Kyodo reveals how US wrecked Japan’s bid for Iran barter

Japan’s Kyodo News agency has revealed how a bid by outgoing Prime Minister Shinzo Abe to barter Iranian crude oil for US grain failed last year because of Washington’s stonewalling.

Abe visited Iran in June 2019 — the first by a Japanese prime minister in 41 years —but as he headed to meet Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei, oil tankers were mysteriously attacked near the Strait of Hormuz in the Persian Gulf.

The United States was quick to blame Iran even as the United Arab Emirates, which owned the tankers, as well as other countries distanced themselves from pinning the attacks on the Islamic Republic. The American claim begged the question why Tehran would go to such lengths while hosting a world leader.

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Kyodo, citing unnamed government sources, said Abe officially proposed the barter deal worth several billion dollars in his June 12 meeting with Iranian President Hassan Rouhani, claiming that it was initially received positively by Tehran and Washington.

The plan, it said, envisaged circumventing US sanctions on Iran by exchanging US corn and soybeans procured from the United States by Japan for Iranian crude oil, and to transport them after obtaining American approval.

“As Japan saw it, US sanctions could be avoided as the non-monetary transaction would prevent Iran from investing any oil profits in its military,” the news agency said.

 According to Kyodo, at the time the proposal was made, Washington was in the middle of a trade war with Beijing and seeking buyers for its crops, especially corn and soybeans.

The Japanese side, it said, was initially confident in persuading the United States but gradually became less so.

From the outset, the agency said Iran doubted the United States would accept the Japanese proposal and insisted on a US commitment in this regard.

"Besides Iran’s deep mistrust of the United States, the inconsistent policy of the US administration of Donald Trump was also regarded as a factor in the failure of the Japanese mediation effort," according to sources cited by Kyodo.

The Japanese proposal was also discussed when Rouhani visited Japan in December 2019 and met again with Abe, at which time he learned that the Japanese were unable to narrow the gaps between Tehran and Washington, Kyodo said.

France also tried to mediate with a plan to provide a credit line to Iran of $15 billion last September, but “the Japanese proposal was better studied and formulated than the French proposal,” the agency cited a government source as saying.

In late 2019, it said, there were also moves to encourage Iran to consider both the Japanese and French proposals as a set to increase the chances of a deal.

“Both proposals failed because of US noncooperation, despite Washington’s initial green light,” the source told the agency.

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