Predicted Backlash from U.S. over Oil Deal with Iran Misplaced

John de Boer (Research Associate, GLOCOM; Japan Fellow, Stanford University)

Japan's signing of a $2bn oil exploration deal with Iran last week drew media attention both in and outside of Japan. All sources voiced some sense of concern over the deal. However, there was a clear difference between Japanese and foreign media over what they thought was the main cause of worry. For papers and news agencies such as the Financial Times, the AFP, Xinhua, the BBC and the Associated Press, the Azadegan contract had the potential to "rekindle tensions with the United States" (Guy Dinmore, Michiyo Nakamoto and Mariko Sanchanta, Financial Times, February 19). According to foreign sources, this arrangement signaled the notion that Japan had given priority to energy supplies over security concerns. In essence, they understood that Japan had turned its back on Bush's 'axis of evil' theory and that it could be subject to the Iran-Libya Sanctions Act enacted by the U.S. to punish foreign countries that invest in Iranian petroleum projects. In contrast, Japanese sources such as the Asahi Shimbun and the Nikkei Weekly expressed primary concern about whether or not the deal was a good investment decision. Their issue was that technological limitation and security threats due to the field's proximity to Iraq would make it difficult for Japan to profit from the arrangement. Nikkei's doubts about the economic feasibility of the deal were reinforced when it introduced the statement that, "some speculate the agreement … was more about ensuring Inpex's (a semi-governmental institution) continued existence to maintain lucrative retirement options for senior bureaucrats than about securing a major oil source" in its article of 23 February.

The discrepancy in issues raised by foreign and local news sources has to do with a often-misunderstood aspect of Japan's foreign policy. While most scholars and journalists take it for granted that Japan goes along with the U.S. on most occasions when it comes to foreign policy, this is not the case in relation to the Middle East. In the case of the Middle East, Japan's traditional subservience to US interests does not always apply. For over 50 years, Japan has not been afraid to take a policy position in the Middle East that contradicts that of the U.S. The recent inking of an oil deal with Iran is merely a step up from extensive ties that Japan maintained with revolutionary Iran since the early 1980s. While the U.S. moved to contain Iran, Japan has been actively and openly seeking to engage it. Between 1979-1999, Japan's direct investment in Iran was 529 million US dollars. Over the past five years Japan has sent its foreign minister to Iran three times, the minister of economy, industry and trade once and high level special envoy's at least six times. In response, Japan received president Khatami in October 2000 and Dr. Seyyed Kamal Kharrazi, minister of foreign affairs, twice, once in November 2001 and another in August 2003.

In the larger Middle Eastern context, Japans position vis-a-vis the Arab-Israeli conflict has also been out of line to that of the U.S. While the U.S. has been consistently pro-Israeli, particularly since 1967, Japan has been clearly pro-Arab since 1952. While most scholars interpret Japan's policy, as expressed in the Nikaido statement following the oil-shocks of 1973 as the major policy shift in favor of the Arabs, my investigations indicate that Japan took a blatantly pro-Arab stance soon after it established ties with Israel in 1952. It took Japan three years to reciprocate with a legation in Israel and when it did, it did so (in 1955) in the form of a non-resident minister to Tel Aviv. In all aspects of their relationship, Japan specifically requested that Israel give no undue publicity to their ties so as to "avoid the renewal of untimely protests from Arab Quarters". While trade with Arab states boomed, Japanese ministries never encouraged companies to take an interest in Israel's economy. As one former Israeli ambassador to Japan told me in an interview, "the Japanese were more Popish than the Pope" when it came to the Arab boycott of Israel. Politically, the Japanese government consistently supported the Arab cause in the conflict with Israel and took an explicitly pro-Palestinian stance in the Bandung Conference of 1955. Also, during the 1950s, Japan approved arms sales to Arab states while rejecting Israeli inquiries for the same. Most notably, Japan's pro-Arab stance was formulated before oil became a factor. Japan only became dependent on oil as a primary source of energy in the 1960s.

Japan's current engagement in the Middle East Peace Process is more balanced. However, when compared to that of the U.S. the Japanese government is still heavily biased towards the Arab/Palestinian cause and has done much more for the Palestinian people and their march to statehood than has America.

One lesson that we need to learn from Japan's recent signing of an oil deal with Iran is that Japan has an independent policy when it comes to the Middle East. Considering historical differences between Japan and the U.S. in the Middle East, notions that Japan's deal with Iran could "rekindle tensions with the U.S.", as has been suggested by foreign news sources, are likely misplaced. In my estimation, Japan's dealings in the Middle East will have little or no impact on its relations with the United States.