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Japan eyes resuming loans to Iran: report

TOKYO, March 8 (AFP) - Japan has launched negotiations aimed at resuming low-interest loans to Iran following a six-year-suspension, a report said Monday.

As a first step, Tokyo is to provide at least 100 billion yen (820 million dollars) for Tehran to finance the construction of a hydro-electric power station on the Karun river in Iran's southwestern provice of Khuzestan, the Nihon Keizai Shimbun said.

It comes as Tehran tries to lure back US oil companies to do business in the country.

Iran started building the power station in 1993 with Japanese financial support, but the project is expected to be stalled later this year because Tokyo froze installments on a soft loan set apart for it.

"It is not a good idea to let Iran suspend the project," a foreign ministry official was quoted by the Nihon Keizai as saying. Bowing to US pressure, Japan has stopped issuing new loans to Iran since 1993.

Claiming that Tehran is a major sponsor of terrorism, Washington has urged other nations to put pressure on the country. US legislation which came into force in 1996 and runs to 2001 bans major investment in Iran's oil and gas sectors.

Iran stepped up the pressure to end the US embargo with the surprise announcement Sunday that US oil companies face "no obstacle" to doing business in the Iranian oil industry.

"There is no obstacle to US oil companies participating in oil development projects in Iran," Foreign Minister Kamal Kharazi said in Tehran.

Kharazi's announcement came just days after a top US oil executive told the US Congress that the embargo meant US firms could not compete on equal terms with companies from Europe and elsewhere.

Despite the sour ties, Japan is still Iran's biggest trading partner with exports of 709 million dollars and imports of 3.2 billion dollars in 1996. Nine percent of Japan's oil needs come from Iran.

A foreign ministry official declined to confirm the Nihon Keizai report, but said Tokyo "is considering seriously" the timing of resuming loans.

"We have received a request from Iran for our support," the official said. "But our stance is that we cannot resume loans without international understanding."

In December, Kharazi failed to persuade Japan to resume loans when he came here as the first Iranian foreign minister visiting the country since 1987.

Tokyo resumed high-level talks with Iran in November 1997 after a seven-month suspension because of a court ruling that implicated Iranian leaders in the 1992 murder of four Iranian Kurdish dissidents in Berlin.


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