Japan sizes up ‘nonnuclear’ Iran

U.S. report citing end of arms program seen reopening door to oil

by Eric Johnston

OSAKA — A recent report by 16 U.S. intelligence agencies that concluded Iran halted its nuclear weapons development program in 2003 is likely to present new opportunities and challenges to Japan, whose relations with Tehran have blown hot and cold over the past decade.

The National Intelligence Estimate report, released last month, judged that not only had Iran abandoned plans for a nuclear weapon in 2003 but also that U.S. intelligence was moderately confident Tehran had not restarted its nuclear weapons program as of mid-2007. It expressed moderate to high confidence that Iran does not currently have an atomic weapon.

Iran’s leaders welcomed the report, saying it clearly vindicated their long-standing claim the nation’s nuclear program is only for peaceful purposes. But in Washington the report created a political firestorm, with current and former members of President George W. Bush’s administration, as well as the president himself, commenting that Iran was still a threat.

“Iran is dangerous. We believe Iran had a secret military weapons program, and Iran must explain why they had such a program,” Bush told reporters in mid-December.

In Japan, the government had no official reaction to the report. But whether — and how — Japan will take advantage of it is the subject of much debate among those who follow Tokyo’s relations with the Middle East.

Michael Penn, executive director of the Kitakyushu-based Shingetsu Institute for the Study of Japanese-Islamic Relations, said the report has led to a diplomatic effort by Iran to push for better relations, but at the moment Japan is not reciprocating.

“Since the report, Iran has been proactive in trying to re-establish positive relations with Japan. Japanese leaders, for their part, are much more cautious for two reasons,” Penn said. “First, Tokyo does not want to step too far out in front of U.S. policy out of deference to their allies in Washington. Second, many Japanese conservatives have now become ‘true believers’ in regard to the ‘war on terrorism.’ Like many American policymakers, but not quite to the same degree, they distrust Iran.”

At the same time, Penn said, Japan will be hard-pressed to stand by and watch as other countries seeking investment in Iran move in.

“China has finalized its involvement in Iran’s Yadavaran oil field and Russia has supplied nuclear fuel for the unfinished Bushehr nuclear power plant. The fact that Japan’s energy rivals are now rushing back into the Iranian market will increase pressure for Japanese energy companies to return as well,” Penn said.

Five years ago, both countries were quite optimistic about their future relationship. In 1999, Iran discovered an estimated 26 billion barrels of oil in Azadegan, in the southwestern part of the country.

In late 2000, then President Mohammad Khatami visited Tokyo, and it was announced Japanese oil firms, led by Inpex Corp., would be given priority in development negotiations of Azadegan.

During the next few years, these negotiations slowly moved forward. In 2003, they appeared in danger of collapse when the International Atomic Energy Agency said Iran had failed to meet its obligations to report nuclear material and international concern rose that it was making nuclear weapons. But in February 2004, Japan and Iran signed an agreement to develop Azadegan.

The United States, which opposed Japan’s attempts to develop Azadegan, increased pressure on Prime Minister Junichiro Koizumi to cancel the deal, and political developments in Washington, Tokyo and Tehran meant the deal could not go forward.

By October 2006, U.S. pressure on Tokyo and international concern over Iran’s nuclear program led Japan to withdraw from the Azadegan agreement, although Inpex continues to hold a 10 percent stake in the project.

Despite all of the problems between Iran and Japan over the past five years, there is still a prevailing feeling of basic optimism about the future. Iranian Ambassador to Japan Mohsen Talaei sees the NIE report as the opportunity for a fresh start.

Shirzad Azad, a researcher of East-West relations at Aoyama Gakuin University Graduate School of International Politics, Economics and Communications who writes about Japan-Iran relations, noted that while Japan’s support of the Bush administration on Iran’s nuclear issue has hurt relations, Iran remains important to Japanese policymakers.

“Japan prefers to buy more oil from Arab countries, but Iran’s strategic importance for Japan is here to stay,” Azad said. “Japanese businesses’ motivation for Iran may be reduced in the short run. But in Japanese political and strategic circles, the importance of the Iran factor will not substantially change.”

According to the Iranian government, trade between Iran and Japan was about $12.3 billion last year, making Japan Iran’s main trading partner. Iran exported about 485,000 barrels a day of oil to Japan, 14 percent of all the crude coming into this country.

Other nonenergy obstacles to better relations remain, in particular the kidnapping of 23-year-old student Satoshi Nakamura, who was abducted by bandits in southeastern Iran in October.

Japanese officials were told shortly afterward by Iranian officials that Nakamura had been reported to be in good health, but his fate remains unknown.

On a more long-term, strategic note, it is the rise of China, to the point where it may overtake Japan as Iran’s main trading partner this year or next, that has Japanese leaders worried.

“China has recently influenced Iran-Japan relations in a substantial way. (Prime Minister Yasuo) Fukuda or the next Japanese leader may prefer to cooperate with China over their shared interests in Iran,” Azad said.