:: Shingetsu Institute ::

Newsletter No. 292
News-Analysis
June 2, 2006

THE SQUEEZE IS ON -- JAPAN AND IRAN

Yesterday, the five permanent members of UN Security Council agreed to jointly propose a package to Tehran as regarding its nuclear enrichment activities. This new unity -- which is undoubtedly very fragile -- could have important consequences if it is maintained. Up until this point, antagonism between Washington and Moscow and Beijing made such a unified posture seem unlikely.

The change was apparently brought about by US Secretary of State Condoleezza Rice’s announcement recently that Washington might be willing to negotiate directly with Tehran. President Bush seems to be letting Rice take this diplomatic initiative, but according to Steven Clemons’ “Washington Note,” John Bolton is “pissed off” and “seething” at Rice for taking this initiative. And behind Bolton stands hardline Vice-President Dick Cheney and his team of advisors.

Still, if Rice does manage to maintain a unified position with Russia and China, then there can be little doubt that Tokyo will diplomatically support this bloc as well.

Since it has no veto power at the UN, Tokyo has been sidelined from the main discussions at this point.

The Nihon Keizai Shinbun has reported that Washington has been pressuring Tokyo to consider various economic sanctions against Iran, including the freezing of some assets. However, AP reported yesterday this statement from Foreign Minister Taro Aso: “Japan is not considering concrete sanctions at the moment.”

However, another report indicates that Tokyo is trying to gain more room for maneuver on this issue by reducing its imports of Iranian oil. Last month, Japanese imports from Iran dropped by 20%, and the difference is being made up by buying more oil from Saudi Arabia and the UAE, which are already its No. 1 and No. 2 suppliers respectively.

Bloomberg quoted Ken Koyama, Senior Research Fellow at the Institute of Energy Economics Japan, as follows: “High dependency on Iran is a disadvantage… Japan needs to think about ways to diversify its supply sources.”

It should also be recalled that in mid-March Nippon Oil -- Japan’s largest refiner -- indicated that they would cut back on Iranian oil supplies for similar reasons (see Shingetsu Newsletter No. 216).

It’s still too early to say where this is all heading. For Tehran the clouds seem to be darkening somewhat. For Tokyo the implications are still rather unclear. The most decisive battles will probably be fought within the capitals Washington, Moscow, Beijing, and Tehran.

Tokyo stands on the outside for now.