Oil and Power: the Rise and Fall of the Japan-Iran Partnership in Azadegan

Volume 4 | Issue 12 | Article ID 2296 | Dec 02, 2006 The Asia-Pacific Journal | Japan Focus

Oil and Power: The Rise and Fall of the Japan-Iran Partnership in Azadegan

Michael Penn

Oil and Power: The Rise and Fall of the Japan-Iran Partnership in Azadegan

By Michael Penn

The story of how Japan gained, and then lost, the development rights to one of the richest oil fields in the world has been treated rather casually in the international media despite the fact that it will strongly affectJapan ’s relations with Iran and other countries for many years to come. The issue of the Japanese involvement in the Azadegan oil field was divisive from the start, but became more Azadegan oil field and more so as the political situation in the Persian Gulf deteriorated after September 11 and the U.S. invasion of Iraq. This essay traces the development of the Japan-Iran partnership in Azadegan from its inception in November 2000 to its effective dissolution in October 2006.

Map of Azadegan oil field

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The Courtship signaled Tokyo’s desire to tighten both political and economic links withIran , On September 28, 1999, Iranian Oil including the resumption of yen loans for Minister Bijan Zanganeh announced to the previously-suspended Karun River the world during a radio interview the Dam project in southernIran . discovery of a major oil field in the southwestern portion of the country, near No Japanese foreign minister had visited the Iraqi border. In fact, this area had Iran since Nakayama Taro in May 1991, been a battlefield during the Iran-Iraq and yen loans to Iran had been frozen War, and was still littered with landmines since 1993 in deference to Washington. from the conflict. The originalHowever, with the establishment of the announcement described Azadegan as moderate administration of Mohammad the largest Iranian oil discovery since the Khatami in August 1997, Japanese 1960s, with estimated reserves of 26 leaders had become increasingly billion barrels of oil, and a capacity to uncomfortable with the tough American produce 400,000 barrels daily. Zanganeh line on the oil-rich Persian Gulf country. further announced that the IranianIn seeking to expand influence and government would begin development of access to oil in the Middle East, Japan the field by the end of March 2001. [1] seemed ready to challenge US preferences in the region and strengthen ties with Tehran. Tokyo pointed to moves toward democratization and the loosening of restrictions on Iranian political dissidents as a justification for a more proactive policy toward Iran.

Still, tensions remained in the Japan-Iran relationship. Komura reiterated Tokyo’s concerns overIran ’s possible development of weapons of mass destruction, as well as its missile development projects in cooperation with Iranian Oil Minister Bijan Zanganeh North Korea. For Tehran’s part, there was the lingering worry that Tokyo was From Japan’s perspective, thisstill tied too tightly toWashington ’s announcement came at a very fortuitous apron strings. The conservative Tehran juncture. In December 1998, Japan and Times explicitly stated: “We would like Iran had issued a joint declarationJapan to realize its own economic might… pledging to expand economicrather than echoing what theUnited cooperation. [2] Furthermore, Foreign States dictates… Komura should come Minister Komura Masahiko had just here for economic and political visited Tehran the previous month and cooperation to serve mankind, not just

2 4 | 12 | 0 APJ | JF the United States.” [3] emerging opportunities in Iran can be attributed to their desire to make up for At any rate, signs of warmth in Japan-Iran the setback in negotiations with the relations were apparent throughout the Saudis. Be that as it may, the key point to following year. In January 2000, the be noted at this point is that the first Ministry of International Trade and major step leading specifically to the Industry (MITI, later METI) announced Azadegan deal was made by the Japanese that medium- and long-term tradegovernment. insurance would be issued to Japanese companies for activities in Iran for the In June 2000, Toyo Engineering received first time in eight years. By March, a major contract to help build a new companies such as NEC and thepetrochemical plant in Iran. [7] That Sumitomo Corporation were already same month, Tokyo announced the taking advantage of this new policy. [4] possibility of the first yen-loans toIran In February, the Japanese Foreignfor entirely new projects including Ministry welcomed the parliamentary improving the air-quality of Tehran and elections in Iran, which it described as for a new railway signal system. [8] having been “carried out in a democratic atmosphere with an extremely high This led to the major breakthrough event: voting rate.” [5] the arrival in Tokyo of Iranian President Khatami in October-November 2000. This In April, after President Khatami’s second was the first visit to Japan by an Iranian great electoral victory, MITI took the head-of-state since the May 1958 visit of initiative to propose a regular dialog with Mohammad Reza Shah, an interval of Iran’s Oil Ministry. The main purpose was more than 42 years. The visit was clearly to explore ways in which Japanesestated as being aimed at deepening companies might participate in theJapan-Iran ties, particularly the Iranian Iranian oil sector. The Iranians quickly desire to see more Japanese investment agreed and talks began inTehran in in their country. August. Nevertheless, it was still something of a In the background to MITI’s initiative in surprise when it was announced that proposing regular energy talks with the Japanese companies would be given Iranian government was the loss, in precedence in negotiations for the February 2000, of the Japanese-owned development of the huge Azadegan oil Arabian Oil Company’s long-termfield. A consortium of Japanese oil concession in the Khafji oil field, along companies led by Indonesia Petroleum, the Saudi-Kuwaiti border. ThatLtd. (the Inpex Corporation) would take concession had been the jewel in the the lead in these negotiations. crown in Japan’s upstream oil developments since December 1957. [6] On the Japanese side, MITI Minister Much of MITI’s enthusiasm to seize the Hiranuma Takeo took the lead in pushing

3 4 | 12 | 0 APJ | JF for Japan’s participation in Iranian oil Group entered the discussions to provide development, in part to compensate for technical support. [13] the loss of the Khafji concession, and in part simply to diversify the sources of oil In July 2001, MITI Minister Hiranuma led imports from the perspective of energy an 80-man delegation of business leaders security. It was thus appropriate that the to Tehran to solidify the relationship. original agreement between Japan and Hiranuma met with both President Iran was reached in a meeting between Khatami and Oil Minister Zanganeh to Hiranuma and Iranian Oil Ministerreconfirm Tokyo’s strong interest in Zanganeh at the MITI building in Tokyo rebuilding its overall business connection on October 31, 2000. [9] In the following with Iran. [14] Hiranuma also suggested days, Zanganeh told reporters that he that if Washington dropped its sanctions expected the contract to be signed within on Iran, American oil companies might a year-and-a-half at the longest, and also participate in the project. Oil probably before the end of 2001. [10] Minister Zanganeh signaled that he Hiranuma spoke of Iran as a “long-term would welcome such a move. [15] partner” for Japan, and expressed However, the issue of the Iran-Libya eagerness to establish a relationship of Sanctions Act (ILSA) remained a trust. [11] stumbling block. Although the moderate Newspaper editorials in Japan were also President Mohammad Khatami had just positive. For example, the Nihon Keizai been re-elected in another landslide in Shinbun -- the respected financial daily -- June 2001, the U.S. Congress remained wrote: “From the viewpoint ofJapan ’s hostile to the Tehran regime, perhaps economic security, it is important to under pressure from various domestic cooperate with Iran, a country that has lobbying groups. Tokyo was thus very the world’s fifth-largest proven oildispleased when the new Bush reserves and second-largest provenadministration signed a five-year natural gas reserves, and which serves as extension of ILSA on August 3. In a rare a point of contact between theMiddle action, Tokyo even released a public East and Central Asia… We welcome the statement critical of the U.S. It read, in efforts to take advantage of thispart: “Considering that the Sanctions Act opportunity and to rebuild a cooperative might not only give rise to the relationship between the two countries.” extraterritorial application of domestic [12] law, which is not permissible under international law, but also inconsistent In the months following the Khatami visit, with WTO Agreements, the Government the negotiations made good progress. In of Japan has repeatedly conveyed its December, the Japan National Oilconcerns to the U.S. side. It is regrettable Corporation signaled that it too would be that the Act came into effect with these willing to participate in the project, and problems still unresolved, despite Japan’s by mid-2001, the Royal Dutch Shell repeated appeals. We strongly urge the

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U.S. administration to implement the Act powerful adverse effects on the carefully while maintaining itsinternational position and domestic consistency with international law.” [16] politics of the Islamic Republic. Al- Furthermore, officials in Tokyo let it be Qaida’s attacks inNew York and known to the press that they were Washington hardened Western attitudes prepared to fight if Washington actually toward political Islam in general and tried to impose the ILSA regulations on undermined President Khatami’s more Japanese companies: “We are not sure if generous notions of a “Dialogue among the U.S. administration will apply the Civilizations.” While Tehran had been ILSA to Japan’s development of the making significant progress toward Azadegan oil field, but we remainbreaking out of the mostly-American- and opposed to taking a sanctions policy Israeli-inspired efforts to isolate it, the toward Iran. We are pursuing favorable renewed and even enhanced fears of an changes in Iran through dialogue and “Islamic threat” almost instantly brought contacts. If the U.S. punishes Japanese this forward progress to a halt, and even firms under the ILSA, Japan may consider reversed it. This undermined President filing a complaint with the World Trade Khatami’s own efforts at domestic Organization against the U.S. measure.” political reform, as Iranian conservatives [17] could now show that the reform movement’s foreign policy was not Tokyo had clearly shifted quite a distance making any substantial progress, and in just a few years. In 1997 the that, in any case, the West would never relationship between Japan and Iran was be willing to accept Islamic nations as narrowly constrained within diplomatic equal partners. channels because of Tokyo’s deference to its American ally. By August 2001, they The full repercussions of this new signaled that they would be willing to political dynamic were not immediately defend their strengthening economic apparent to leaders in Tokyo, who at first partnership with Iran, even to the extent sought to preserve the budding Japan- of publicly criticizing and filing legal Iran partnership. OnSeptember 19, complaints against Washington. 2001, Prime Minister Koizumi sent a letter to the leaders of several Islamic For the Khatami Administration, it was a countries, including Iran, expressing his considerable achievement. In retrospect, appreciation for their condemnation of however, the Japan-Iran rapprochement the terrorist attacks, and clarifying had already reached its high-water mark. Tokyo’s position that al-Qaida’s attacks The First Crisis should not be associated with Islam itself. [18] Just over a week later, former Tehran had nothing to do with the Foreign Minister Komura Masahiko was horrifying terrorist attacks of September dispatched as a Special Envoy to Riyadh 11, 2001, but 9/11 nevertheless had and Tehran to reassure the leaders of

5 4 | 12 | 0 APJ | JF those countries of continuing Japanese community. Tokyo remained officially goodwill, and to promote a united front tightlipped about the American against al-Qaida-style terrorism. [19] He president’s declaration, but on February also discussed the possibility of financial 13, 2002, Prime Minister Koizumi stated aid for Tehran in the event that a large Japan’s intention “to continue supporting number of Afghan refugees should cross the reformist policies of the Khatami the border during impending coalition government and keep friendly ties with assault. [20] Iran.” [22]

Japan could not, however, control the At the beginning of May 2002, Foreign political changes taking place in the Minister Kawaguchi Yoriko was United States as a result of the terrorist dispatched to Iran to meet with key attacks. President George W. BushIranian leaders and to discuss a wide immediately determined that al-Qaida’s variety of issues, including, of course, attacks in New York and Washington economic cooperation. The tone, constituted an act of war, and voices however, was subtly different, as within and without the administration differences in the Japanese and Iranian demanded retaliation against a long list positions were enunciated more clearly. of rivals and perceived enemies,While the two parties agreed to including Iran. cooperate on Afghan reconstruction and to strengthen cultural exchanges, Tokyo understood well that emotions President Khatami told Kawaguchi that were running high inAmerica . As a “Iran would not bend to threats, nor result, the planned December 2001 would it swallow insult, and remarked deadline for the completion ofthat he hoped the United States would negotiations over the Azadegan oil field not adopt an overbearing posture.” Also, was allowed to quietly slip by. Japanese in her discussions with Supreme National leaders later denied that the September Security Council Secretary Hassan 11 attacks influenced this decision,Rouhani, Kawaguchi stated that “suicide saying that the delays were “purely due bombing incidents of terrorism on to technical reasons.” Yet, even a Foreign innocent Israeli citizens was a serious Ministry official admitted relief to see a issue, and that she expected thatIran delay in the negotiations on the Azadegan would take further positive measures to oil field. [21] respond.” Rouhani retorted: “the killing of innocent Palestinians violated Japanese concerns about U.S. policy humanitarian principles, and the right toward Iran multiplied when President existed to fight against such an Bush used his January 2002 State of the occupation.” [23] Union speech to declare that Iran, together with Iraq and North Korea, were It was clear that the positions ofJapan part of an “Axis of Evil” that needed to be and Iran were beginning to diverge by confronted by the internationalthe spring of 2002, under political

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President Bush’s declaration regarding Nevertheless, with strong political the “Axis of Evil” and a stream of threats backing from Hiranuma Takeo and what by various American commentators that was now called the Ministry for Economy, Iran was second only to Saddam Husain’s Trade, and Industry (METI), the Iraq as the country that must be “dealt Azadegan negotiations quietly moved with,” had thrown the Iranian leadership forward, and as the June 30 deadline onto the defensive, and made them even approached, all that remained was to more sensitive to perceived insults from sign the agreement. the West and its allies. They were thus not in the mood to be lectured by the However, at precisely this point, another Japanese foreign minister about the issue suddenly appeared that had a Israeli-Palestinian issue or about the negative political impact: the issue of development of new weapons systems. nuclear non-proliferation. On June 19, 2003, the International Atomic Energy For their part, Tokyo was becoming much Agency (IAEA) reported that Iran “failed more sensitive to American political to meet its obligations under its pressure than they had been previous to Safeguards Agreement with respect to September 11. The Koizumi reporting of nuclear material.” At a time administration had made a strategic decision to align itself more closely to when the neighboring Iraqi regime had U.S. policy, and this was being reflected just been overthrown on the official in many ways. The dispatch of the pretext of the development of weapons of Maritime Self-Defense Forces to the mass destruction, Iran’s concealment of Indian Ocean in support of operations nuclear material and unreported against the Taliban regime constituted attempts to enrich uranium attracted a one facet. More reluctantly, a slow-down great deal of attention and criticism. in Japan-Iran relations was another facet. The Japanese Foreign Ministry quickly The Azadegan oil field negotiationsreleased a statement declaring that proceeded at a much slower paceTokyo “will continue to urge Iran to take through the rest of 2002, and thethe international community’s concern deadline for the completion of theseriously [and] cooperate fully with the negotiations was quietly extended to the IAEA in order to get rid of the end of June 2003. [24] In early 2003 international concern and enhance everyone’s attention was firmly focused transparency in its nuclear activities.” on the impending American and coalition [25] invasion of Iraq, which took place in March after a long political and military But in spite of nuclear concerns, METI build-up. In the process, Tokyo aligned officials still intended to sign the itself even more closely with U.S. policy Azadegan oil deal as planned on June 30.

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The IAEA report had nevertheless given were also interested in Azadegan. [30] much ammunition to foes of the Japan- Iran oil deal inWashington . National But Tehran did not break off the Security Adviser Condoleezza Rice,negotiations, and Japan was still their Secretary of State Colin Powell, and preferred partner. On July 12, the Deputy Secretary of State RichardForeign Ministry’s Director-General for Armitage all placed calls to key decision- Arms Control, Amano Yukiya, held makers in Tokyo with a blunt message: discussions in Tehran with his Iranian signing the deal would harm U.S.-Japan counterparts. The Iranians promised to relations. [26] work with the IAEA to clear up the problems that had been pointed out, and Tokyo quickly caved in: Chief Cabinet this was appreciated by the Japanese Secretary Fukuda Yasuo stepped forward delegation. The Iranians also suggested and stated: “We are unlikely to sign a that a Nuclear Weapon Free Zone should contract over crude oil that sets aside be established in the Middle East, and concern about Iran’s nuclear program.” complained that the international [27] METI Minister Hiranuma could not community was pressing Tehran at the contain his frustration about this sudden same time that it was ignoringIsrael ’s reverse, even in his public comments to nuclear weapons arsenal. Additionally, reporters: “The deal has been negotiated the Japanese delegation criticized Iran’s by private-sector firms. I know therecent testing of a Shehab-3 missile. The Japanese-U.S. relationship is important... Iranians responded by pointing out that but I want the U.S. to understand that we conventional missile development did not have been in negotiations since 2000.” violate any arms agreements or [28] international law. [31]

Having refrained from signing theBy the beginning of August 2003, Oil Azadegan deal as planned, Tokyo’s new Minister Zanganeh was sending positive policy was to try to encourage Tehran to signals, saying that Japan still had the clear up the doubts regarding its nuclear best chance to win the bidding for the program as a prerequisite for moving giant oil field, and reminding everyone forward with the oil development project. that, “the oil development project is a symbol of Japan-Iran cooperation, and if Iranian leaders were clearly annoyed by there is strong will on both sides, we can Tokyo’s retreat. They signaled that Japan conclude an agreement.” [32] was no longer the only partner that they would negotiate with for the development At the end of that month, Iranian Foreign rights to Azadegan. [29] An Iranian Minister Kamal Kharrazi arrived in Tokyo government spokesman declared that, “in to attempt to address the Japanese not signing this contract, the damage will concerns. Kharrazi bore a letter from not befall Iran, but rather Japan itself.” President Khatami promising thatIran He also hinted that Chinese companies had no secret nuclear weapons program,

8 4 | 12 | 0 APJ | JF and indicating that he would try to indicated that it might turn to other expand cooperation with the IAEA.partners if Tokyo was not going to get on However, Kharrazi pointed out in his board. In November, Total of France and discussions that Iran, like any other Statoil of Norway were mooted as country, had the right to develop nuclear specific companies whose bids might be energy for peaceful purposes under the considered. [35] terms of the Nuclear Non-Proliferation Treaty (NPT), and that they intended to Near the end of their patience in early pursue that right. [33] December, Iran wrote a letter to Inpex and the other companies involved in the The Khatami administration was coming Japanese consortium demanding that under heavy political pressure from many they clarify their intentions within one Western countries, as well as from Japan, week or be forced to participate in an and so on October 21, 2003, Tehran open, international bidding process for announced that it would suspend its the Azadegan development. Still under uranium enrichment activities, sign the pressure from Washington, the Japanese Additional Protocol of the NPT, and side let the December 15 deadline pass cooperate fully with the IAEA. Indeed, without taking any action. Tehran signed the Additional Protocol on December 18, 2003, in Vienna. Tokyo Places Its Bet

But in September, Prime MinisterJapan’s bid for the Azadegan oil Koizumi reshuffled his cabinet, and the development seemed to be facing METI portfolio was handed to Nakagawa imminent dissolution, but just then there Shoichi, an ideological hawk linked with was a dramatic recovery. Japan’s farm lobby. While Hiranuma had Tehran’s decision to sign the Additional been strongly committed to the Azadegan Protocol of the NPT on December 18 deal, Nakagawa told an interviewer not reduced the level of political pressure long after he was appointed, “For us, Iran from Washington and made Japanese is on the same level as North Korea… We leaders somewhat more comfortable shouldn’t be lost in trying to find an oil about dealing withIran . field… In light of our national interests, both issues should be weighed equally.” [34]

Although Nakagawa’s view was completely out of tune with the policy of his predecessor, as well as the bureaucrats under his authority, it was bound to have an effect on the negotiations. The bilateral atmosphere turned chilly once again, andTehran

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Prime Minister Hashimoto Ryutaro. Even in public interviews he was scathing: “Currently, Japan’s ties with nations other than the U.S. are like dotted lines. We should at least try to make those dotted lines into solid ones as well… It is very regrettable that the relationship with Iran that Japan had long worked so hard to build was completely damaged by the current administration.” [36]

Bam Earthquake on Dec. 26, 2003.

Then, on December 26, a major earthquake struck Bam in southeastern Iran. There were thousands of victims and a desperate situation on the ground. Tokyo’s response was generous and immediate. Food and other supplies were donated, and a Japanese emergency medical team was dispatched to the affected areas. The Defense Agency transported much-needed supplies on two of its C-130 transport planes. Various Japanese NPOs also participated in these relief efforts.

The Japanese efforts were genuinely appreciated. This seems to have had the effect of soothing the political tensions that had been developing in the bilateral relationship, and restoring a positive mood. Hashimoto Ryutaro. Meanwhile, the Koizumi administration’s policies toward Iran were coming under In early January 2004, Foreign Minister criticism from those who had formerly Kawaguchi made another visit to Tehran, worked to build the bilateral connection. and discussed various issues, including Behind the scenes, Hiranuma wasthe Azadegan project. Emerging from certainly among these figures. The most their meeting on January 6, Iranian prominent critic, however, was former Foreign Minister Kamal Kharrazi

10 4 | 12 | 0 APJ | JF commented to reporters about the oil address this very question, felt that the field negotiations: “It’s time to move Azadegan deal was highly forward and sign the agreement.” [37] uncharacteristic of Japan’s traditional energy policy, and owed much more to Tokyo now had a major decision to make. political factors than to economic ones. Would it commit to a long-termAfter examining several other partnership with Iran and sign the possibilities, she concluded that “the Azadegan deal? Or would it back away growing competition between Tokyo and from the risks that such a partnership Beijing in the Middle East and elsewhere entailed? are the primary factors inJapan ’s decision to conclude the Azadegan oil All of the main political and economic deal.” [38] factors were already on the table: there was the U.S.-Japan Security Alliance to Certainly that played an important role. consider; there was also the Japan-Iran METI Minister Nakagawa Shoichi had “special relationship” which had endured already expressed a very dim view of American pressure throughout theIran, and did not seem to share the Islamic Revolution; there was the loss of concerns of the bureaucrats in his Khafji and Japan’s need to better secure ministry about the vital need to develop its energy sources; there were concerns overseas oil fields. The appeal to the about Iran’s nuclear development and China factor would have been important other weapons programs; there was the in gaining his consent. Nakagawa and “war on terrorism”; there were the like-minded Japanese officials would have limitations of the democratic nature of deeply regretted seeing another rich oil the Iranian political system; and there field fall into Chinese hands while Japan was Japan’s growing rivalry with China stood by helplessly. In his case, Shaoul’s over oil and gas resources in the Persian analysis is probably right on the mark. Gulf and elsewhere. On the other hand, the Azadegan Tokyo then gave its answer -- yes! And so negotiations had begun in 2000, and the Japan-Iran partnership was formed. there is little evidence that theChina factor was crucial in the earlier stages. The Japanese government is never very MITI’s concerns over the loss of the forthcoming about explaining the reasons Khafji concession seem to have provided for its actions. Key discussions arethe original motive force, along with a usually conducted in-house with only more general policy of trying to play a hints leaked to the press. Precisely why significant role in upstream oil did Tokyo sign the Azadegan deal on development projects. February 18, 2004? One other possible factor that Shaoul Raquel Shaoul of Tel Aviv University, who raises, but eventually dismisses, is the produced a research paper attempting to “bureaucratic factor.” She describes as

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“received wisdom” the notion that METI the objections of the Bush administration. was consistently pushing for theThe reaction in Washington, however, Azadegan deal because of their mandate was not very harsh. The first public to ensure Japan’s energy security, while comments came from State Department the Japanese Ministry of Foreign Affairs Spokesman Richard Boucher: “Our policy always opposed the project due to their has always been, with respect to Iran, to preoccupation with the American alliance oppose petroleum investment there. We and other concerns. Shaoul points out remain deeply concerned about deals that the ministry personnel are not such as this, and disappointed that these monolithic in their orientations, and that things might go forward… Over the debates were carried on within each years, repeatedly, we’ve had many ministry as the policy was beingdiscussions with the Japanese developed. [39] government at all levels about our concerns.” [40] Hardline U.S. Shaoul is at least partially correct in Undersecretary of State John Bolton was pointing out these realities, but in the uncharacteristically mild in his end, the “received wisdom” seems closer comments: “I think the Azadegan to the mark than her revised version. To arrangement has just been proceeding on be sure, neither METI nor the Foreign a completely separate track, and the Ministry is monolithic. Nevertheless, they government of Japan has made it very do have dominant factions and dominant clear that they remain very concerned interests which tend to shape their about Iran’s proliferation activities and outlooks and even reproduce similar very concerned that Iran be held strictly policies for generations. All the evidence accountable… I don’t think that there is seems to suggest that METI (with the any difference in the view in the exception of Minister Nakagawa) was government of Japan and the United always highly committed to the project, States on this point.” [41] while the Foreign Ministry was dragged along only reluctantly. It is worth noting Washington and Tokyo seem to have that the key senior political allies of the worked out some kind of fragile Azadegan development -- Hiranuma agreement behind the scenes. A Japanese Takeo, Hashimoto Ryutaro, and, later, official told one reporter: “Of course the Nikai Toshihiro -- were all non-ideological U.S. had to say that they were Liberal Democratic Party conservatives disappointed with the deal due to their with strong links to the METIstrong attitude against Iran, but we have bureaucracy. Nakagawa Shoichi was continually kept them informed and always a misfit as METI Minister, as most updated on the Azadegan situation.” [42] of his base and expertise lay in agricultural policy. The signing of the Azadegan agreement came at the same time asTokyo was At any rate, the signing of the Azadegan deploying the Ground Self-Defense deal in mid-February 2004 was done over Forces to Samawa in Iraq. It was perhaps

12 4 | 12 | 0 APJ | JF inevitable to presume that Washington’s Azadegan oil field, and I very much hope relatively mild reaction was closelythat this will go farther.” [44] related to U.S. appreciation of the Japanese role inIraq . As California A Tale of Three Elections Democrat, Brad Sherman, put it, “an After the signing of the contract on administration desperate for re-election February 18, 2004, the Bush will take 550 soldiers from Japan, which administration did not abandon efforts to provide the veneer of international pressure Tokyo to terminate the deal. support and credibility for our relations This became apparent in August 2004 in Iraq, and give the green light to $2.8 when reports emerged that a “senior U.S. billion going from Japan to Iran.” [43] John Bolton immediately denied this government official” (probably John allegation, but at one level or another, it Bolton) suggested to a METI official that is probably true that Japan’s cooperation Japan look to Libya as a source of oil in Iraq temporarily reduced U.S. pressure supplies rather than Iran. [45] Indeed, over the Azadegan development in Iran. even without such American prompting, Japanese economic leaders were looking Be that as it may, it was now an into investment in the Libyan oil market; indisputable fact that Tokyo in February but this did not preclude pursuing the 2004 placed its bet on a long-term Azadegan project as well. [46] partnership with Iran. Whatever concerns may have lingered, the JapaneseAnother issue that kept creeping up consortium led by Inpex now held a 75% during the course of the next couple of share in the Azadegan oil field, with the years was Iran’s nuclear development. remaining 25% held by the state-owned The IAEA continued to criticize some National Iranian Oil Company (NIOC). aspects of Iran’s program, and The contract signed by Inpex Chairman complained that Tehran was not being Matsuo Kunihiko called for a partnership sufficiently forthcoming with information. lasting until 2016. It was thought that the For its part, Tehran insisted on the right Japanese would be able to recover their to develop an independent nuclear financial investment by around 2010, and capability for peaceful purposes.Tokyo that thereafter it would all be profit. supported the IAEA line, and also criticized Iran’s development of ballistic But beyond the purely financial issues, missiles. This remained an irritant in the Japan was now tied politically toIran . bilateral relationship. Iranian Oil Minister Bijan Zanganeh had called Azadegan “a symbol of Japan-Iran Broadly speaking, however, the Japan- cooperation.” Hiranuma Takeo had said Iran bilateral relationship and the the same. Even Prime Minister Koizumi Azadegan oil development project himself stated in March that “Japan-Iran proceeded reasonably well for the first relations have been strengthening as year and a half after the agreement was seen in the agreement to develop the signed.

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The most crucial factors that would impact the future of the partnership had no direct connection to Azadegan itself: It was a tale of three elections.

The first of these was theU.S. presidential election in November 2004. Despite the deteriorating situation in Iraq, George W. Bush and the Republican Party scored a major victory. These results entrenched the hardline approach to foreign policy emanating from Washington, and this affected both Iran Iranian President Mahmud Ahmadinejad and Japan. The victory of Ahmadinejad heralded a It affected Iran in that the continuing war more difficult period for Japan-Iran in Iraq, robust U.S. political support for relations. Although the new Iranian Israel, and the wider “war on terrorism,” regime still eagerly sought Japanese antagonized public opinion throughout understanding and friendship, relations the Islamic world and beyond. This between Iran and theU.S. spiraled dimmed the political prospects fordownwards with uncompromising figures Iranian reformers and helped pave the like Bush and Ahmadinejad at the helm. It way for the results of the Iranian national didn’t take long for each man to come to elections of June 2005. believe that the other was “evil”. Furthermore, Ahmadinejad’s victory Indeed, it was those Iranian elections undermined the Japanese Foreign that provided the biggest surprise. The Ministry’s argument thatTokyo ’s leading presidential candidate wasengagement with the Islamic Republic thought to be the “realist” formerwould help buoy the liberal reform president, Akbar Hashemi Rafsanjani, or movement. The Foreign Ministry had not perhaps one of the “reformers”; in fact, been wrong in its initial calculations, but the relatively inexperienced and hardline the unwillingness of Washington to Mayor of Tehran, Mahmud Ahmadinejad, abandon its hostility to Tehran during the won in a second round landslide. [47] eight years of the Khatami presidency drastically limited what Tokyo, on its own, could achieve in that respect. This was especially true after September 11 and the inauguration of the “war on terrorism.”

Finally, in September 2005, a snap election in the lower house was called by

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Prime Minister Koizumi Junichiro, and his Tokyo, this meant increasedU.S. revamped Liberal Democratic Party pressure. scored a landslide victory, crushing the opposition parties. Still, there remained the issue of China. If Japan backed away from Azadegan now, The significance of this last event was would the Chinese step in? This question twofold: First, it entrenched an even stirred debate and exposed some of the more conservative regime in Tokyo, more divisions in Tokyo. committed to strengthening the U.S.- Japan Security Alliance. It alsoAn official at Inpex was quoted as coincidentally removed some of the key remarking, “If (political backing) for the supporters of the Azadegan agreement project ebbs during its first phase, China from the political field. Hiranuma Takeo could get the drilling data and glide into was a prominent victim of Koizumi’s the second phase without doing any of purge, keeping his seat in the Diet, but the initial grunt work.” To this, a Foreign ejected from the ruling party. At the Ministry official responded, “We cannot same time, Hashimoto Ryutaro retired ignore China, but we have to ask from politics under the pressure of failing ourselves if we really need these projects, health and a domestic scandal. The only no matter what the cost.” [48] positive result for the Azadegan project The comment of the Foreign Ministry was the transfer of Nakagawa Shoichi to official symbolizes the larger fact that the the Ministry of Agriculture, and the mainstream of the Foreign Ministry was installation of the pro-business politician now turning against the Azadegan Nikai Toshihiro as the new METI project. Even at the beginning, officials of minister. this ministry were decidedly It was the combined impact of these unenthusiastic about the partnership three elections -- and particularly the with Iran. Now they were turning more results in Tokyo -- that lit the fuse that decisively against it. Their responsibility would eventually destroy the Japan-Iran was to maintain good relations with the partnership just over a year later. outside world, and for most ofJapan ’s diplomats that meant -- above all -- Things Fall Apart maintaining a smooth working relationship with Washington. In August 2005, Tehran announced that it was resuming uranium-enrichmentAt any rate, both the Japanese oil activities as a step toward thecompanies led by Inpex, as well as METI, development of nuclear energy. The IAEA were still solidly behind the project, and demanded a halt, but Tehran did not that did carry some weight. It appears comply. This raised even further the that METI Minister Nikai became the tensions between the new Ahmadinejad new champion of the energy-security line administration and the United States. For within the Koizumi Cabinet.

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The next blows to the Japan-IranAt about this time, Tokyo began to drop partnership were once again delivered by hints that it was well-positioned to be a President Ahmadinejad. mediator in the developing U.S.-Iran political crisis because it maintained First, the new president was unable, for good relations with both sides. The Bush several months, to have his appointees to administration, however, opted to the Iranian Oil Ministry confirmed by “punish” Tokyo for its lack of obedience parliament. This stalemate dragged on by freezing Japan out of the main until late in the year. international discussions over the Iranian nuclear issue. This was a blow aimed at Second, in a similar vein, the new Iranian Japan’s pride, as well as Tokyo’s hopes to president decided to relieve a string of join the United Nations Security Council senior Iranian diplomats of their posts in as a permanent member. [51] European capitals, thus making it more difficult for Iran to explain its policies Tehran launched a major initiative in internationally. In the view of at least one February 2006 to try to relieve concerns analyst, this also resulted in thein Tokyo about the direction of Iranian deterioration of Japan-Iran relations. [49] government policy: Foreign Minister Manouchehr Mottaki (a former Finally, in a series of speeches in late ambassador to Japan) made a four-day 2005, President Ahmadinejad adopted a visit to the Japanese capital. very radical posture, and made Mottaki was urbane and pleasant outrageous remarks. These included his throughout his visit. In interviews with advocacy of seeing Israel “disappear from the media he was soft-spoken and the page of history” and his questioning reassuring. Nevertheless, on the issues of of the historical record of the Holocaust. substance he didn’t give any ground at He even taunted a struggling Washington all. On the other side, Foreign Minister and Europe with statements such as, Aso Taro used his meeting with the “You need us more than we need you. All Iranian delegation to strike a tough pose, of you today need the Iranian nation. Why making comments such as, “Japan has are you putting on airs? You don’t have had a long relationship with Iran, but if that might!” [50] they antagonize the entire [U.N.] Security Council, there is a limit.” Through such remarks, the Iranian According to one participant in the president effectively positioned himself meeting, the two sides just “argued in a as a leader of Islamist radicalism, but circle.” [52] also alienated moderate and liberal opinion around the globe. In Tokyo, this By mid-March, the first clear indications could only have undermined theemerged that Japan was preparing for conviction that Iran remained a stable the possibility of an economic disruption international partner. in the oil trade. Nippon Oil,Japan ’s

16 4 | 12 | 0 APJ | JF largest refiner, cut back on its purchases the Japanese from both the Iranian and of Iranian oil by 15%, looking to the American sides. Iranian Ambassador Saudi market to make up the difference. Mohsen Talaei opened this phase with The obvious implication was that this comments asserting that if Tokyo joined company feared that Tokyo would now Washington in imposing sanctions on back U.N. Security Council sanctions on Iran, this would be “an action against Iran, and felt that an oil embargo or other Japan,” and he specifically cited cut-off was now a distinct possibility. [53] Azadegan as “the most important part of the energy security ofJapan in the In April, the political climate between future.” [56] Iran and the United States deteriorated even further. President Ahmadinejad made some of his most outrageous comments yet, such as, “Like it or not, the Zionist regime is heading toward annihilation… The Zionist regime is a rotten, dried tree that will be eliminated by one storm.” From the other side, prominent American commentators were beginning to talk openly about the use of nuclear weapons on Iran. When President Bush was asked about this possibility, his response was: “All options are on the table.” [54] Whatever gains Tehran may have made in Tokyo through Mottaki’s confidence-building diplomacy were surely wiped away by the Iranian John Bolton, US Ambassador to UN. president’s ill-conceived rhetoric. John Bolton -- the U.S. Ambassador to the But then Tehran dangled a proposal that U.N. -- responded the very next day with seemed to offer the possibility of veiled threats of his own: “Iran is very resolving the entire nuclear crisis: They cynically using the reliance of Japan on suggested that the Japanese should Iran for oil -- the possibility of the participate in Iran’s nuclear program so as to assure themselves that it was aimed Azadegan oil field and other things -- to only at the peaceful development of try to back Japan away from its very nuclear energy. This proposal was clever principled commitment to non- and interesting, but nothing substantial proliferation… When you’re looking at a developed from it. [55] country ruled by a man like Ahmadinejad, who threatens to wipe Israel off the map, In mid-May -- with Tokyo’s position still it is just good due diligence to say, ‘Is this unclear -- open threats were launched at a country we want to invest in?’” [57]

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Bolton’s public comments showed what not written in the contract.” [58] kind of arguments the Bush administration was using behind-the- Throughout the summer, it remained scenes to persuade Tokyo to give up the unclear how Tokyo was going to respond Azadegan project and to join in the to all of this pressure. TheU.S. had efforts to sanction and isolate the Islamic sidelined the Japanese from the main Republic. Although many commentators multilateral discussions on the Iranian would continue to deny that there was nuclear issue, and the Koizumi intense pressure coming fromadministration was upset about that. Washington, Bolton’s comments here Meanwhile, all eyes were on the U.N. Security Council where U.S. Secretary of (and those of Michael J. Green a bit later) State Condoleezza Rice was launching a provide insight on the true nature of the major diplomatic effort to gain the more confidential discussions. consent of the other four permanent At any rate, in late May, Mehdi Bazargan members for a strict sanctions regime. -- an influential Iranian oil official -- France, Russia, and China all had openly voiced his dissatisfaction with the reservations aboutWashington ’s performance of Inpex in Azadegan. The intentions. The mood inTokyo swung project was moving forward very slowly, back and forth as the permanent five’s and the Iranians were growing impatient. negotiations waxed and waned. Japanese Officials at the Japanese oil company leaders wanted to know what rival China Inpex blamed these delays on problems would do before committing themselves in de-mining the area around the oil field, to any particular course of action. which was necessary to complete first in Meanwhile, in August, as the fate of the order to ensure the safety of its workers. Azadegan project still hung in the Bazargan, however, now asserted that he balance, Michael J. Green, former didn’t “think the main obstacle is mine member of Bush’s National Security clearing or de-mining,” but rather Inpex’s Council and a key “alliance manager,” hesitation to invest the money that had published an opinion article in the Nihon been agreed due to their concern about Keizai Shinbun making an extended case the future direction of policy within the for why Japan should withdraw from the Japanese government. In other words, Azadegan project. Inpex didn’t want to spend a lot of money if Tokyo was simply going to pull the plug His main argument was clear: “It is on the project in a few months’ time. contrary to Japanese national interest to Bazargan further announced that Inpex take the course of appeasement of Iran… was contractually obligated to complete a Japan should not wait to see how cautious certain amount of work by September China and Russia are going to react. 2006, and if this work was not done, “the Japan should seek ways to stabilize the contract will be terminatedMiddle East and energy supplies in automatically… Extending the deadline is cooperation with America and Europe,

18 4 | 12 | 0 APJ | JF maintaining a strong attitude initself… In September, an agreement is considering the imposition of sanctions.” needed, and if they want to be involved they can come up with the financing. It Green then pleaded that “Japan should seems Japan has to get a positive not pay attention to the 15% of its oil instruction by the U.S. administration imported from Iran. What is more before they can do anything. They have to important is that Japan imports nearly ask the king, and clearly Bush considers 90% of its crude oil from the Persian Gulf himself the king of the world.” [60] States. If Iran is regarded as developing nuclear weapons, it will be a threat for all The Iranians eventually granted an of the Gulf States.” extension of the September 15 deadline to September 30, probably to allow the Green argued that Iran was destabilizing new administration of Abe Shinzo to the entire Persian Gulf area and was make the final decision on this matter. unworthy of Japanese friendship. He also noted that Tehran had some form of The new Abe administration quickly cooperation on missile development with backed out of Azadegan. METI Minister North Korea, and that “through such a Nikai was replaced by Abe loyalist Amari cooperative relationship, North Korea’s Akira, who showed no interest in ability to fire missiles at Japan with championing the project as his chemical, biological, and nuclearpredecessor had done. The new line out weapons has been enhanced.” [59] of Tokyo became that the whole Azadegan project had been a “private American arguments like Green’s seemed business relationship” in which the to have the desired impact in Tokyo. The Japanese government had no direct Japan-Iran negotiations over the next concern, thus ignoring the fact that the phase of the Azadegan project hadJapanese government itself had launched reached an impasse, with Iranian officials the first negotiations over Azadegan, and becoming increasingly angry with Inpex’s that officials such as Hiranuma Takeo endless delays in getting theand even Prime Minister Koizumi had development underway. previously pointed to the joint development as being “a symbol of Japan- There was now a definite September 15 Iran cooperation.” When it was deadline for Tokyo to make its intentions announced that government financing for clear on participating in the Azadegan the project would not be forthcoming, the development. The frayed tempers were position of Inpex collapsed, because apparent in the public comments of everyone knew that the Japanese oil Kamal Daneshyar, chairman of an Iranian company needed loans from public parliamentary committee on energy: institutions in order to cover the costs of “Iran was happy to do a favor for the the project. Tehran allowed Inpex to keep Japanese, but if they decline, Iran will be a 10% stake in Azadegan in order to very happy to complete this project signal their continuing interest in having

19 4 | 12 | 0 APJ | JF a positive bilateral relationship with Japanese leadership, and with it the rise Japan, but, in practical terms, the Japan- of neo-nationalists whose political Iran partnership was finished. [61] priorities differed from those of their immediate forebears. Accounting for the Collapse In the first months after September 11 In November 2000, the Japan-Iranevery major power in the world partnership had been launched with expressed its sympathy and pledged its great hopes and promise for the future. cooperation in helping the United States Six years later, the project was dead and track down and to punish those who had the century-long bilateral relationship carried out a terrible crime. Even such had sunk into its lowest level. How had potential rivals asRussia and China this miserable failure come about? adopted this line. This doubtless reinforced the perception by Japanese It was understood from the start that leaders of the United States as “the Washington would be hostile to any leader of the international community.” Japan-Iran partnership, but at the With Japanese leaders focusing almost beginning of this process, Japanese entirely on the signals coming from the policymakers were willing to face the Bush administration, it was inevitable American objections in order to pursue that the Japan-Iran relationship would be their own energy security policies, and to downgraded. build upon the history of modest cooperation between Tokyo and Tehran. Reinforcing this emphasis on the U.S.- As international conditions deteriorated Japan Security Alliance was the behavior after September 11, Japanese leaders of the North Korean regime. The nuclear began to doubt their original policy, and crisis on the Korean Peninsula affected eventually abandoned it altogether. the Azadegan deal in various ways, all of them negative. In the first place, fears Why did Tokyo change course? Three about the Kim Jong-Il regime helped main factors influenced this decision: convince Tokyo in 2002-2003 to bow to U.S. pressures to extend the U.S.-Japan 1) The “unilateral moment” in world alliance into a global alliance. Previously, affairs that lasted for several years after Japan had maintained a somewhat September 11, and which strongly independent stance in the Persian Gulf. influenced Japanese perceptions of the During the post-September 11 period, global order. however, this dramatically changed as 2) The deepening conflict withNorth Japanese policy in the region folded into Korea that made Japanese leaders feel American policy. Secondly, the crisis in more insecure and dependent onNorth Korea centered on the American protection. development of nuclear weapons. The main source of concern about Iran also 3) A generational change within the revolved around a possible nuclear

20 4 | 12 | 0 APJ | JF weapons program. This made it easier for Although it is our contention that the foes of Japan-Iran bonds to link concerns critical factors that led to the dissolution about Tehran with concerns about of the Japan-Iran partnership over Pyongyang. This could not but create a Azadegan took place inTokyo , the heavy burden for the bilateralIranians also shared a degree of blame relationship. for this result.

The North Korean factor also played an Every country is wise to diversify its important role in the political rise of neo- sources of energy, even those rich in oil nationalists in Tokyo, and that was the and gas. If some of Iran’s domestic needs third factor that eventually sank the are satisfied by nuclear energy, a larger Azadegan project. The generation of share of its oil and gas could be exported. Japanese politicians that had been in The Non-Proliferation Treaty guarantees power in the 1990s were supporters of all countries the right to develop civilian the American alliance, but they also saw nuclear power. a need for some balance in that relationship, and were believers in the It was nevertheless clear that the United traditional Japanese diplomacy thatStates, Israel, and even some Arab prioritized economic issues. The younger nations, would be hostile toward nuclear generation of neo-nationalists was far development in Iran, even for civilian more aggressive and committed tonuclear energy. It cannot be said that the rebuilding Japan as a credible military Khatami administration handled this issue with the care that was necessary. If power. Above all, they aimed to revise the there truly is no military component to pacifist Article Nine of the Japanese Iran’s nuclear development -- as they Constitution, which stood in the path of repeatedly insist -- then it would have their ultimate goal. With the Bush been better had they found ways early on administration and its Neoconservative to relieve the suspicions of the IAEA. If it allies calling for the “unleashing” of is indeed a civilian program, then the Japan, and offering the U.S.-U.K. alliance emphasis on secrecy has not served as a model for the future of U.S.-Japan Tehran well. relations, Tokyo moved closer to Washington. By using AmericanOf course, if Iran really does have a influence, they could help persuade parallel military nuclear program, that is domestic skeptics that remilitarization another issue altogether, and would was a necessary step if the crucial U.S.- certainly raise the level ofIran ’s Japan Security Alliance was to beresponsibility for the failure of the Japan- preserved into the future. In other words, Iran partnership. the downgrading of the Japan-Iran partnership served the partisan interests Tehran must also be faulted for the of the new generation of Japaneseextreme rhetoric of President Mahmud leaders. [62] Ahmadinejad. President Khatami had

21 4 | 12 | 0 APJ | JF worked patiently to build a relationship of argument used by some in the Foreign trust with countries like Japan. Although Ministry that Japan’s engagement with American hostility prevented his efforts Iran would help produce a more liberal from having the desired results,regime had been undermined. Foreign Ahmadinejad’s approach wasted most of Ministry officials found it increasing the political capital that Khatami had difficult to justify support for the earned in Europe and throughout the Azadegan deal in the face of withering Persian Gulf region. Ahmadinejad’s crude American criticism. As a result, the METI threats toward Israel, as well as his bureaucrats could expect no support confrontational stance toward the Bush from that quarter. administration, may have increased his popularity among radical Islamists and Above all, with the establishment of the those who have become deeply alienated Abe administration, the balance had by American foreign policy, but it also shifted. Nakagawa Shoichi -- who had was highly destructive to fragile Japan- once declared that, “For us, Iran is on the Iran ties. Tokyo may have been willing to same level as North Korea” -- now go against Washington’s demands in a chaired the influential Liberal Democratic quieter period, but Ahmadinejad’s Party Policy Research Council. The new approach made the political costs of the METI Minister, Amari Akira, immediately Japan-Iran partnership seem too high for distanced himself from the Azadegan most Japanese leaders. project. There was thus no member of the Abe cabinet willing to argue on behalf of One final aspect of the collapse of the preserving the Japan-Iran relationship. Azadegan deal that should be noted The METI bureaucrats who supported the refers back to the “bureaucratic factors” deal were completely outflanked by both discussed in the context of Raquelthe Foreign Ministry and the leading Shaoul’s research. As previously noted, politicians, and so they had to surrender. the Azadegan project had all along been [63] championed by METI and its allies such as Hiranuma Takeo, Hashimoto Ryutaro, and Nikai Toshihiro; while theConclusion mainstream of the Foreign Ministry was reluctant at best. The Azadegan story is a dramatic illustration of a political failure. Japan set In the final phase, it appears that METI out to enhance its energy security and to bureaucrats still supported the deal as solidify the special relationship with Iran. necessary for Japan’s energy security, but Not only were both goals thwarted, but they had become isolated within the they ended up in a much worse position government. With the rise of thefrom that in which they started. The Ahmadinejad administration, the old failure rests squarely on the Japanese

22 4 | 12 | 0 APJ | JF government’s shoulders. They made their Michael Penn teaches at The University commitments in February 2004 with all of Kitakyushu, and is Executive Director of the relevant factors on the table. The of the Shingetsu Institute for the Study of price of the Japan-Iran partnership was Japanese-Islamic Relations. always going to be the annoyance in Washington. If Japanese leaders lacked He wrote this article for Japan Focus. the courage to face that AmericanPosted on December 19, 2006. criticism, then they shouldn’t have signed the contract in the first place. Notes

[1] Nihon Keizai Shinbun, September 29, Ironically, the Japanese withdrawal from 1999. Azadegan in October 2006 came at a time when some kind of accommodation [2] “Joint Press Statement by the between the U.S. and Iran may emerge Ministers for Foreign Affairs of Iran and as a result of the collapse of theU.S. Japan on the occasion of the official visit position in Iraq, with a need to reopen of Foreign Minister Kamal Kharrazi of the negotiations with Iran in an effort to Islamic Republic of Iran to Japan,” stabilize the Persian Gulf region. December 24, 1998.

[3] Associated Foreign Press, August 10, This means that previous U.S. efforts to 1999. isolate Iran are now weakening. It also means that Japan could have played an [4] Nihon Keizai Shinbun, March 5, 2000. important role as mediator between [5] “Statement by the Press Secretary / Washington and Tehran -- as they had Director-General for Press and Public sometimes hoped -- had they showed Relations, Ministry of Foreign Affairs, on more tenacity in defending the Japan-Iran the Parliamentary Elections in Iran,” special relationship. Instead, by acceding February 22, 2000. to American political pressure so readily, Tokyo managed to make itself irrelevant [6] For a solid, recent review of the to any possible diplomatic solution in the collapse of the Khafji concession, see region. Tokyo could no longer be viewed Ahmed Kandil, “The Political Economy of by the Iranians as a fair-minded and International Cooperation Between Japan neutral party, but rather as a participant and Saudi Arabia: The Arabian Oil in a hostile alliance. Company as a Case Study,” Annals of the Japan Association for Middle East In the final analysis, the Azadegan oil Studies, No. 22-1, August 2006, pp. development project may be considered a 21-61. case study in the failure to conduct an independent foreign policy. [7] Nihon Keizai Shinbun, June 8, 2000.

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[8] Nihon Keizai Shinbun, June 30, 2000. [20] Nihon Keizai Shinbun,September 26, 2001. [9] Nihon Keizai Shinbun, November 1, 2000. [21] Misaki Hisane, “No Hurry over Iran Oil Deal: Meeting Target Date Could [10] Nihon Keizai Shinbun, Evening Have Strained U.S. Relations,” Japan Edition, November 2, 2000. Times, February 22, 2002.

[11] Japan Times, November 2, 2000. [22] Ibid.

[12] Nihon Keizai Shinbun, November 2, [23] “Visit by Minister for Foreign Affairs 2000. Yoriko Kawaguchi to the Islamic Republic of Iran (Overview and Evaluation),” May [13] Japan Times, December 29, 2000; 9, 2002. Nihon Keizai Shinbun, July 4, 2001. [24] Nihon Keizai Shinbun, July 1, 2003. [14] Nihon Keizai Shinbun, July 9, 2001. [25] Statement by the Press Secretary / [15] Kyodo News, “Japan, Iran Agree to Director-General for Press and Public Work toward Contract Regarding Relations, Ministry of Foreign Affairs, on Azadegan Oil Field,” Japan Times, July 10, 2001. the Chairwoman’s Summing-Up Statement of the IAEA Board of [16] Comment by the Press Secretary / Governors Meeting Concerning the Director-General for Press and Public Implementation of the NPT Safeguards Relations, Ministry of Foreign Affairs, on Agreement in the Islamic Republic of the Enactment of the Iran and Libya Iran,” June 19, 2003. Sanctions Extension Act of 2001,” August 8, 2001. [26] Guy Dinmore, “US Presses Japan over Iran Oil Deal,” Financial Times, June [17] Misaki Hisane, “Crucial Days of 27, 2003; Kanako Takahara, “U.S. Negotiations Lie Ahead for ‘OilPressure Places Iran-Japan Oil Deal in Diplomacy’,” Japan Times, August 18, Doubt,” Japan Times, July 2, 2003; 2001. Hooman Peimani, “Americans Stymie Japan-Iran Oil Deal,” Asia Times Online, [18] “Prime Minister Junichiro Koizumi July 4, 2003. Sends Letters to the Leaders ofEgypt , Iran, Saudi Arabia, and Qatar,” [27] Hooman Peimani, “Americans September 20, 2001. Stymie Japan-Iran Oil Deal,” Asia Times Online, July 4, 2003. [19] “Dispatch of Prime Minister’s Special Envoy Former Foreign Minister [28] Kanako Takahara, “U.S. Pressure Masahiko Koumura to the Middle East,” Places Iran-Japan Oil Deal in Doubt,” September 28, 2001. Japan Times, July 2, 2003.

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[29] Nihon Keizai Shinbun, July 3, 2003. [41] Richard Hanson, “Japan, Iran Sign Major Oil Deal, US Dismayed,”Asia [30] Nihon Keizai Shinbun, July 7, 2003. Times Online, February 20, 2004.

[31] “Japan-Iran Disarmament and Non- [42] Eric Watkins, “Japan Secures Proliferation Consultations (Overview),” Financing to Develop Iran’s Azadegan Oil July 2003. Field,” Alexander’s Gas and Oil Connections, Vol. 9, No. 8,April 22, [32] Nihon Keizai Shinbun,August 2, 2004. 2003. [43] Kyodo News, “U.S. Traded Iran Oil [33] “Visit to Japan by Seyyed Kamal Deal for SDF in Iraq: Democrat,” Japan Kharrazi, Minister of Foreign Affairs of Times, April 1, 2004. the Islamic Republic of Iran (Overview and Evaluation),” September 2003. [44] Eric Watkins, “Japan Secures Financing to Develop Iran’s Azadegan Oil [34] Tomoko Otake, “Cabinet Interview: Field,” Alexander’s Gas and Oil Nakagawa’s Farm Trade Background Connections, Vol. 9, No. 8,April 22, Brings Mixed Bag to METI Portfolio,” 2004. Japan Times, September 27, 2003.

[35] Nihon Keizai Shinbun, November 9, [45] Kyodo News, “Japan Nudged to 2003. Consider Libya Oil Deal: SeniorU.S. Official Suggests Iran Development Plan [36] Sayuri Daimon, “Japan Should Not Be Reconsidered,” Japan Times, August Just Be a Guest: Hashimoto Urges6, 2004. Koizumi to Diversify Diplomacy,”Japan Times, January 1, 2004. [46] For more on the eventual success of Japanese bids in Libya, see Michael Penn, [37] Nihon Keizai Shinbun,January 7, “The Roots of the Japanese Oil Victory in 2004. Libya,” Japan Focus, No. 421, October 30, 2005. [38] Raquel Shaoul, “An Evaluation of Japan’s Current Energy Policy in the [47] For a good analysis of this election, Context of the Azadegan Oil Fieldsee Shintaro Yoshimura, “Regarding the Agreement Signed in 2004,”Japanese Ninth Iranian Presidential Elections,” Journal of Political Science, Vol. 6, No. 3, Shingetsu Newsletter No. 30,July 1, 2005. 2005.

[39] Ibid. [48] Mayumi Negishi, “China to Swoop on Iran Oil Field if Tokyo Pulls Support: [40] Richard Boucher, Spokesman, Daily Firms,” Japan Times, August 18, 2005. Press Briefing, State Department, February 18, 2004. [49] J. Sean Curtin, “Tehran’s Diplomatic

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Purge Hits Europe and Japan,” Shingetsu 2006. Newsletter No. 186, February 7, 2006. [57] Michael Penn, “Bolton Pushes Back,” [50] Quoted in Michael Penn, “The Iran Shingetsu Newsletter No. 275, May 20, Nuclear Crisis -- Japan As Mediator?,” 2006. Shingetsu Newsletter No. 161,January 15, 2006. [58] Michael Penn, “Inpex in Azadegan: Delay is Not an Option,” Shingetsu [51] Ibid.; Mindy L. Kotler, “Unrequited Newsletter No. 284,May 27, 2006. Responsibility: Japan and Iran,” Asia Policy Calendar, January 16, 2006. [59] A full English translation of Michael Green’s opinion article is available in “All [52] Michael Penn, “Foreign Minister Shook Up –-Tokyo and Azadegan,” Mottaki in Japan: The Balance Sheet,” Shingetsu Newsletter No. 372, Shingetsu Newsletter No. 207, March 6, September 2, 2006. 2006. [60] Michael Penn, “The Azadegan Saga [53] Michael Penn, “Nippon Oil Cuts –- Daneshyar Talks Trash and Nikai Talks Back on Supplies from Iran,” Shingetsu Business,” Shingetsu Newsletter No. 380, Newsletter No. 216, March 17, 2006. September 12, 2006.

[54] Michael Penn, “Tokyo’s Agony Over [61] Michael Penn, “Tokyo Backing Out of Iran,” Shingetsu Newsletter No. 244, the Azadegan Project,” Shingetsu April 21, 2006. Newsletter No. 395, September 30, 2006.

[55] See the discussion in Michael Penn, [62] For a more extended discussion, see “Will Tehran Call Tokyo’s Bluff?,”Michael Penn, “Azadegan Autopsy, Part II Shingetsu Newsletter No. 263, May 9, -- The North Korea Factor,” Shingetsu 2006. Newsletter No. 412, October 19, 2006.

[56] Michael Penn, “The Iranian[63] Michael Penn, “Azadegan Autopsy, Ambassador Talks Tough inTokyo ,” Part I: METI versus MOFA,” Shingetsu Shingetsu Newsletter No. 273, May 19, Newsletter No. 405, October 14, 2006.