A sudden halt in crude oil imports from Iran would inevitably send the Japanese economy into turmoil. To keep the impact to a minimum, the government needs to cooperate with relevant countries in implementing appropriate measures to deal with the problem.
The U.S. administration of President Donald Trump has urged Japan, China, the European Union and others to fully suspend imports of Iranian crude oil. Stating that a grace period will be in place until Nov. 4, the administration has also warned that it could introduce "secondary sanctions," through which companies in nations that continue to import Iranian oil after that date would be banned from business transactions in the U.S. market.
Iran is the world's fourth-largest oil producer. Oil imports from Iran account for 5 percent of Japan's total imports.
Both technically and from the standpoint of a business strategy, it will be difficult for Japanese oil companies to shift from Iran to different sources of oil imports in a short time. If any company continues business transactions with Iran despite the U.S. warning, it could be forced out of the U.S. market, together with financial institutions that arrange loans tied to such deals. Either option will entail extremely high risks.
Chief Cabinet Secretary Yoshihide Suga had every reason to say, "To prevent Japanese companies from being adversely affected, [the government] will properly promote talks with relevant nations, including the United States."
In anticipation of short supply due to reductions in Iranian exports, there has been an upward trend in international prices of crude oil. Rising crude oil prices will push up physical distribution and production costs due to an increase in gasoline prices and other factors. There are concerns that the global economy could be dealt a blow.
Don't revive crisis
The U.S. legislation used as a basis for the sanctions includes a provision stipulating that nations that have substantially reduced the amount of their crude oil imports from Iran will be excluded from punitive measures. Although the U.S. government intends not to allow any exemptions, Japan should cooperate with the EU and others in persistently urging the United States to grant them exemptions.
During the early 2010s, the international community acted in concert with the United States to impose sanctions on Iran, including an oil embargo. This was because there was a pressing need to exert greater pressure on Iran to prevent that country from possessing nuclear weapons.
The current situation is entirely different from those days. In 2015, a nuclear accord was concluded, requiring the United States and European nations to lift sanctions on Iran in exchange for restraints on that country's nuclear development program. The international agreement reached by the United States, Britain, France, Germany, China and Russia with Iran bears significance.
The Iranian nuclear problem has quieted down, and these nations, excluding the United States, support the accord. Nevertheless, the Trump administration decided to withdraw from the accord in May, partly because of an ulterior motive to negate the achievement of the preceding administration.
Undoubtedly, Iran's conduct is fraught with problems, as it has destabilized the region through such actions as intervention in Syria's civil war. The Trump administration's poorly considered Middle East policy is not contributing to solving these problems and is only expanding the turmoil.
If anti-U.S. hardliners increase their influence in Iran, prompting the country to resume its nuclear development program, it will revive a serious crisis.
Japan, a nation that has historically enjoyed good relations with Iran, must play a role in bringing the situation under control.
(From The Yomiuri Shimbun, July 2, 2018)
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