JIN-234 -- Japan's Iranian Oil Deal Evaporating under US Pressure

J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News

Issue No. 234
Wednesday, July 9, 2003


++ Viewpoint: Japan's Iranian Oil Deal Evaporating under US Pressure

++ Noteworthy News
- Mobloggers Descend on Tokyo for First International Conference

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++ Viewpoint: Japan's Iranian Oil Deal Evaporating under US Pressure

The US and Iran are raising the stakes in their little nuclear
standoff, and Japan is stuck right in the middle of the whole thing.
It's a classic showdown of immovable object and unstoppable force:
Japan desperately needs oil rights to sate its thirst for the black
gold; it also desperately needs to maintain its relationship with its
military protectors.

The Bush administration is heaping the pressure on Japan to pull out
of a multibillion dollar oil deal that it has been negotiating with
Tehran for more than two years. It now looks more and more like
Washington is going to get its way.

Any LDP insider you speak to mutters how very keen they are for the
deal, which would give a consortium of Japanese companies rights to
the rich Azadegan field in southwestern Iran, to go through. Japan
lost the rights to a big field in Saudi Arabia back in 2000, and METI
hasn't got many other immediate opportunities up its sleeve.

Despite the war in Iraq, Japan's dependency on the Middle East remains
very high. Eighty percent of its oil imports come from the region, and
Siberian pipeline negotiations between Tokyo and Moscow remain only in
their fledgling stages.

The US is using its old "axis of evil" rhetoric and concerns over
Iranian nuclear ambitions to effectively force Japan into
battering-ram status on the issue. Under obvious US instruction, Japan
is now demanding clarification over suspected atomic weapons programs
before the negotiations go any further. Even the mighty METI has to
toe the line, with its chief ministers now saying that the deal
negotiators have to proceed "with caution." In their own show of
dissent, Iranian authorities have allowed Japan's "priority bidder"
status to lapse and are not renewing it.

Japanese-Iranian talks on weapons of mass destruction due to begin in
the Iranian capital later this week are expected to deepen the rift
over the deal. The summit directly follows a visit to Tehran on July 9
by Mohamed El Baradei, the chief of the International Atomic Energy
Agency (IAEA). The IAEA is demanding that Iran immediately sign a
protocol that would allow its teams to conduct surprise inspections.

Oil industry analysts, however, believe that if the Japanese deal
falls through completely, a state-backed consortium from China is at
the top of the list of bidders most likely to step in. The US
Department of Energy estimates that China will, by the end of this
year, overtake Japan as the world's second most oil-thirsty nation.
China is also less susceptible to US pressure to pull out of deals
like Azadegan.

The writing is apparently now on the wall: Japan's chief cabinet
secretary Yasuo Fukuda said that he did not think the oil plan would
move ahead "unless international fears are resolved" -- pretty blunt
code for: "It isn't going to happen unless the US is happy." The
comments were taken by Japanese political analysts as the clearest
possible indication that the Bush administration had forced a dramatic
shift in Tokyo's energy strategy.

It all leaves Koizumi and his minions with a very unpleasant headache
to add to their many others: jeopardize Japan's energy supply or fall
out with its most important ally. Japan is in no position to take as
bold an anti-US line as, say, France, which leaves us fairly certain
what the outcome of the Iran deal will be.
--The Editors

"The Sakhalin Oil Boom, Part One: From Poverty to Prospects," from our
July issue (subscription required)

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** Mobloggers Descend on Tokyo for First International Conference

In Brief: Mobloggers from all over the world arrived at Super Deluxe
near Roppongi Hills last Saturday for the first International
Moblogging Conference, sponsored in part by Sony and i-mode. The space
was filled with around 150 mobloggers and enthusiasts, who spent the
day discussing this relatively new twist on Web publishing, where
mobile devices like cellphones and PDAs can publish photos and text
instantly to the Net.

Commentary: Adam Greenfield, coordinator of the conference, told the
crowd that "family is the killer app of moblogging," and indeed, many
of the moblogging sites up and running now feature photos of family,
friends, pets and, for some reason, alcoholic beverages. Moblogging is
still something being done almost exclusively by early adopters, and
Justin Hall, creator of links.com, mentioned that "a disproportionate
number of moblogs are made by expatriates in Tokyo." It's a fun, if
expensive, hobby, but will it pose a threat to mainstream publishing?
Many at the conference thought so, but until the technology becomes
more accessible to those of us who are not early adopters, it will
remain a publishing outlet for technophiles with plenty of pocket

Sample moblogging sites:



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Written and edited by Leo Lewis and Roland Kelts (editors@japaninc.com)


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