Could Japan and the US clash over Iran?

John de Boer (Research Associate, GLOCOM)

Over the past week, newspapers have reported mounting US government pressure on Japan to abandon a $2.5 billion oil deal with Iran that would give Japan access to find oil in the world's largest undeveloped oil reserve for thirty-five years. The motive for this demand, according to the State Department, is based on US worries that Japan may be sending Iran "the wrong message" by doing business with a state that is evading IAEA inspections of its nuclear sites. For the US, this is particularly alarming due to beliefs that Iran is developing a nuclear weapons program, is aiding international terrorism and could be a potential exporter of weapons of mass destruction (WMD) to such agents. Whether or not Japan shares these threat perceptions, its government has made clear, like European and Russian governments, that Iran should open its doors to IAEA inspectors and prove that its nuclear program is dedicated to energy production only.

Nevertheless, Iran continues to refuse monitors and little, if anything, has changed in regards to the prospective oil deal. In fact, while high level Japanese officials call for inspections, other colleagues are busy at work trying to increase their investments in Iran. The Iran News Agency (IRNA) quoted the Japanese Ambassador in Tehran, Takezu Kawamura, on 23 June saying that, "his country is interested to cooperate with Iran in various sectors, notably tourism". He went on to call for an "expansion" of Tehran-Tokyo ties in oil exploration and technical cooperation and said the Japanese government would consider any request for technical assistance. The article stressed that the two states are striving to forge "higher trade and investments ties" in areas beyond oil including mining, textiles, ICT and tourism. Japanese investment in Iran forms part of what has become a ten-fold increase in foreign investment in Iran over the past ten years.

For the US, the conflict with Iran involves much more than nuclear inspections. Rather, it reflects a bitter history of failed overt political and covert military interventions that have sought to entrench US interests in Iran in order to gain access to a resource rich, potentially lucrative market and a militarily strategic ally in the Muslim world. Ever since the Islamic Revolution of 1979, when the US was ousted from the country, successive American administrations have sought to isolate and weaken the regime. However, for the most part they have failed to gain the cooperation of the international community.

In 1996, the Clinton administration tried to scare governments and businesses away from investing in Iran by signing into law the Iran-Libya Sanctions Act. This law required the President to impose sanctions on any international company that did $40 million US or more in oil/gas business with Iran. The measure was ineffective and luckily for Japanese companies, it was hardly implemented.

In the case of Japan, oil is a lifeline commodity. After the termination of its oil rights in the Khafi area oilfields in Saudi Arabia last year, Iran has emerged as a strategic source of oil for resource poor Japan. Currently, Japan imports 14 percent of its oil from Iran, however, in light of recently inked deals with Iran this amount will certainly increase over the next decade.

In the meantime, newspaper reports indicate that the US government is seeking to strengthen its sanctions regime against Iran. Currently, there is a study group in the US House of Representatives looking to find ways of making the 7-year old sanctions regime more effective, in essence implementing it. In addition to this, the US is leading a Proliferation Security Initiative, outside of the boundaries of international law, which will engage in the interception of ships and aircraft carrying WMD, missiles or enabling technology and material on land, in the sea or air. Japan, along with 10 other nations has joined the US to study this option.

As the US moves to build a coalition against Iran, Japan is finding itself in an increasingly uncomfortable position, squeezed between the US and its own national interests. For Japan, Iran represents a key trading partner upon which a not so insignificant portion of Japan's national welfare depends. Unlike Iraq, Japan has developed extensive cultural, economic and political relations with Iran and would be hard pressed to give this up as a result of Bush's deep seated enmity towards the Islamic Republic.

While Iran may not be as strategic for the Japanese economy as was China during Shigeru Yoshida's reign, considering Japan's increasing energy vulnerability we may witness comparable friction over Iran between the US and Japan in the years to come. At this point, all Japan can hope for is that Iran admit IAEA inspectors and sign the Additional Protocol to the Non-Proliferation Treaty. However, considering that Iran is surrounded by US forces on its East and West, is threatened by an uninspected Israeli nuclear weapons program and has placed the lifting of the sanctions regime as a condition to inspections, Japan will likely continue to suffer from US-Iranian animosity and as a result could be forced to face up to America, in the very near future.