Japan offers U.S. support on Iran, less clear elsewhere in Asia

Reuters News
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Posted: Jan 20, 2012 7:19 AM
Japan offers U.S. support on Iran, less clear elsewhere in Asia

By Risa Maeda

TOKYO (Reuters) - Japan pledged on Friday to keep cutting purchases of Iranian crude in the clearest public offer of support yet among Asia's big buyers for U.S. efforts to tighten an international noose around Iran in an escalating dispute over its nuclear ambitions.

Other Asian buyers of Iran's crude have indicated less co-operation or been less forthright in their comments following a flurry of visits to the continent in the past two weeks by envoys of President Barack Obama, who signed a new sanctions law on New Year's Eve aimed at starving Tehran of critical oil revenues.

Asian support for U.S. sanctions is vital since the region buys more than half of Iran's daily crude exports. The European Union has committed to banning Iran crude imports.

China, Iran's biggest crude customer, rejected the U.S. sanctions as overstepping the mark and defended its extensive imports from the second-biggest oil producer in OPEC.

India, the second-biggest importer of Iranian crude, also rejected the U.S. pressure and said it would continue to trade with Tehran.

Officially, South Korea says it has yet to determine its response. But government and industry sources say the government is trying to line up alternative supplies of crude in case it is forced by the U.S. sanctions to reduce Iranian crude imports.

Washington wants Asia to cut crude imports from Iran in a bid to pressure Tehran to rein in its nuclear ambitions, which it suspects are aimed at making weapons. Iran rejects the charge and says its program is for peaceful means.

Obama sent a team to South Korea and Japan this week led by the U.S. State Department's special adviser for nonproliferation and arms control, Robert Einhorn, and the Treasury Department's assistant secretary for terrorist financing, Daniel Glaser.

Other officials, including Treasury Secretary Timothy Geithner, have visited during the last two weeks.

Einhorn made clear that the United States was looking for Asian oil buyers to cut their purchases of Iranian crude.

The United States says it will punish financial institutions that deal with Iran's central bank, the main clearing house for oil payments. However, a country can earn a waiver from the sanctions if it significantly reduces trade with Iran.

Tightening sanctions in recent years appear to be taking a toll on Iran, weakening its currency and making it increasingly difficult for importers of its oil to make international payments.

Japan told U.S. officials in Tokyo on Friday it had cut Iran crude imports by about 40 percent in the past five years, Trade Minister Yukio Edano told a press briefing.

"We also told them our understanding is that this trend is set to continue," he said. "Having said that, we asked U.S. officials to consider the Japanese situation in a flexible manner, including the consideration of a waiver from the U.S. law on sanctions. And I understand that negotiations will continue."

Fresh cuts to Japan's Iranian crude imports are likely in about three months, Akihiko Tembo, president of the Petroleum Association of Japan said on Thursday.

Japan's Ministry of Economy, Trade and Industry will hold talks with buyers in Japan of Iranian crude about cutting supplies, a ministry source said.

Cutting Iranian crude imports is particularly risky for Japan. Since the Fukushima nuclear power plants disaster last year, the world's third-biggest economy is much more reliant on energy imports. Some 10 percent of overall oil imports come from Iran.

South Korea also intends to seek a waiver from the U.S. sanctions, sources say, but in public comments has not shown any clear commitment to cutting imports.

"We have not yet set any certain policy such as reducing our crude imports from Iran. Nothing has been determined yet," Minister of Knowledge Economy, Hong Suk-woo, told Reuters on the sidelines of an energy event on Friday.

However, government and industry sources said Seoul is trying to line up alternative suppliers in case Iran purchases are shut down by the sanctions.

The battle to win support from China and India is much tougher for Washington.

China, which has long rejected unilateral sanctions against Iran, gave no hint of giving ground last week when Geithner visited Beijing to lobby for support.

However, Premier Wen Jiabao was frank this week in comments warning Tehran against any effort to acquire nuclear weapons, saying Beijing "adamantly opposes Iran developing and possessing nuclear weapons."

The sets of comments underline the tricky path Beijing is trying to steer between pressure from Washington and its allies and expectations from Iran, which sees China as a sympathetic Third World power.

India has dispatched a delegation to Tehran to work out ways to continue buying Iran's oil, worried that the current payments route through Turkey's state controlled Halkbank could become hobbled by the U.S. sanctions.

Still, Foreign Secretary Ranjan Mathai said this week that India intended to keep on importing from Iran.

"We have accepted sanctions which are made by the United Nations. Other sanctions do not apply to individual countries," he told reporters. "We continue to buy oil from Iran."

China, Japan and South Korea have made a flurry of trips in recent weeks to the Middle East, visiting the likes of Saudi Arabia and the United Arab Emirates who produce crude oil that could replace Iranian grade oil.

Still, the Asian buyers are wary of cutting off ties with Iran. The producer is the world's fifth-biggest crude exporter and so a vital source of fuel for Asia's economic growth.

If pushed too far, Tehran says it will close the Strait of Hormuz, a vital shipping lane in the Gulf that carries a third of the world's seaborne oil trade and a route for much of the oil that heads to Asia.

(Reporting by Cho Meeyoung in Seoul; Risa Maeda, Stanley White and Tetsushi Kajimoto in Tokyo, Chris Buckley in Beijing, Nidhi Verma in New Delhi and Ramin Mostafavi in Tehran: Writing by Neil Fullick; Editing by Ian Geoghegan)