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Iran and the (relative) calm after the storm: Where does Japan stand?

1 July, 2022

By Luke Austin – Research Assistant

Recent years have seen a drastic worsening of Iran’s multilateral relations. As a major regional player with its own interests, Iran’s relations with the United States have particularly exacerbated. Then-US President Donald Trump’s decision to withdraw his country from the Joint Comprehensive Plan of Action in May 2018 drew swift condemnation from the remaining signatories, including France, Germany, the UK as well as Iran itself. New economic sanctions enacted against Iran by the Trump administration had devastating effects on Iran’s economy: denial of revenue from oil exports, the plummeting value of the Iranian Rial as well as rising inflation and the deterrence of foreign investors from considering Iran as a possible area for their operations. In January 2020, things went from bad to worse when Qasem Soleimani, an Islamic Revolutionary Guard Corps (IRGC) major-general and commander of the Quds Force, was killed in a drone strike near Baghdad International Airport ordered by the Trump administration. While there was a glimmer of hope that the Biden administration would successfully navigate the US’s re-entry into the JCPOA, as reflected in the piecemeal progress achieved in negotiations earlier this year between the Biden administration and Iranian President Ebrahim Raisi’s hawkish government, a bipartisan vote in the U.S. Senate placed Biden’s JCPOA revival efforts in serious danger. None of this is helped by the fact that even within Iran itself there is a considerable level of disagreement about what type of nuclear deal would best suit Iran: a debate involving the Iranian public that dates back at least two decades to 2002.

Iran’s foreign policy is also complicated further by its escalating rivalry with Saudi Arabia. The Saudi-Iranian rivalry, according to a British former diplomat, has been given its unique trajectory by a combination of factors which range from Saudi fears over possible Iranian influence on the Shi’a minority in the country’s eastern regions and Tehran’s embracing of a revolutionary anti-monarchism following the 1979 revolution to Iranian suspicions towards Saudi Arabia on account of it being a U.S. ally. This rivalry has manifested itself in what has essentially become a proxy war throughout the Middle East, with Iran and Saudi Arabia supporting opposing participants in regional conflicts from Yemen to Syria.

One key U.S. ally enjoys unexpectedly calm bilateral relations with Iran: Japan. This is especially the case in terms of bilateral trade relations. Until 2008, Iran was recorded to have been Japan’s third-largest supplier of unrefined oil since at least 1995 according to statistics released by Japan’s Ministry of Finance. Japan, widely regarded as the net importer in the context of economic Japan-Iran relations in that it imports more from Iran than does Iran from Japan, mainly exports automobiles and machine parts to Iran. The energy aspect of bilateral relations is particularly prominent, as reflected in Japan’s involvement in the Azadegan oilfield near the Iraqi border, particularly between 2000 and 2006. Within six months from the oilfield’s discovery in December 1999, Toyo Engineering had already been contracted for the construction of a new petrochemical facility in Iran. In late 2000, then-Iranian President Mohammad Khatami made the first visit to Japan by an Iranian head-of-state for over four decades.

The wider consensus dictates that it is Japan’s reliance on imports of Middle Eastern oil for the maintenance of its energy security that drives Tokyo’s engagement with Iran. Despite Iran’s plentiful energy resources as well as its position as the second-largest Middle East and North Africa (MENA) economy, Japan has been left with no choice but to restrain its Iran policy on account of Washington’s poor relations with Tehran, which have been exacerbated further by Iran’s announced efforts to continue the enrichment of uranium at 20%, clearly in violation of the JCPOA. It has been speculated that a 20% decrease in Iranian exports to Japan came as a result of Tokyo’s attempts to obey the sanctions regime put in place against Tehran by Washington. It has also been suggested that in 2018 then-Prime Minister of Japan Shinzō Abe cancelled what would have been the first visit to Iran by a Japanese Prime Minister since 1978 due to American pressure to take a harder stance against Iran, particularly under the Trump administration. While Abe did eventually visit Iran the following year, this coincided with a drone attack on the Japanese-owned oil tanker MT Mercer Street in the Gulf of Oman, laying bare Japan’s reliance on vital strategic points such as the Strait of Hormuz. While Japanese Maritime Self-Defense Force (MSDF) units were deployed to the Gulf of Oman, the Arabian Sea, the Red Sea and Bab al-Mandab from January 2020, they were nevertheless restricted from any military action by Japanese law and it is their participation exclusively in “information-gathering activities” as opposed to operating alongside a U.S.-led military coalition which implied that this military activity was the result of very cautious deliberation and compromise so as not to upset the balance between the U.S., Iran and Japan.

Japan and Iran have enjoyed surprisingly cordial relations for a long time. Despite Japan’s two centuries of self-imposed isolationism (Sakoku) between the 17th and 19th centuries, there were a number of small-scale yet nevertheless symbolically significant bilateral exchanges, ranging from the visit of a Japanese delegation to the court of Naser al-Din Shah Qajar in 1880 to Prime Minister Mirza ‘Ali Asghar Khan Amin al-Soltan’s visit to Japan in 1903. What is new about these relations, however, is their permeation by Japan’s rivalry with China. Beijing, having already flexed its economic and geopolitical muscles through major projects such as the Belt and Road Initiative (BRI), also envisions Iran as an important partner. This culminated in the signing of the “Iran-China 25-Year Comprehensive Cooperation Agreement” in March 2021, which reportedly includes provisions for greater Sino-Iranian energy cooperation in the form of discounts of up to 30% for Chinese imports of Iranian oil in return for Chinese development of major Iranian oil and gas facilities, including that at Azadegan. This is further grounded on the basis that Iran itself has taken steps to improve relations with China in not only bilateral, but also multilateral formats. In September 2021, Iran’s bid to join the China-and-Russia-dominated Shanghai Cooperation Organisation (SCO) was approved, with this move being seen to complement Iran’s previous strategic partnerships with both China and Russia as well as finalise the SCO’s inclusion of “all the key powers in Central Asia”. While it has been demonstrated that the decision of Iran, also like that of India and Pakistan, to join the SCO is based largely on benefitting from increased regional cooperation, it must also be kept in mind that the SCO is also regarded as a counter-balance to Western influence in Central Asia.

With regards to the JCPOA and the broader nuclear controversy, the Kishida administration has emerged as a voice for mediation between Iran and the wider international community. On 9th February, Kishida held a telephone conversation with Raisi, during which both participants exchanged “candid opinions” on the JCPOA and agreed to maintaining “close communication”. What is interesting is that Kishida actually served as Minister of Foreign Affairs at the time of the JCPOA’s adoption in October 2015. While Japan’s precarious energy security situation largely drives Tokyo’s economic engagement with Tehran, there are several additional reasons why Japan does not take such a hawkish position when it comes to the nuclear issue. First, Japan itself is in close proximity to another, arguably even more unstable nuclear power: North Korea. North Korea, along with Japan, have also been given as two hypothetical examples for Iran to follow in developing its nuclear threshold strategy: the North Korean example reflects determination to develop nuclear capabilities in spite of Western pressure and  whatever politico-economic consequences may arise from such a strategy, while that of Japan represents a historical aggressor who has managed to regain the trust of the international community and reap the benefits of the use of nuclear technology for peaceful purposes. Second, if Japan intends to counter China’s growing influence in Iran, then it seems to have outsourced this task to fellow Quadrilateral Security Dialogue (‘Quad’) member India. India clearly has its sights set on Iran becoming an integral part of the Asia-Africa Growth Corridor (AAGC), which also involves Japan as India’s main partner. The AAGC, in turn, represents the confluence of Japan’s wider ‘Free and Open Indo-Pacific’ strategy and India’s ‘Act East’ policy. In 2016, Indian Prime Minister Narendra Modi restarted Indian development of the Iranian port of Chabahar, including the creation of a free trade area as well as the construction of roads and a railway line to Zahedan. There are no illusions of purely economic impetus informing this decision: the Indian development of Chabahar as part of the AAGC has been identified as a move to rival the Chinese development of the Pakistani port of Gwadar as an important link in the chain of the BRI.

The future course of bilateral relations between Japan and Iran will depend greatly on whatever actions may (or, for that matter, may not) be taken by the US as part of its Iran policy, particularly with regards to sanctions and the JCPOA. One reason given for the U.S.’s Iran policy, which may strike some as being heavy-handed, is that the role of religion as an ideology is somewhat overplayed. It has been suggested instead that other factors such as Iranian nationalism drive Iran’s foreign policy, which is “rarely driven by theological precepts or religious doctrine, but rather political power calculations and a desire to preserve the quasi-theocratic status quo”. Nevertheless, events such as the 1979 revolution and Tehran hostage crisis were significant enough to have influenced and continue to influence not only the U.S.’s Iran policy, but also American public opinion of Islam, for instance.  While it is in Japan’s interests to salvage the JCPOA given recent North Korean missile launches, the current Kishida Cabinet and future administrations in Tokyo may be tempted by the ongoing Russo-Ukrainian War to rekindle its energy-import relationship with Iran, as Japan seeks to end its energy dependency on Russia in response to Russia’s invasion of Ukraine in February 2022. This is somewhat indicative of Japanese foreign policy turning more reactive as opposed to proactive, being driven largely by outside pressure (gaiatsu) or, more specifically, ‘American pressure’ (beiatsu). Furthermore, the recent weakening of the Liberal Democratic Party’s (LDP) pro-China Nikai faction and the subsequent erosion of the LDP’s pro-China lobby may have already emboldened the Kishida administration to participate in additional infrastructure projects to counter the BRI, such as the Indo-Pacific Economic Framework (IPEF) announced by Biden during a visit to Tokyo on 23rd May. Regardless of whether this new project may involve Iran, which would be unlikely given the U.S’s stake in the IPEF and its poor bilateral relations with Iran, re-engaging with Iran and India through the already-established AAGC could provide a means for Japan to continue its controversial yet fruitful relationship with Iran.

About Luke Austin

Luke Austin has recently completed his MA with distinction in Governance and Global Affairs at the Moscow State Institute of International Relations (MGIMO). He wrote his master’s dissertation on the levels of consistency and contradiction between actual policy-making and political discourse in the framework of EU-Russia relations. Luke also holds a BA in Japanese and Russian from the University of Leeds. He has previously interned for the Primakov Institute of World Economy and International Relations (IMEMO) in Moscow.