Japan backtracks on Iran oil embargo

The Japanese government on Friday began backtracking on its pledge to join Washington's drive to strangle Iranian oil exports as top figures insisted no decision had yet been made.

Just 24 hours after the country's finance minister indicated Tokyo was falling into line with US demands, the premier and his foreign minister both signalled a significant retreat.

The US is trying to ramp up pressure on Iran over its nuclear programme, threatening to cut off financial institutions that deal with the country's central bank, so squeezing Tehran's vital oil export business.

China has refused to play ball, but Washington appeared to score a diplomatic victory Thursday when Finance Minister Jun Azumi told visiting US Treasury Secretary Timothy Geithner that Tokyo was planning to cut its imports from Iran.

But on Friday Foreign Minister Koichiro Gemba was less than enthusiastic.

"The United States would like to impose sanctions. We believe it is necessary to be extremely circumspect about this matter," Gemba told a news conference with French Foreign Minister Alain Juppe in Tokyo.

"We must look at this extremely carefully and find an intelligent solution. "We as a government are in the process of examining the issue and coming to a common position."

Gemba said that over the last five years Japan had reduced its dependence on Iranian crude, which now made up around a tenth of the country's oil imports.

"We are examining whether there is any advantage in a further reduction. But it is important to know what impact any reduction would have on the price of crude.

"One can imagine there would be negative effects (from this scheme) not just on Japan but on the world economy."

At a separate press conference Prime Minister Yoshihiko Noda said his finance minister had been speaking in a personal capacity.

"Minister Azumi's comment was to recap what has happened in the past so far, and expressed his personal views on the outlook," Noda told reporters.

"As a government, we wish to engage in more concrete discussions at a working level."

The seeming volte-face came after what appeared to be a coup for Washington when Azumi told Geithner that Japan was on board with the US bid to economically punish Iran for what it and its Western allies say is a weapons programme.

"In the past five years, we have reduced... the amount of oil imported (from Iran)," Azumi said as he stood next to his US counterpart.

"We wish to take planned and concrete steps to further reduce this share, which now stands at 10 percent."

Geithner had come away empty handed from Beijing, which refused to add its economic might to the campaign to isolate Tehran.

India, which buys about ê12-billion-worth of oil from Iran a year, also said Thursday it had not told refiners to reduce supplies, while South Korea said it would ask the US to let it not cut imports.

The EU has thrown its hat in with the US and said Wednesday it expected to finalise its sanctions against Tehran by the end of the month.

Iran, which insists its nuclear programme is for exclusively peaceful purposes, has repeatedly said it will not abandon uranium enrichment despite four rounds of UN Security Council sanctions demanding it desist.

Tehran has threatened to block the strategic Strait of Hormuz if more sanctions are imposed.

On Friday, Juppe said the world could not afford to let Iran acquire nuclear weapons and oil sanctions were a sensible way forward.

"France and her European partners believe Iran's nuclear programme... is a serious violation of its international obligations and is a threat to world peace," he told the news conference.

"It would be a grave error to ignore this."

Azumi insisted Friday that there was "no confusion" and "no inconsistency" within the government, Kyodo reported.

Under Washington's financial measures, foreign firms will have to choose between doing business with the Islamic republic or the United States.

The pressure from Washington and the European Union to boycott Iranian crude comes at a time when Japan must make greater use of fossil fuel power plants after a huge earthquake and tsunami sparked a nuclear power crisis last March.

The vast majority of Japan's 54 nuclear reactors are now shut down, amid public distrust of the technology and calls for increased safety.

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