Newsletter No. 298
News-Analysis
June 8, 2006

 

Below are four reports on the latest moves in Japan-Iran relations.

JAPAN EYEING SANCTIONS AGAINST IRAN IN NUCLEAR DISPUTE

Tokyo, June 5 (Associated Press) - Japan is considering imposing sanctions on Iran, if it continues to reject international calls to scrap its nuclear programme and controversial uranium enrichment efforts, a news report said on Sunday.

The sanctions would ban the remittances of money to Iran from Japan, the Yomiuri newspaper said, citing unidentified sources.

Japan has tried to seek a diplomatic solution to the standoff over Iran's nuclear ambitions, but with Iran still uncommitted to a package of incentives offered by other nations, the Japanese Government is considering stronger measures, the report said.

Chief Cabinet Secretary Shinzo Abe, when asked about Iran on a Sunday morning talk show, declined to say whether Japan was considering sanctions and said the Government is still pushing for a diplomatic resolution.

But he said he doubted whether sanctions would be effective against Iran, given the windfall profits the country is making on the currently high price of oil.

"It might not damage Iran, but could cause confusion in the world economy," Abe said on TV Asahi's Sunday Project.

On Thursday, Foreign Ministry Taro Aso urged Iran to accept a US offer for direct talks in return for suspending its controversial uranium program, but said Tokyo was not considering economic sanctions.

Foreign Ministry officials were not immediately available for comment.

Local news reports have said the United States is urging Japan to consider restricting financial transactions with Iran, should diplomatic efforts fail to break the diplomatic impasse.

IRANIAN OIL MINISTER WARNS INPEX OVER DELAYS

Tehran, June 5 (IRNA) - Iran's Oil Minister Kazem Vaziri Hamaneh on Monday complained about the Japanese delay to join Iran in the lucrative venture for development of Azadegan oilfield south of the country, saying Tehran will turn to domestic partners and technicians in case of further prolongation.

"Japanese delay in Azadegan oil field development has been far from expectation," complained Hamaneh.

He said Iran still awaits final decision on the issue by the Japanese party.

CHINA SOAKS UP IRAN CRUDE AS JAPAN, KOREA CUT BACK

Singapore, June 5 (Reuters) - China has boosted imports of Iranian crude by a quarter so far this year, making up for oil shipments cut by refiners in Japan and South Korea due in part to fears over Teheran’s stand-off with the West, national data shows.

The official figures suggest Iran, which has started to hint it might use its oil as a tool in the row with the United States and other countries over its nuclear programme, has a ready buyer in China, which has been hesitant to confront Teheran.

China’s crude imports from Iran are up 74,000 barrels per day (bpd) in the first four months of the year, according to official data released last week.

Data from Japan show a 14 percent or 97,000 bpd drop in Iranian imports, at least a quarter of that attributable to top refiner Nippon Oil’s decision in March to curb purchases due to the rising risks.

That decision was the first outward sign that customers were moving to limit their dependence on Iranian supplies.

South Korean imports of Iranian crude in January-April were down about 7 percent or 16,000 bpd.

While many Iranian officials have said the country will not use oil as a political weapon, supreme leader Ayatollah Ali Khamenei said on Sunday that its energy flows would be ”seriously endangered” if the United States made a “wrong move” toward Iran.

While monthly data tend to be volatile, the trend of the first four months of 2006 may indicate a broader-than-expected reaction by anxious refiners to the risks attached to Iranian crude.

But there are also commercial reasons for the fall in Japanese imports from Iran.

State oil firm Saudi Aramco last June completed its purchase of a 15 percent stake in Japan’s fifth-largest refiner Showa Shell Sekiyu K.K., which industry sources say allowed the kingdom to boost supplies to the refiner at the expense of Iranian crude.

Saudi exports to Japan rose 15 percent in the first four months of the year to 1.4 million bpd, government data show.

A shift in Iran’s sales to China could serve many interests. Public refiners in North Asia would reduce their exposure to riskier supplies; China’s state-owned refiners would avoid raiding edgy spot markets by securing more long-term contracts; Iran would tighten economic ties with a key U.N. Security Council member.

It remains to be seen if the trend continues, however, as most refiners surveyed by Reuters two months ago said they had no plans to cut their annual contractual volumes with Iran, risking a rift with the world’s fourth-biggest exporter.

While imports by Japan and South Korea have fallen on a seasonal basis, they are still running above last year’s average.

TELEPHONE CONVERSATION BETWEEN THE FOREIGN MINISTERS OF JAPAN AND IRAN

Tokyo and Tehran, June 7 (MOFA) - For about 25 minutes from 21:05 on June 6, Mr. Taro Aso, Japanese Minister for Foreign Affairs, had, on the initiative of the Japanese side, a conversation over the telephone with Mr. Manuchehr Mottaki, Iranian Minister of Foreign Affairs, on Iran's nuclear issue. The gist is as follows: The telephone conversation took place immediately after Dr. Javier Solana, EU High Representative for the CFSF, and others, who are now visiting Teheran, had talks with Dr. Ali Larijani, Secretary of Supreme National Security Council, and Foreign Minister Mottaki.

1) Mr. Aso stated that because a new EU proposal on the nuclear issue of Iran has been made by major countries getting support from Japan, the US., China and Russia, Iran should take its significance seriously, study it thoroughly, and start negotiations, and that Iran should not miss an opportunity to talk with the U.S. Mr. Aso also reiterated that although no country denies Iran's right to use nuclear power for peaceful purposes, Iran needs to suspend uranium enrichment to restore the confidence of the international community, in light of past developments.

2) Mr. Aso stated that Iran should note that it would be developing countries that would be most affected by an unstable energy supply, and that Japan intends to continue dialogue with Iran, being ready to play its utmost role in resolving the issue peacefully and diplomatically.

3) Mr. Mottaki again invited Mr. Aso to Iran and highly praised the role played by Japan for a peaceful solution of the issue, referring to the consultations with the countries concerned held by Mr. Tsuneo Nishida, Deputy Minister for Foreign Affairs, in Moscow and London.

4) Mr. Mottaki stated that consultations with Mr. Javier Solana, EU High Representative for the CFSF, and others were conducted in a friendly atmosphere, and that though there is a question left concerning the right to the peaceful use of nuclear power, Iran would seriously study the comprehensive package-proposal. The Iranian Foreign Minister also said that confidence building should be bi-directional and that Iran is ready to solve the issue through peaceful negotiations with no preconditions, as he explained that at the foreign ministerial meeting of the NAM countries held in Malaysia, a statement was issued emphasizing Iran's right to the peaceful use of nuclear energy.

5) As to relations with the U.S., Mr. Mottaki said that if confidence building poses a problem, the side that deteriorates relations of trust should be blamed, and that there is distrust of the U.S. in the international community.