Iran oil sanctions: Japan backtracks; Korea uncertain

Updated On: Jan 13, 2012

After getting no assurances from China that it would cut Iranian oil imports, the US appeared to win Japan’s backing to cut oil supplies from Iran, only to have the Japanese government backtrack on that pledge shortly after. In South Korea, an unnamed source indicated a possible reduction of Iranian oil imports, but the government later denied the report just as the South Korean Prime Minister begins a trip to the Middle East to apparently source for alternatives to Iranian oil. A US State Department special advisor is also due to visit South Korea next week to discuss the oil sanctions against Iran.

Japan backtracks on earlier promise to cut Iranian oil imports

The Japanese government on Friday appeared to pull back on an earlier pledge to the US, its most important ally, to reduce oil imports from Iran, suggesting Japan was not yet fully aligned with the US in reducing Iranian oil imports, which could potentially hurt the credibility of its foreign policy and its dealings with the US.

On Thursday, after Japan’s Finance Minister Jun Azumi told US Treasury Secretary Timothy Geithner that Japan was planning “concrete steps” to cut Iranian oil imports, helping the US score an apparent victory to rally support for sanctions against Iran, Chief Cabinet Secretary Osamu Fujimura appeared to pull back by saying Japan had yet to make a final decision, and that importing less Iranian oil was merely one of many opinions on settling the matter.

The following day, Foreign Minister Koichiro Gemba echoed Mr Fujimura, saying the government has not yet reached a decision, and that the matter remains unsettled and scepticism was needed.

“The United States would like to impose sanctions. We believe it is necessary to be extremely circumspect about this matter,” Mr Gemba told a news conference with visiting French Foreign Minister Alain Juppe. Mr Gemba added that sanctions would be ineffective if they end up pushing up oil prices, a negative development for the fledgling global economy but a benefit for oil producing Iran.

Mr Gemba asserted, “We must look at this extremely carefully and find an intelligent solution… We as a government are in the process of examining the issue and coming to a common position.”

Mr Gemba emphasised that over the last five years, Japan had reduced its dependence on Iranian crude, which now makes up about ten percent of the country’s oil imports. Mr Azumi also insisted on Friday that there was “no confusion” and “no inconsistency” within Japan’s government, news agency Kyodo reported.

Throwing even more doubt into Mr Azumi’s promise to the US, Japanese Prime Minister Yoshihiko Noda also said later on Friday that his country has yet to decide on reducing Iranian oil imports, and that Mr Azumi’s pledge only represented the Finance Minister’s “personal opinion” and that the Japanese government intended to discuss the issue further with the Japanese business community.

It was unclear if Prime Minister Noda’s comments signalled an actual retreat from support of Washington or reflected a need for time to win the agreement of Japan’s businesses.  Prime Minister Noda however did not entirely rule out joining the sanctions, and said he wanted additional talks with US officials.

Japanese news reports have said the Noda administration has offered to incrementally reduce imports of Iranian oil in exchange for the US exempting Japan’s banks from financial sanctions aimed at Iran. Under those sanctions, the US will prohibit from its market all financial companies that deal with Iran’s central bank.

Purchasing less Iranian oil is sensitive for Japan because its reliance on energy imports has dramatically increased after last year’s Fukushima nuclear disaster. Some in Japan are worried that the new sanctions could cause oil prices to spike, dealing a blow to its economy, which is still recovering from last year's triple disaster.

Report: Japan ‘circumspect’ on Iran oil embargo: minister (AFP, 13 Jan 2012)

Report: Japan policy on reducing Iran oil in doubt (Reuters, 13 Jan 2012)

Report: Japan Delays Decision on Iran Oil Sanctions (NY Times, 13 Jan 2012)

South Korea denies report indicating Iranian oil cuts as Prime Minister visits Middle East

In South Korea, the Chosun Ilbo on Thursday quoted an unnamed senior government official as saying that Seoul was considering cutting imports of Iranian crude oil by half to support US sanctions against Iran.  However, Presidential spokesman Park Jeong-ha on Friday denied the report, saying that the government has not yet made any decision on how much to cut its crude oil imports from Iran as part of a US-led campaign to sanction the Islamic Republic.

Mr Park said, “No decision has been made by our government with regard to sanctions on Iran… A decision will be made in a direction that minimizes the impact to our economy.” Iranian oil imports account for about a tenth of all oil imports into South Korea, and like Japan, there are concerns in South Korea that a drastic reduction in oil imports from Iran will adversely affect the economy.

South Korea’s knowledge economy minister Hong Suk-woo also said “it was too early to say” if Seoul would cut Iranian oil imports. “Our basic stance is to cooperate with the US,” Mr Hong said, adding that officials from the two countries would meet next week to discuss “concrete measures”. The US State Department’s special adviser for non-proliferation and arms control, Robert Einhorn, is due to visit Seoul on Monday for three days to explain Washington’s new sanctions against Iran.

South Korean refiners have made deals for oil supplies from Iran in 2012 for slightly more than what they purchased in 2011 but are also watching out for alternative sources, company and industry sources said earlier in January.

South Korea's Prime Minister Kim Hwang-sik will visit Oman and the United Arab Emirates from Friday to discuss oil supply and “build stable energy supply bases,” according to a statement from the Prime Minister's Office.

Report: Seoul Considers Cutting Oil Imports from Iran by Half (Chosun Ilbo, 13 Jan 2012)

Report: No decision yet on cutting oil from Iran: official (Korea Herald, 13 Jan 2012)

Report: Korea PM heads to Oman, UAE as Iran sanctions bite (Reuters, 12 Jan 2012)

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