Anxious Australia and jittery Japan deepen ‘quasi-alliance’ for an uneasy age

Japan's Prime Minister Sanae Takaichi visited Australia, resulting in a strengthened "quasi-alliance" between the two nations. During her three-day trip, Takaichi and Australian Prime Minister Anthony Albanese signed an economic security pact and secured nearly US$1 billion in funding for critical minerals. The core of their agreement is the Australia-Japan Joint Declaration on Economic Security Cooperation, designed to coordinate responses to economic coercion, with analysts suggesting it targets both Beijing and Washington. Australia committed up to A$1.3 billion to support critical minerals projects involving Japan, aiming to secure vital resources like nickel, graphite, and rare earths. This deepened cooperation reflects shared anxieties regarding global uncertainties and supply chain vulnerabilities.

Japan and Australia are strengthening their collaboration on critical minerals, defense, and energy security to counter China's dominance in rare earths and mitigate fuel supply disruptions. Australian Prime Minister Anthony Albanese and Japanese counterpart Sanae Takaichi met in Canberra to discuss these initiatives, aiming to build more resilient supply chains. The leaders also addressed concerns regarding China, North Korea, and the Middle East, particularly the impact of the Strait of Hormuz closure on energy supplies. Japan is actively diversifying its supply chains due to disputes with China, while the US has accused China of funding terrorism through Iranian oil purchases and urged its cooperation in reopening the Strait of Hormuz. Japan is also enhancing defense ties with Southeast Asian nations.

Australian Prime Minister Anthony Albanese will not introduce a gas export tax in the upcoming budget, primarily due to concerns about alienating key energy trading partners like Japan. Japan, which relies on Australia for approximately 40% of its LNG supply, views market interventions as a threat to the stability of these crucial energy imports. Australian gas exporters, some with Japanese government ties, have also warned that such a tax could jeopardize Australia's reputation as a reliable supplier. While Albanese is deferring the tax for now to avoid immediate backlash, the article suggests domestic pressures may eventually force his government to reconsider this stance.

Japan's Prime Minister Sanae Takaichi stated that the oil crisis stemming from shipping disruptions in the Strait of Hormuz, due to the US-Israeli war on Iran, is having a significant impact on the Asia Pacific region. Takaichi made these remarks during a visit to Australia, where both nations signed agreements to enhance cooperation on energy supplies and critical minerals. The Strait of Hormuz is a vital shipping route, normally carrying about one-fifth of global oil and LNG, with 80% of that oil destined for Asia. Both Japan and Australia are concerned about these disruptions and have pledged to work together with urgency to secure energy supplies. The visit also included discussions on defense and economic cooperation.