Japan: A Delicate Balance

With the price of oil skyrocketing, Tokyo may have to make friends with some of Washington’s enemies.

For most of the past century or so, Japan has enjoyed remarkable popularity within the Muslim world. In stark contrast to European countries or the United States, Japan has no burdensome history of colonial-style intervention in the region’s affairs (with the possible exception of Tokyo’s brief wartime occupations of Malaysia and Indonesia). And if there was ever a time when Japan needed to maintain that good will, it’s now, when spiking oil prices are threatening to undermine its economic recovery.

Japan needs lots of oil

Iran is a prime example of the dilemma facing Tokyo. For years Japan has been doing its best to shore up relations with the mullahs in Tehran, even though policymakers know that Washington disapproves of its overtures. Iran provides 15 percent of Japan’s oil, making it the country’s third largest supplier (behind Saudi Arabia and the United Arab Emirates). Two years ago, as part of an increasing effort to secure ownership of reserves rather than simply buying oil on the open market, Tokyo decided to make a strategic investment in the vast Azadegan field along Iran’s border with Iraq. The Japanese oil major Inpex is investing $2 billion to develop the field, the biggest onshore production project in Iran since the 1979 Islamic Revolution.

Critics warned that Iran’s burgeoning nuclear ambitions could complicate the deal