Geithner’s efforts to tighten economic sanctions on Iran

U.S. Treasury Secretary Timothy F. Geithner’s efforts to tighten economic sanctions on Iran over its nuclear program won backing from Japan a day after China rejected limiting oil imports from the country.

“We want to take concrete steps to reduce our share in an orderly way as soon as possible,” Finance Minister Jun Azumi said at a joint press conference in Tokyo today with his U.S. counterpart. “The world cannot tolerate nuclear development.”

Geithner’s meetings were part of a trip to Asia’s two largest economies aimed at building support for tighter Iranian economic sanctions after international monitors detected an acceleration in the nation’s nuclear development program. China, which counts Iran as one of its top petroleum suppliers, yesterday snubbed the U.S., with a vice foreign minister saying his nation “opposes imposing pressure and sanctions.”

Crude for February delivery climbed 49 cents, or 0.5 percent, to $101.36 a barrel in electronic trading on the New York Mercantile Exchange as of 5:00 p.m. Tokyo time.

JX Nippon Oil & Energy Corp., Japan’s biggest refiner, is in talks with Saudi Arabia and other producers to replace crude shipments in the event of an embargo, according to an official who declined to be identified, citing company policy. JX buys about 90,000 barrels of Iranian oil a day, the official said.

Japanese Chief Cabinet Secretary Osamu Fujimura said the government hasn’t made a final decision on cutting Iranian imports, and that Azumi’s pledge “is just one of several opinions.” Azumi later said he is seeking ways to make sure sanctions on Iran don’t hurt the Japanese economy.
‘Halfway Solution’

“Japan will try and seek a halfway solution where they’ll try and limit imports from Iran and boost imports from other Middle Eastern countries that are also U.S. allies,” said Razeen Sally, a professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore. Given its military alliance with the U.S., Japan “is much more susceptible to U.S. pressure than China,” he said.

The U.S. will send officials to Japan next week to discuss how the Japanese government will implement its plans, NHK Television quoted Geithner as saying in an interview. “We share a sense of urgency,” he told NHK.

Asked about China, Geithner told NHK: “They have been actually very cooperative with the international community with this common objective because of course they share our interests in trying to make sure Iran is compliant with its international obligations.”

“They actually have been quite supportive in tangible ways. I heard additional evidence of their intentions on that when I was there,” Geithner said.
Total Purchases

Japan, the world’s second biggest importer of Iran’s crude after China, bought 1.09 million kiloliters, or about 6.85 million barrels, in November, or 6.4 percent of the country’s total purchases for the month, according to trade ministry data.

“Any price spike would lead to a worsening of Japan’s trade terms,” said Azusa Kato, an economist at BNP Paribas in Tokyo. “If the price increase gets passed on to consumers, that diminishes their disposable income; if it doesn’t get passed on to consumers then it hurts corporate earnings.”

European Union foreign ministers are scheduled to decide at a Jan. 23 meeting in Brussels whether to impose and how to phase in an embargo on Iranian oil, which is designed to force Iran back to the negotiating table over its nuclear program.


Bloomberg