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C O N F I D E N T I A L TOKYO 000274 
 
SIPDIS 
 
SIPDIS 
 
PARIS FOR USOECD 
TREASURY FOR DUVIVIER AND THOMPSON 
 
E.O. 12958: DECL: 01/28/2018 
TAGS: ENRG PGOV PREL XC XF JA
SUBJECT: JAPANESE VIEWS ON IRAN AND BURMA SANCTIONS 
 
Classified By: Ambassador J. Thomas Schieffer. Reasons 1.4(b/d). 
 
¶1. (C) Summary.  EEB DAS Hengel discussed Iran and Burma 
related sanctions with Japanese government officials January 
23-24.  The GOJ will continue to support the international 
community on Iran sanctions, but urged caution regarding 
Iran's central bank.  The Japanese are concerned Iran's 
increasing trade with China will undermine international 
sanctions.  On Burma, the GOJ will continue its policy of 
engagement.  End Summary. 
 
¶2. (C) Japanese banks are extremely cautious in dealings with 
Iran and MOF is working diligently to ensure there are no 
"unhappy transactions," MOF International Bureau Deputy 
Director General Masashi Nagaosa told EEB DAS Doug Hengel 
January 24.  Oil, however, is Japan's "lifeline" and asset 
freezing measures targeting Iran's central bank (Bank 
Markazi) are "untouchable," he asserted, reiterating the 
strong position previously taken by MOF officials with 
Treasury U/S Levey in November.  Nagaosa asked for details 
regarding the proposed new resolution adopted by the P5 1 in 
Berlin and was encouraged to learn China and Russia have also 
agreed to the proposal.  Convincing Japanese businesses to 
cease dealings with Iran is difficult, Nagosa claimed, but 
added that sharing the new resolution with them could help. 
 
¶3. (C) While Japanese banks have suspended relationships with 
Iranian banks Melli, Mellat and Saderat, activity-based 
sanctions are technically difficult and costly to implement, 
according to MOF International Bureau Director Hiroshi Naka. 
MOF issued an advisory to Japanese banks based on the 
Financial Action Task Force's (FATF) October 11 statement on 
Iran which requires every transaction be checked to verify 
its legitimacy.  Japan would prefer a list-based or 
entity-based approach, Naka commented. In addition, the UNSC 
provides scant information about why it is freezing a 
particular entity's assets which could pose a legal risk 
should a freeze be challenged.  DAS Hengel cited Iran's 
tendency to create front companies to hide illicit 
transactions as requiring close scrutiny of transactions. 
 
¶4. (C) Regarding export credit financing for Iran, Naka 
stated the Japan Bank for International Cooperation (JBIC) 
will provide no new credits or guarantees, but must honor 
contractual obligations for those provided before the 
sanctions were in place.  Naka concluded by underscoring the 
need for a UN mandate for further financial measures against 
Iran, citing concerns for "third countries" to benefit from 
patchwork sanctions. 
 
¶5. (C) The GOJ is "very proud" of its work to comply with 
UNSC resolutions on Iran but is concerned Iran's increasing 
trade with China will undermine international sanctions, MOFA 
Economic Affairs Director-General Yoichi Otabe told DAS 
Hengel January 23.  Japan shares the U.S. belief that Iran 
presents a real danger to the world and will work quickly to 
implement any new UNSC resolution. 
 
¶6. (C) The U.S. and Japan have differed for some decades 
about the approach to resolving the situation in Burma, Otabe 
observed. Japan believes engagement is key, and that 
sanctions will not force the ruling junta to change. The GOJ 
used to have considerable leverage with the Burmese 
government, but China has taken advantage of the vacuum 
created by the sanctions to increase its dealings in Burma. 
Otabe believes China and ASEAN are best placed to increase 
pressure on the junta to improve the human rights situation. 
 
¶7. (U) EEB/ESC DAS Hengel cleared on this message subsequent 
to his return to Washington. 
SCHIEFFER