U.S. Wins Japanese Support for Sanctions on Iranian Oil

Japan will support the U.S. in imposing oil sanctions against Iran over a nuclear program thought to be geared around developing atomic bombs that the central Eurasian country has repeatedly been urged to terminate.

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Visiting U.S. Treasury Secretary Timothy Geithner urged Tokyo to help deprive Iran of vital oil revenues. Iran relies heavily upon oil revenues, which comprise nearly half of the country’s gross domestic product. Sanctions have already caused the rial currency to lose 20 percent of its value against the U.S. dollar in the past week.

Tensions between Iran and major Western superpowers over the country’s enrichment of uranium for nuclear energy not only threatens the flow of world oil supplies, but also the possibility of war.

An Iranian nuclear scientist was blown up on Wednesday, with Tehran blaming Israeli and U.S. agents while insisting that the man’s death would not derail nuclear activity. Washington denied involvement in the attack and condemned it, but Israel declined to comment.

Though Iran says the aims of its nuclear program are entirely peaceful, after the country launched an underground enrichment plant and sentenced an American to death for spying, the U.S. and Europe have stepped up efforts to cripple Iran’s oil exports for refusing to halt work the West suspects to be centered upon building nuclear weapons.

If its exports are to be sanctioned, Iran has threatened to block access to the Strait of Hormuz, a vital means of transport through which roughly one-fifth of the world’s oil is transported.

Japanese Prime Minister Yoshihiko Noda said he shares concern about Iran’s nuclear capabilities, but he does worry that the sanctions could seriously affect the Japanese and world economies, depending on how they are implemented.

Japan, China, and India together account for over 40 percent of Iran’s crude exports. The European Union collectively buys another fifth of Iran’s exported crude, but is advancing toward an agreement to ban crude imports after a six-month grace period and ban petrochemical products after three months.  The U.S. is working on similar legislation, which has garnered bipartisan support.

The U.S. is also “exploring ways to cut Iran’s central bank off from the global financial system,” Geithner told reporters after talks with Japanese leaders. The White House has announced that financial institutions dealing with Iran’s central bank will be frozen out of U.S. markets.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com