Iran sanctions: China opposes Iran nukes; Japan, S’Korea signal willingness to cut Iran oil but cautious on economic impact

Updated On: Jan 20, 2012

As the US continues to seek support for sanctions against Iranian oil, China defended its energy ties with Iran on Wednesday, but also opposed Iran’s alleged nuclear weapons programme. Meanwhile, Robert Einhorn, the State Department’s special adviser for nonproliferation and arms control, obtained greater assurances of measured support for US sanctions from Japan and South Korea.

China: Defends oil trade with Iran, but opposes nuclear programme

China appears to be attempting to diversify its sources of foreign oil and reduce its reliance on its traditional oil suppliers, including Iran, even as it publicly snubs US and European pressure to decrease its Iranian imports. It has also strongly opposed any development of nuclear weapons by Iran.

Premier Wen Jiabao completed a trip to the Persian Gulf, where he concluded billions of dollars in deals with main US allies, including Saudi Arabia, the United Arab Emirates and Qatar. Even though Premier Wen did not visit Iran, his tour came as China faces scrutiny over its apparent support for Iran.

While defending his country’s energy ties with Iran on Wednesday, Premier Wen also expressed opposition to Iran’s alleged nuclear weapons programme, and at the same time issuing what some see as Beijing's clearest condemnation yet. “We are deeply concerned about the situation in the Persian Gulf and the Middle East,” Premier Wen said.

“China adamantly opposes Iran developing and possessing nuclear weapons,” he emphasised.

China is seen to have sent a message to Iran that it could not depend on Beijing's unfailing support as Western nations tighten sanctions against Tehran. Chinese foreign policy observers said the statement also showed that Beijing would not allow its international position to become tied up to Iran.

China’s drive to diversify oil sources is still on-going, with Iran still supplying about 11% of China’s oil imports. Any move by China to curb Iran imports could push global prices up as China seeks other sources. China’s drive has gained greater urgency as disruptions occur in smaller crude suppliers such as Libya and Sudan, and mounting unease in Beijing of the potential spread of the Arab Spring.

Report: China Shops Around for Oil, Wary of Iran, Arab Spring (Wall Street Journal, 19 Jan 2012)

Report: China begins to turn against Iran (Telegraph, 19 Jan 2012)

Japan: Wants to reduce Iran oil, but concerned about economic impact

Meanwhile, Mr Einhorn said Japan agrees on the need to step up pressure on Iran to prevent the Islamic Republic from developing nuclear weapons, and sought to ease worries that doing so will drive up oil prices.

Mr Einhorn said, “Increasing pressure could give the Iranians stronger incentive to get to the negotiating table… I think there is agreement on that. And my government believes in stepping up pressure against Iran while maintaining stability in the international oil markets.”

Prime Minister of Japan Yoshihiko Noda’s government has signalled support for US efforts to cut imports of Iranian oil, but expressed concern about the economic impact on Japan, which imports about 10 per cent of their oil from Iran. The East Asian country also found itself more dependent on imported energy after the Fukushima nuclear disaster last year.

Foreign Minister Koichiro Gemba added that while Japan is considering slashing Iranian imports, keeping oil prices stable is crucial. “The important thing is the stability of markets,” he said at a press conference in Tokyo. “If crude oil prices rise as a result, the sanctions aren’t effective.”

On Thursday, Akihiko Tembo, president of the Petroleum Association of Japan (PAJ), said that Japan is likely to cut Iranian crude purchases in about three months, a reassuring message for US officials touring Asia to rally support for Iran oil sanctions that is also seen as helping to clear confusion about Japan’s response to the sanctions after conflicting comments by officials.

“I think each buyer is considering this in a practical way and making efforts to reduce nominations (for Iranian crude) as much as possible and find alternatives… I think there will be less planned volumes than before in a three-month time,” Mr Tembo said in a regular press briefing.

Last week, Prime Minister Noda’s administration had given contradictory signs on its intentions to cut Iranian oil imports. While Finance Minister Jun Azumi said on 12 January that Japan would take “concrete steps” to do so, Prime Minister Noda said on the following day that consultations were needed with business groups about the impact of reductions.

Report: U.S. Envoy Einhorn Says Japan Agrees on Need to Increase Pressure on Iran(Bloomberg, 18 Jan 2012)

Report: Japan likely to cut Iran imports in 3 mths, industry head (Reuters, 19 Jan 2012)

Korea: Reduce Iran oil imports “in steps”

Earlier this week, Mr Einhorn was in South Korea, also to discuss Iran oil sanctions. On Tuesday, South Korea decided to reduce its oil imports from Iran “in steps”.

“We showed (the US delegation) that we shared the (US) view on the purpose of Washington's sanctions against Iran and expressed our stance that we will cooperate to address the Iranian nuclear issue within our capacity,” a government press release said.

Earlier in the day, Mr Einhorn pressured South Korea to reduce its oil imports from Iran, saying that Iran’s nuclear issue is linked to North Korea’s. Mr Einhorn indicated that actions to address Iran's nuclear issue could help with denuclearisation of the Korean peninsula, but he underscored Washington’s consideration of joint efforts to minimize possible economic impact from the sanctions. Like Japan, South Korea receives about ten per cent of its oil imports from Iran.

South Korean deputy foreign minister, Kim Jae-shin, said that South Korea shares growing concerns of the US about Iran's nuclear development. "[The] recent situation related to [the] Iranian nuclear issue has been getting worse since we met last month. But I assure you, once again, that the [South] Korean government is committed to strongly support and participate in international efforts to resolve this issue," Mr Kim said.

He added, "(The South Korean government) knows that the situations in Iran and in North Korea are related. I think progress in one will help us achieve progress on another".

But he cautioned that more forceful action is contentious in South Korea, saying, “Many Koreans are quite worried about that further strengthening sanctions against Iran at this time may destabilize the international market of crude oil and, accordingly, bring about some adverse effect on the [South] Korean economy as well.”

Report: Korea to reduce oil imports from Iran in steps (Asia One, 18 Jan 2012)

Report: US Asks South Korea to Cut Iran Oil Imports (Voice of America, 17 Jan 2012)

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