Japan  has asked the United States to waive a law banning financial institutions that have done business with Iran's central bank from operating in the United States.

The request from Japan, made to a visiting delegation from the United States comprising Robert Einhorn, the State Department's special advisor on nonproliferation and arms control, and Daniel Glaser, the Treasury Department's assistant secretary for terrorist financing, comes as Japan seeks to lower its imports of oil from Iran, while seeking to protect its financial institutions.

The U.S. side has said that the White House may grant a country a waiver to the sanctions if it has "significantly reduced its volume of crude oil purchases from Iran."

Japan, for its part, has said it will seek to lower its reliance on Iranian oil, but has asked the United States to take into account the adverse affects of last year's twin disasters in March on the nation's economy.

Prime Minister Yoshihiko Noda and Foreign minister Koichiro Gemba have both voiced concern about the possible negative impact joining the US-led sanctions on Tehran could have on Japan's economy, especially in light of the increased oil needed to fuel power stations as most of the country's nuclear plants are still offline following the March 11 earthquake and tsunami-triggred crisis.

To this point a foreign ministry official asked the US delegation last week to apply the new law "flexibly" as regards Japan's supporting of the sanctions.

The official also said that during two days of talks the two sides had yet to reach an agreement on Japan joining the sanctions and how Japan intended to precede with US-led campaigns to ramp- up pressure on Tehran to give up its nuclear ambitions.

But Washington is leaning hard on Tokyo, that relies on Iran for around 10 per cent of its oil, to participate in the sanctions against Iran.

Initial talks between Finance minister Jun Azumi and US Treasury secretary Timothy Geithner, led to Japan stating it would implement cuts to oil imports from Iran in a "planned manner ", but concerns surfaced thereafter about the implications of this and how Japan will make up for its oil deficit. The head of a large association of Japanese oil companies said they would have no choice but to reduce their reliance on Iranian oil, once the sanctions come into effect, but called into question the government's unilateral decision making process.

"No matter what the Japanese government says, we can't keep doing business with Iran, once banks pull back on transactions," Akihiko Tembo, chairman of Idemitsu Kosan Co. and the Petroleum Association of Japan told reporters last week in Tokyo.

"Japanese refiners are probably trying to reduce and replace Iranian oil imports with other sources as a realistic approach," the industry chief said.

He went on to say that the Japanese government has no right to call for a ban on imports, but that companies would have no choice but to follow the sanctions if banks here are not allowed to do business with their Iranian counterparts.

Tembo said that his association is currently not holding discussions on the matter with the Japanese government.
"We aren't in talks with the government at the moment," he said. Tembo also indicated that Japan could make up for a lack of oil imports by individual companies turning to alternative sources like Saudi Arabia, for example, but said that Japanese companies had had no issues with banks over settling Iranian crude payments.

Japan imported 312,000 barrels per day of Iranian oil in the first 11 months of 2011, 12.3 per cent less than in the same period a year earlier, according to trade ministry data.

The figure is down by more than half from the 683,000 barrels per day Japan imported in 2003, the data showed.
The US delegation is scheduled to hold talks with their Japanese counterparts until Friday. The talks come on the back of the commissions' visit to South Korea to hold discussions on the same matter.

Meanwhile Iran will study Russia's reposals regarding future talks between Iran and the Iran Six, a diplomatic group consisting of the US, China, Russia, Britain, France and Germany, a high-level Iranian official said.

Ali Bageri, deputy secretary of Iran's Supreme National Security Council, was in Moscow last Wednesday to discuss with Russian diplomats key bilateral and regional issues, including Iran's nuclear program.

"Our Russian friends submitted the proposals for future talks within the framework of the group of six and we agreed to study these proposals and discussed with the Russian side," Bageri was quoted by the RIA Novosti news agency as saying. However, the official didn't reveal more details about his talks with Russian diplomats.

Earlier, Russian Foreign minister Sergei Lavrov said there were good chances for the resumption of talks between Iran and the Iran Six.

Following an International Atomic Energy Agency report on Iran's nuclear programme in November, the United States, Britain and Canada announced new sanctions against Tehran and still are working to impose an embargo on Iran's crude exports.

In last August, Russia raised proposals to Iran on its nuclear program, which called for a "phased" approach to resolve the issue.
The writer filed this analysis from Tokyo

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