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07TOKYO1766 2007-04-20 09:35:00 CONFIDENTIAL Embassy Tokyo
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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.