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Americans stymie Japan-Iran
oil deal
By Hooman Peimani
Japan and Iran have missed a deadline to sign
off on an important US$2 billion oil deal after two
years of negotiations, apparently in the face of
American pressure over Iran's nuclear ambitions. Given
the importance of the American market for Japan's
troubled economy and its reliance on Washington for
security, Tokyo may condition its signing the contract
on Tehran's satisfying the American demand on its
joining the additional protocol to the Non-proliferation
Treaty (NPT) of 1968 or a similar agreement.
Japan appears willing ultimately to sign the
contract for the development of part of Iran's largest
oilfield, Azadegan, located in its oil-rich Khuzestan
Province. Tokyo sees it as a vital source of long-term
energy supplies for its economy, which is heavily
dependent on imported oil. Accessing the oilfield is
especially important for the Japanese, who about two
years ago lost their rights to extract oil from Saudi
Arabia's Kafji zone. According to available estimates,
the Azadegan oilfield contains 6 billion barrels of
crude.
A Japanese consortium consisting of
Tomen, Inpex and Japan Petroleum Exploration has been
negotiating with the Iranian Ministry of Oil for the
development of the field since 2001. Their
representatives were supposed to sign with their Iranian
counterparts this Monday, although the mounting American
pressure on Japan raised doubts on its in-time signing
even prior to that day.
The American
intervention in the Japanese-Iranian transaction is part
of a broader US policy to pressure Iran to sign the NPT
protocol providing for more extensive inspections of its
non-military nuclear facilities. It also reflects
Washington's two-decades-old policy of seeking to weaken
Iran by limiting its revenues. The intervention is the
first American attempt to block a major economic
agreement involving Iran since the openly hostile
American policy towards that country began following the
Anglo-American occupation of Iraq. The Japanese and
Iranian negotiators have blamed unresolved economic
issues for the missed deadline. Although that is
conceivable for a two-billion-dollar contract, the
statements of Japan's chief cabinet secretary on Tuesday
suggested that the American pressure was the main
delaying factor and that Tokyo would not likely sign the
contract unless Iran addresses Washington's concern
somehow. Referring to American allegations over Iran's
clandestine nuclear-weapon program, Yasuo Fukuda urged
Iran to "address" those allegations and added: "We are
unlikely to sign a contract over crude oil that sets
aside concern about Iran's nuclear program."
Officially, the missed deadline does not mean
the death of the deal. Both sides report continued talks
over the unresolved economic issues, implying they would
sign the contract at a later time once those issues are
resolved. However, it is unlikely that they will sign
against American pressure. This is notwithstanding
Iran's importance for Japan as its third-largest oil
supplier and as its major economic partner in the Middle
East. For these reasons, the Japanese have sought to to
diverge their policy from that of the Americans towards
Iran. This has been reflected in various joint ventures
such as a huge steel complex in Iran's Persian Gulf
island of Qeshm, part of whose products are to be
exported to Japan once it is operational. The Japanese
are also involved in the Iranian auto industry.
Nonetheless, Tokyo has sought to maintain a
careful balancing act over its ties with Tehran while at
the same time trying to keep from antagonizing
Washington. Thus, contrary to its legal obligations,
Japan has refused to complete some of Iran's major
projects, such as the petrochemical complex at Bandar
Imam. It has also refrained from major investments in
Iran's oil and gas industry to comply with the American
D'Amato Act proscribing non-American investments over
US$20 billion in that industry. However, as the
Europeans, Russians and Asian oil companies have ignored
the Act since 1997 to secure access to Iran's large oil
and gas reserves, the Japanese are now trying to catch
up.
The Azadegan project has the potential to
turn Japan into a major player in Iran's fossil fuels
industry, enabling it to compete with the mentioned
companies in process of dominating that industry through
a variety of buyback contracts. The project could also
provide Japan with a reliable, long-term source of
energy to address its pressing need for imported fuel.
For these reasons, the Japanese have a clear interest in
concluding the oil deal. However, they have to balance
that against ties with the United States for their
economic and security merits.
Consequently,
Tokyo will probably try to prolong the continuing talks
with Tehran until Iran's nuclear issue is somehow
resolved. In this regard, a realistic scenario could be
its waiting until September when the International
Atomic Energy Agency (IAEA) is scheduled to report on
Iran's progress towards satisfying the IAEA's requests
for more extensive cooperation. Despite Washington's
hope, the IAEA could well present an overall positive
report. Its June report did not accuse Iran of
violations of its safeguards obligations, even though it
referred to a few cases of "failures", while mentioning
Iran's measures to address them. Russia's continued
cooperation with Iran on its nuclear energy project and
its expression of interest for expanding such
cooperation since the June report suggest Moscow is
expecting a positive report on Iran's nuclear health.
Technically, an IAEA report exonerating the
Iranians of all Washington's accusations on their
nuclear objectives would enable Japan to sign the
Azadegan oil deal. Yet, this would still require Tokyo
to ignore Washington's opposition to any deal for its
positive effects on Iran's economy, a possibility given
the two-year-long talks in the face of American
opposition. After all, the Japanese, like the Europeans,
pursue their national interests, which are at odds with
those of the Americans in a growing number of areas.
Notwithstanding, the direct intervention of the
Americans in the Japanese-Iranian oil deal signals the
escalation of hostility between Iran and the United
States with a predictably damaging impact on American
relations with some of its closest allies such as Japan.
Dr Hooman Peimani works as an
independent consultant with international organizations
in Geneva and does research in international
relations.
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