UNSCR 1747/OECD DEMARCHE DELIVERED ON EXPORT

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 001766 SIPDIS SIPDIS PARIS FOR USOECD E.O. 12958: DECL: 04/19/2017 TAGS: PREL EFIN ETRD EXIM OECD UN JA SUBJECT: UNSCR 1747/OECD DEMARCHE DELIVERED ON EXPORT CREDITS TO IRAN REF: A. STATE 50834 ¶B. TOKYO 1346 Classified By: Ambassador J. Thomas Schieffer for reasons 1.4 b/d. Summary -------------- ¶1. (C) Embassy delivered reftel demarche to the Ministry of Foreign Affairs (MOFA),Ministry of Economy, Trade, and Industry (METI),and Ministry of Finance (MOF) on the U.S. desire for the OECD to adopt a "common line" on restricting medium- to long-term export credits to Iran. While the Japanese government has not yet formulated a position on the demarche, interlocutors noted the complicated factors at play in Japan's relationship with Iran. They also attributed recent declines in export credits to companies' risk assessments rather than government policy. Japan's delegate to the OECD meetings will likely seek out U.S. delegates directly for clarification of the proposal's implementation and impact. End summary. MOFA Response -------------- ¶2. (C) On April 20, Deputy Chief of Mission raised with MOFA Director General for Middle Eastern and African Affairs Norihiro Okuda the issue of our desire to see the OECD adopt a "common line" on restricting medium- to long-term export credits to Iran. Okuda replied that MOFA will look into the issue based upon our demarche, and noted that Japanese export credits to Iran had recently declined. This decline was not, he added, the result of legal or administrative guidance, but rather of the fact that Japanese companies are taking a more cautious approach to doing business with Iran. At the same time, the government of Japan does not think it wise to cut all trade ties with Iran. Iran is very complicated, explained Okuda, and unlike the DPRK there are many ways and means to impact Iran's behavior without breaking relations. Accordingly, Japan hopes to maintain bilateral ties with Iran. That said, Okuda continued that Japan is always interested in having an international consensus on how best to act with regard to Iran's nuclear program, which Tokyo considers to be a very important political, diplomatic, and even national issue, given Japan's stance on the proliferation of nuclear weapons. Okuda concluded by noting that his bureau found itself squeezed between the need to maintain bilateral relations and the requirement to take action on the critical issue of nuclear proliferation. METI Response -------------- ¶3. (SBU) Per reftel request, Economic Officer also delivered the demarche April 20 to Ministry of Economy, Trade, and Industry (METI) officials. METI Trade Insurance Director Michihiro Kishimoto and METI Director for Trade Finance Mitsuhiro Maeda, who will attend the OECD plenary session during the week of April 23, received the demarche. ¶4. (C) Noting that Iran presented complicated issues, Kishimoto stated that it would be difficult for Japan to formulate a response in the short time remaining before the OECD conference. This was especially so, he stated, because the issues at hand concerned the actions of private companies, rather than the government. He maintained that line, despite being pressed that the issue was fundamentally one of government-supported export credits. Kishimoto also attributed to private company decisions about risk, rather than government guidance or policy, the fact that Japan's export credit agency, NEXI, had issued no medium-to-long term credits since mid-2006. ¶5. (C) Kishimoto voiced concerns about how meaningful an OECD "common line" would be, given the actions of non-OECD countries, particularly China. Calling them his personal views, he said he feared that a "common line" containing just OECD countries would be ineffective, a view he thought was shared by many EU countries. He stated that the Japanese government had asked its embassies in EU countries to assess what policies and actions those countries are taking with TOKYO 00001766 002 OF 002 respect to Iran. (Note: He suggested that the request was broader than the question of export credits, and that it had been made without connection to this demarche.) ¶6. (C) As a side note, Kishimoto stated that Japan had taken action on Bank Sepah, but that many in the Japanese government felt they had received insufficient information about what kinds of risks are at stake with that bank and other sanctioned entities. ¶7. (C) Maeda, who will attend the OECD meetings, closely compared the text of the non-paper with UNSCR 1747 and stated that he would be interested to hear from the U.S. delegates about minor differences in language between the two. In particular, he would seek clarification of the definitions of "medium- to long-term credits," the "agents" of Iran's government, and what would be specifically excluded from the common line under "humanitarian and developmental purposes." ¶8. (SBU) The Financial Attache passed a copy of the non-paper to the Ministry of Finance (MOF). MOF had been in touch with METI officials Kishimoto and Maeda in advance of their receipt of the demarche. SCHIEFFER