October 2015

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Special Bulletin
A Japanese Perspective on the International Energy Landscape (242)

October 22, 2015

At The 16th World Knowledge ForumKen Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn October 20-22, I had an opportunity to participate in the 16th World Knowledge Forum(WKF) in Seoul. The WKF was established in Seoul in 2000 for an annual meeting. Sponsored bySouth Korean media group Maeil Broadcasting Network (MBN), the forum has annually met for
high-level discussion on the hottest issues regarding the international and East Asian situations. At
the 16th WKF meeting, former British Prime Minister Tony Blair, former U.S. Treasury Secretary
Timothy Geithner, former U.S. Defense Secretary Leon Panetta, Prof. Paul Kennedy, Prof. John
Mearsheimer and other famed people had vigorous discussions on key issues regarding international
politics, the world economy and geopolitics in various sessions. The Forum organizer estimated thenumber of registered participants at about 3,500, indicating a very large conference.
The unified theme for the latest conference was "Mapping the Zeitgeist," covering key
problems facing today's world and their background including perceptions and views of the world.
Specifically, participants discussed U.S.-China relations, challenges for Asia Pacific stability andprosperity, Middle Eastern problems, Russian problems, global economic outlooks and other topics.
The Forum also included five sessions on energy and environment problems, indicating that crude
oil prices and other energy problems are recognized as key problems influencing the world.
The conference was very interesting in that it included not only sessions on international
politics, the world economy and other issues seen from a macro point of view but also those inwhich famed experts and company officials discussed robots, automatic driving and othercutting-edge technologies that would support or change the world in the future, from the businesspoint of view. But my impression through discussions in the Forum is that the most important matterof concern to South Korean participants, dominant in the Forum hosted in their country, is the fate ofSouth Korea’s relations with the United States and China, and U.S.-China relations. At many
sessions, the famed experts cited above discussed the present situation and future perspectives ofU.S.-China relations and South Korea’s relevant position. These discussions were very interesting tome.
Will a rising China outdo the United States in total national power in the future? How will
China challenge the United States in that process? What grand strategy will the United States build
and implement in the face of a fast catch-up by China? These questions are the most important
problems influencing future developments for not only South Korea but also Japan and the entire
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world. A U.S. expert noted that China would naturally use its accumulated power to challenge andrewrite U.S.-led international orders and rules while the United States would exploit all possiblemeans to counter the Chinese challenge. Even while the United States and China grow more
dependent on each other in the economic arena, their confrontation over order and rules will benatural in a sense. The confrontation might have caused the revival of geopolitics. Many participantsin the Forum cited alliance and cooperation as part of the most important keywords for the UnitedStates under the situation. In this respect, the United States gives priority to its alliances with Japan,
South Korea, the Association of Southeast Asian Nations, Australia and India. Representing theireconomic cooperation is the Trans-Pacific Partnership free trade agreement.
Impressively, South Korean participants based many of their remarks and questions on theproblem of how their country should act while being sandwiched between the United States as its
security ally and China that has been historically and geographically close to South Korea and has
risen and become the most important economic partner for South Korea. It was very interesting thatmany U.S. experts clarified their hope to see South Korea, or a possible unified Korea, choosing thealliance with the United States that has served as the base for South Korea’s prosperity. They also
noted that South Korea shares values with the United States.
Regarding alliances, I would like to point out that conference participants frequently
discussed Japan’s roles in addressing Northeast Asian or Asia-Pacific problems and the UnitedStates’ consciousness of these roles. It was noteworthy that these participants indicated their strong
interests in Japan’s relations with the United States and China, national security policy developments
in Japan, and the Japanese economy and the fate of Prime Minister Shinzo Abe’s Abenomics
economic policy. While it may be the most important for South Korea to consider relations with theUnited States and China, how it should deal with Japan may be a key issue for South Korea inconsidering the relations with the two big powers.
Forum participants also had vigorous discussions on future geopolitical risks regarding theinternational situation including Middle Eastern problems as well as Russian problems and Russia’srelations with the United States and China as external factors influencing U.S.-China relations. As
U.S.-Russia relations have grown severer over Russia’s aerial bombing in Syria, a strategic allianceand a sensitive balance between China and Russia have become important for consideringinternational politics and order. As the world economy’s integration makes progress with majorcountries growing more dependent on each other, geopolitical disputes may have direct economic
impacts. In a new development based on various complex and sensitive international balances,
Chinese President Xi Jinping has visited the United Kingdom and emphasized the enhancement ofChina-U.K. economic cooperation.
In a session where I participated, Japanese, Chinese, South Korean and Russianparticipants held panel discussions on energy problems, including conventional energy sources’
competition with unconventional ones, in an effort to enhance cooperation between their countries.
The present loose energy supply-demand balance have resulted in creating “winners and losers”,
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their positions may be reversed if and when the loose supply-demand balance leads to a futuretightening and price hikes. How to exploit Russian energy resources while considering US relations
has become a major challenge for Northeast Asia that will begin to import liquefied natural gas fromthe United States in the future. Each Northeast Asian country in the future will be required to
strategically consider the challenge based on a wide view of the world and the “Zeitgeist (spirit ofthe age).”

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