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Japan, US to seek common ground over Iran, euro crisis

Press Trust of India  |  Tokyo 

Japan and the US will seek common ground for co-operation on such issues as sanctions on Iran over its nuclear ambitions as well as the euro zone's sovereign debt crisis, with US Treasury Secretary Timothy Geithner holding talks with Japanese leaders tomorrow.

But sources close to the matter have said the two countries are unlikely to achieve any tangible result during the talks, expecting that the two sides would only confirm their resolve to address those issues by standing on the same side.

The US Treasury Department has said that Geithner's visit, which follows his tour to China, is mainly designed to discuss with his Asian partners a way "to increase pressure" on Iran over its nuclear development programme.

The US sanctions would target the oil industry in the West Asian country by barring financial institutions of other countries from operating in the US if they do business with the Central Bank of Iran.

Japan, which has already frozen the assets of Iranian commercial banks, groups and individuals involved in the nuclear program, will now be required to impose a similar sanction on the central bank. This means Japanese industries will become unable to settle their Iranian oil imports, causing such trade to be halted.

Japan depends on Iran for around 10% of its crude oil imports, with some government officials saying it would be difficult to completely stop the imports at a time when Japanese utilities need to boost oil-fired thermal power generation to cover the loss of energy due to the idling of nuclear power plants over safety concerns after last March's earthquake and tsunami.

A senior official has acknowledged that the government is now seeking to exempt Japanese banks from US sanctions in exchange for significantly reducing Japan's oil imports from Iran, under a provision of a relevant US law.

Finance Minister Jun Azumi is expected to discuss the details with Geithner, such as the amount by which Japan needs to cut imports in order to qualify for the possible exemption, the official said.

First Published: Wed, January 11 2012. 16:14 IST