Japan sets its sights on opportunities in Iran
By BAYAN RAHMAN
Financial Times (London)
August 24, 2000,
In the early 1950s, a tanker left Iran, making a lonely journey to Japan
with a consignment of oil.
The tanker was breaking a worldwide boycott of Iranian oil after the
government seized the oilfields of Anglo-Iranian Oil Company (now BP) and
nationalised the country's oil operations.
The tanker's journey was seen as heroic in Japan and symbolic of a small
nation's defiance of world opinion.
Japan was to defy the world again more than four decades later when
several countries withdrew their ambassadors from Tehran in 1997 after
a German court linked Iran with the assassination of Kurdish leaders in
Berlin. Japan stopped official dialogue for a few months but took no other
Japan's view of Iran has been coloured primarily by its need for oil
and more recently by its desire not to be left behind when US sanctions
preventing large investment in Iran expire next year.
This week, a Japanese government delegation is in Iran to discuss broad
energy issues, according to Japanese officials. But many believe this is
part of a charm offensive to gain an oil development contract with Iran
after Japan lost the oil concession in Saudi Arabia's Neutral Zone.
"Japan is very keen to have 'Japanese flag oil' and after the deal
with Saudi Arabia collapsed, Iran is the next target," said Kazuo
Takahashi, associate professor of international studies at Hoso university.
Japan has no natural resources and imports 85 per cent of its energy
needs. Most of its oil comes from the Middle East and Iran is the third
Japan is eager to endear itself to the Iranians. NHK World, Japan's
main broadcaster, broadcasts daily radio programmes in Farsi to Iran. Iran
has recently reciprocated with its own Japanese-language broadcasts.
In the 1980s, Japanese companies were eager to employ Iranian workers
escaping the Iran-Iraq war and the high unemployment that followed. Last
year Japan made a Y7.5bn (Dollars 70m) loan to Iran, the second instalment
of a credit agreed in 1993, and more financial aid is likely to follow.
The Japanese government is pinning its hopes on Mohammad Khatami, Iran's
pro-reform president. Since Mr Khatami's election in 1997, the number of
official visits between the two countries has increased markedly, including
a visit from Keidanren, Japan's leading business federation, two years
While Japan looks to Iran for business opportunities and oil supplies,
Iran is eager to attract foreign investment to bolster its sagging economy.
The Iranian parliament yesterday passed a bill to encourage foreign investment
and to protect investments against seizures.
Japan's leading trading companies, such as Mitsui, Mitsubishi and Tomen,
already export steel, machinery and chemical products to Iran, and hope
the recent flurry of diplomatic activity will lead to increased trade.
"We sincerely hope that the energy dialogue in Tehran will further
enhance the mutual understanding of the two countries and lead to the expansion
of business activities," says Morihiko Tashiro, president of Tomen.
Japan is concerned that some European companies are already working
in Iran and that there may be a sudden U-turn in US policy towards Iran,
similar to its change of heart towards China in the 1970s, which took Japan
"For a long time the US told Japan not to make deals with China
but suddenly we saw American leaders shaking hands with the Chinese. Japan
felt slighted by the US and it doesn't want a repetition of that. It's
eager to get a strong base in Iran before more powerful US companies get
there," says Mr Takahashi.
Japan is concerned that as China's economy grows, so will its appetite
for Iranian oil. Mr Khatami visited China, which has been a net importer
of oil since the mid-1990s, in June after the two countries agreed to strengthen
political and economic co-operation. China is building supertankers for
Iran, breaking a Japanese-Korean duopoly, and China National Petroleum
Corporation won an Dollars 85m drilling contract in Iran.
Tomorrow, as the energy delegation leaves Iran, Taro Nakayama, a former
foreign minister, will begin a visit during which he will invite Mr Khatami
to Japan. A trip by Iran's president to Tokyo and the better trade relations
that could follow would be seen by Japan as a vindication of its independent
policy towards Iran.