Energy vs alliances: Abe’s Middle Eastern tightrope walk
Japan’s prime minister meets Iran’s leaders to reduce tensions with the US and protect energy supplies.
Tokyo, Japan – A crisis in the Middle East, leading to a visit to Iran in an attempt to mediate between two powerful adversaries, and help secure a nation’s future energy needs.
This is the mission that 64-year-old Japanese Prime Minister Shinzo Abe has chosen for himself as he travels to Iran this week. But it also describes what was happening in 1983, when Abe’s father, Japan’s then Foreign Minister Shintaro Abe, travelled to Tehran to try and broker peace between Iran and neighbouring Iraq when those two countries were locked in an existential war. Shinzo Abe, then 28, accompanied his father as a secretary on that trip.
Today, Iran is not under attack from a neighbour, but is engaged in a dispute with the United States that’s crippling its economy. After pulling out of an international nuclear deal last year, US President Donald Trump reimposed sanctions on Iran that, amongst a long list of other actions, prevent it from exporting oil to some of its biggest customers.
One of those customers was Japan, until the sanctions took full effect in May. The loss of Iranian crude oil could hurt Japan’s economy.
But any attempt to circumvent the sanctions, which Iran has described as “illegal“, risks angering Japan’s biggest international ally: the US.
This is the tightrope that Abe will have to walk during the first visit by a Japanese prime minister to Iran in four decades. Abe’s trip from June 12 to 14 is scheduled to include meetings with Iranian Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani.
‘A clean slate’
Abe will have to strike a delicate balance between Japan’s geopolitical priorities and economic needs.
“Japan has a clean slate when it gets to mediating between Iran and the US,” said Ali Vaez, an Iran expert at the International Crisis Group in Washington, DC.
Not only does Abe have a personal history with Iran, but he also has Trump’s trust, analysts say. The two leaders share a love of golf and at least outwardly have a warm friendship, despite Trump’s efforts to reduce its large trade deficit with Japan.
“Nevertheless, overcoming political sensitivities in Tehran and Washington to facilitate direct dialogue between the parties is no mean feat,” Vaez told Al Jazeera.
Japan has long cooperated with Iran. Tokyo maintained its ties with Tehran through the Iran-Iraq war of the 1980s, despite US disapproval.
At the heart of that relationship is oil.
“Japan imports almost all its oil and, historically, Iran has been an important and stable supplier,” said Sachi Sakanashi, a senior research fellow at Japan’s JIME Center of The Institute of Energy Economics. “Although it is not clear what PM Abe can accomplish in his Iran trip yet, making a visit itself is already a valuable step in the current situation,” Sakanashi told Al Jazeera.
Data from Japan’s Ministry of Economy, Trade and Industry show that a little more than four percent of Japan’s total oil imports came from Iran last year. That was dwarfed by imports from Saudi Arabia and the United Arab Emirates, which together accounted for nearly two-thirds of Japan’s oil purchases. Qatar and Kuwait each provided about eight percent of total imports.
All told, Japan imported more than 88 percent of its oil from the Middle East. That means stability in the region is key for Japan, and arguably more important than the actual amount of oil it buys from Iran.
But the region is looking rather less stable than it did even a few months ago. In addition to the renewed sanctions against Iran, the US announced last month a plan to move an additional 1,500 troops to the region. That was in response to attacks on oil tankers off the coast of the UAE last month, which the US blamed on Iran’s Revolutionary Guards.
“The high level of tension in the region is against Japan’s national interest and it will be the first step in the long process of mediation,” said Sakanashi. “Although everyone is aware that it will be extremely difficult to mediate between the US and Iran, we still believe it is worth a try.”
If Abe’s mediation effort fails, Japan will have to find an alternative source of energy to cover the loss of Iranian oil, Sakanashi said.
The US’s hardline policy against Iran has received support from Saudi Arabia and the UAE, which have increased their crude oil production to cushion the impact of sanctions on crude oil prices, said Mari Nukii, a research fellow at the Japan Institute of International Affairs (JIIA).
The sanctions force US allies like Japan to stop purchasing Iranian oil. The US allowed a six-month waiver on the sanctions for eight regions, including Japan, but those waivers expired on April 22. Since May 2, the US has been applying severe penalties to any company or individual country that breaches the sanctions.
Japan isn’t the only party that’s hurting under the sanctions. After the five permanent United Nations Security Council members and Germany struck the 2015 deal limiting Iran’s nuclear capabilities in return for sanctions relief, a wave of European companies invested heavily in Iran. Now those investments are under threat.
On Monday, German Foreign Minister Heiko Maas met Iranian President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif in Tehran and announced a new payment system aimed at circumventing US sanctions that block Iran from using existing international funds transfer mechanisms.
Keeping the oil flowing
It’s not clear whether Japan will also seek ways to get around the sanctions. But it does have a history of ensuring that oil keeps flowing from the Middle East.
“There is a famous episode in 1953, when Iran was under a British blockade for nationalising Iranian oil. Japan began to directly import oil from Iran, ignoring the British blockade, which marked the beginning of Japan’s direct import from oil producing countries,” said Sakanashi.
“Japan had relied in the past on ‘oil majors’ for its supplies, which was very expensive. The import of Iranian oil was welcomed in Japan, in the context of regaining confidence in the post-World War II reconstruction period.”
But not everyone is as concerned by the possibility of the loss of Iranian oil, or as worried about the issue of regional stability.
Noriaki Sakai, general manager of the finance department of Idemitsu Kosan Co., does not think it will be a big problem. Idemitsu Kosan is the second-largest petroleum refiner in Japan after Nippon Oil. It owns and operates oil platforms and refineries.
“We don’t have any problem with securing alternatives since Iranian oil accounted for less than 10 percent of our total supply,” Sakai said at a news conference last month. “We have not picked any particular countries to buy alternative supplies for Iranian oil from, but we have a wide range of sources and we are selecting where and when to buy alternative crude depending on prices and seasonal demand.”
He added that Saudi Arabia, the UAE and Kuwait are among the top list of oil producers that have extra output capacity.
“In fact, Japanese refiners are tapping more oil from the Middle East after the US ended all waivers from sanctions on Iran,” he said.
There is another possible reason for Japan’s willingness to offer itself up as an intermediary in the US-Iran confrontation, and that involves North Korea’s nuclear weapons development programme.
The JIIA’s Nukii suggests that by acting as an intermediary and demonstrating its commitment to the Iran nuclear deal, Japan will be signaling its opposition to North Korea’s development of nuclear weapons and ballistic missiles. It would also help to build momentum towards a conference next year to review the international Treaty on the Non-Proliferation of Nuclear Weapons, says Nukii.