Newsletter No. 860
News-Analysis
December 26, 2007

 

STILL WAITING FOR THE NUCLEAR THAW IN TOKYO

There are still no clear signals out of Tokyo that they have understood the ramifications of the US National Intelligence Estimate. After months of expressing deep concern about Iran’s nuclear program, and having pulled out of the key Azadegan project over these very concerns in the fall of 2006, Japanese leaders now seem to have nothing to say about the strong likelihood that their fears were vastly exaggerated. I’m not the only one who has noticed the silence from official quarters on this matter.

Anyway, under my tree I found that Santa brought me a little package of media exposure this year.

Japan Sizes Up 'Non-Nuclear' Iran
By Eric Johnston
Japan Times

OSAKA -- A recent report by 16 U.S. intelligence agencies that concluded Iran halted its nuclear weapons development program in 2003 is likely to present new opportunities and challenges to Japan, whose relations with Tehran have blown hot and cold over the past decade.

The National Intelligence Estimate report, released last month, judged that not only had Iran abandoned plans for a nuclear weapon in 2003 but also that U.S. intelligence was moderately confident Tehran had not restarted its nuclear weapons program as of mid-2007. It expressed moderate to high confidence that Iran does not currently have an atomic weapon.

Iran's leaders welcomed the report, saying it clearly vindicated their long-standing claim the nation's nuclear program is only for peaceful purposes. But in Washington the report created a political firestorm, with current and former members of President George W. Bush's administration, as well as the president himself, commenting that Iran was still a threat. "Iran is dangerous. We believe Iran had a secret military weapons program, and Iran must explain why they had such a program," Bush told reporters in mid-December.

In Japan, the government had no official reaction to the report. But whether -- and how -- Japan will take advantage of it is the subject of much debate among those who follow Tokyo's relations with the Middle East.

Michael Penn, executive director of the Kitakyushu-based Shingetsu Institute for the Study of Japanese-Islamic Relations, said the report has led to a diplomatic effort by Iran to push for better relations, but at the moment Japan is not reciprocating.

"Since the report, Iran has been proactive in trying to re-establish positive relations with Japan. Japanese leaders, for their part, are much more cautious for two reasons," Penn said. "First, Tokyo does not want to step too far out in front of U.S. policy out of deference to their allies in Washington. Second, many Japanese conservatives have now become 'true believers' in regard to the 'war on terrorism.' Like many American policymakers, but not quite to the same degree, they distrust Iran."

At the same time, Penn said, Japan will be hard-pressed to stand by and watch as other countries seeking investment in Iran move in.

"China has finalized its involvement in Iran's Yadavaran oil field and Russia has supplied nuclear fuel for the unfinished Bushehr nuclear power plant. The fact that Japan's energy rivals are now rushing back into the Iranian market will increase pressure for Japanese energy companies to return as well," Penn said.

Five years ago, both countries were quite optimistic about their future relationship. In 1999, Iran discovered an estimated 26 billion barrels of oil in Azadegan, in the southwestern part of the country. In late 2000, then President Mohammad Khatami visited Tokyo, and it was announced Japanese oil firms, led by Inpex Corp., would be given priority in development negotiations of Azadegan. During the next few years, these negotiations slowly moved forward. In 2003, they appeared in danger of collapse when the International Atomic Energy Agency said Iran had failed to meet its obligations to report nuclear material and international concern rose that it was making nuclear weapons. But in February 2004, Japan and Iran signed an agreement to develop Azadegan.

The United States, which opposed Japan's attempts to develop Azadegan, increased pressure on Prime Minister Junichiro Koizumi to cancel the deal, and political developments in Washington, Tokyo and Tehran meant the deal could not go forward. By October 2006, U.S. pressure on Tokyo and international concern over Iran’s nuclear program led Japan to withdraw from the Azadegan agreement, although Inpex continues to hold a 10 percent stake in the project.

Despite all of the problems between Iran and Japan over the past five years, there is still a prevailing feeling of basic optimism about the future. Iranian Ambassador to Japan Mohsen Talaei sees the NIE report as the opportunity for a fresh start.

Shirzad Azad, a researcher of East-West relations at Aoyama Gakuin University Graduate School of International Politics, Economics and Communications who writes about Japan-Iran relations, noted that while Japan's support of the Bush administration on Iran's nuclear issue has hurt relations, Iran remains important to Japanese policymakers. "Japan prefers to buy more oil from Arab countries, but Iran's strategic importance for Japan is here to stay," Azad said. "Japanese businesses' motivation for Iran may be reduced in the short run. But in Japanese political and strategic circles, the importance of the Iran factor will not substantially change."

According to the Iranian government, trade between Iran and Japan was about US$12.3 billion last year, making Japan Iran's main trading partner. Iran exported about 485,000 barrels a day of oil to Japan, 14 percent of all the crude coming into this country.

Other non-energy obstacles to better relations remain, in particular the kidnapping of 23-year-old student Satoshi Nakamura, who was abducted by bandits in southeastern Iran in October. Japanese officials were told shortly afterward by Iranian officials that Nakamura had been reported to be in good health, but his fate remains unknown.

On a more long-term, strategic note, it is the rise of China, to the point where it may overtake Japan as Iran's main trading partner this year or next, that has Japanese leaders worried. "China has recently influenced Iran-Japan relations in a substantial way. (Prime Minister Yasuo) Fukuda or the next Japanese leader may prefer to cooperate with China over their shared interests in Iran," Azad said.

Time Ripe for Better Ties: Iran Envoy
By Eric Johnston
Japan Times

A recent U.S. report that concluded with "high confidence" that Iran halted its nuclear arms program in 2003 offers a key opportunity to expand Japan-Iran ties, Iranian Ambassador to Japan Mohsen Talaei said. "The affirmation of the use of peaceful nuclear energy in Iran was not unexpected," Talaei said in a recent interview in Tokyo. "I hope the NIE (National Intelligence Estimate) report will create more realism in U.S. policies toward Iran. Naturally, our expectations from Japan, which has amicable relations with the U.S. and Iran, are also high."

Iran is hoping that Japan will resume investments in developing its oil fields. Japan withdrew from an agreement to develop the Azadegan oil field in western Iran, near the Iraqi border, in October 2006 under U.S. pressure.

"Iran and Japan have a complementary relationship. Iran is an energy exporter and Japan an important energy consumer. There is much ground for cooperation, especially in areas like security of energy supply and in working to create conditions for bringing back growth and prosperity to sensitive areas of the Middle East and Persian Gulf," Talaei said.

At the same time, however, he warned Japan not to let a third party like the U.S. hinder bilateral relations. "In its relations with Japan, Iran is looking for the prevention of a third country's intervention in such relations," he said.

In response to a question about whether Japan's relationship with Iran is better or worse under current Prime Minister Yasuo Fukuda compared with his predecessors, Talaei said Fukuda has deep knowledge of Iran and he expects bilateral relations to improve. "Although relations have been somewhat affected due to the international situation, the basis of Iran-Japan relations is solid. Short-term developments cannot affect the importance of our long-term relationship. Now that the legitimacy of Iran's peaceful nuclear activities has been recognized, and considering the full cooperation between Iran and the International Atomic Energy Agency, it's natural to expect a further expansion of Iran-Japan relations," Talaei said.