(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000401330001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: January 12, 2017
• Document Release Date: June 30, 2011
• Sequence Number: 1
• Publication Date: August 4, 1983
• Content Type: MEMO

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Central Intelligence Agency
DIRECTORATE OF INTELLIGENCE
4 August 1983
Foreign Minister Abe's Trip to Iran and Iraq
Summary
Foreign Minister Abe's early August trip to Iran and Iraq is
intended to strengthen Japan's relations with both countries. A
successful trip should also bolster Abe's domestic political
standing. Abe will appeal to both governments to accept a
ceasefire. Japan, which is the only major Western power with an
ambassador presently in both Tehran and Baghdad, is well
positioned to benefit economic ly from the reconstruction that
will follow.the war.
Bilateral issues will figure importantly in both stops.
Tehran will try to enlist Japanese Government cooperation in
pressing the Mitsui Corporation to resume construction of the
huge petrochemical project at Bandar-Khomeini, which has been
suspended since the outbreak of the Iran-Iraq war; Abe will
probably resist. In Baghdad, Abe will encounter the nrnh7pm
growing Iraqi debts to Janana.aa fi rmc
Abe's trip will probably achieve its basic objective of
strengthening Japan's relations with Iran and Iraq. But it also
entails real risks. Although he is committed to trying, Abe will
This memorandum was prepared by Japan Branch,
Northeast Asia Division, Office of East Asian Analysis. Comments
and queries are welcome and may be directed to the Chief, Japan
Branch, Northeast Asia Division, OEA,
EA M 83-10139
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not to able to persuade the two belligerents to cease
hostilities. If, on the contrary, the war intensifies during his
visit, the Foreign Minister will be placed in a very delicate
diplomatic position.
Japan has characterized its ties with Iran as a "window? on
the West and a channel of communication available to the US. In
addition, Tokyo clearly hopes Washington will see Abe's trip as
another sign that Japan is now ready and willing to play a larger
and more constructive role in international politics.
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Foreign Minister Abe's Trip to Iran and Iraq
Abe's Objectives
Viewed from Tokyo, Foreign Minister Abe's trip to Iran and
Iraq will serve both political and foreign policy objectives.
Although not explicitly stated, Abe clearly hopes that the trip
will enhance his visibility and reputation as Foreign Minister
and hence his political standing with the LDP and the Japanese
public at large. Abe sees himself as a future Prime Minister and
has chafed in the shadow of Nakasone's active, personal
involvement in diplomacy. Abe clearly hopes that a trip into the
volatile Middle East, where Japan has obvious major interests,
will generate media attention.
.A successful visit should strengthen the image of.the
Nakasone Government as having a strong and active foreign
policy. It should also help pave the way for a later trip by
Nakasone to the Middle East. As Minister of International Trade
and Industry, Nakasone visited the region (Iran, Kuwait, Saudi
Arabia, and the United Arab Emirates) in 1972. He takes pride in
the accomplishments of that trip--including substantial increased
economic contacts- -d would clearly like to do a sequel as Prime
Minister.
In terms of foreign policy objectives, Abe hopes to
strengthen political ties with both Tehran and Baghdad including
establishing a good personal relationship with his
counterparts. Tokyo is quick to point out that expanding
Japanese access and influence in the Middle East serves the
interests of the West generally and the United States in
particular. Japan, for example, is the only major Western power
to have ambassadorial relations with both Iran and Iraq. Also,
Tokyo clearly hopes to benefit from the economic opportunities
that will become available in both Iran and Iraq when the
fighting ends.
According to the Foreign Ministry, Abe hopes to hasten that
moment with direct personal appeals to the leadership in Tehran
and Baghdad for an end to hostilities. Japanese officials have
disavowed any mediator's role, if for no other reason than Japan
presently lacks sufficient leverage with either party on this
issue to be effective. Another reason is that Tokyo's previous
calls for a ceasefire have been welcomed by Iraq and emphatically
rejected by Iran. As long as Baghdad wants a ceasefire and
Tehran does not, Japanese efforts could be viewed as having an
inherently pro-Iraq bias. For this reason, Tokyo has not acted
on Baghdad's urging that it take the lead in the UN and elsewhere
in search of a settlement. Nonetheless, in the unlikely event
Tokyo-were asked by both parties to act as mediator, it would
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probably do so with alacrity.
The Foreign Minister will face difficult bilateral issues in
both capitals.
Iran. Despite the excesses and turmoil of the recent past,
Tokyo believes that Iran under Khomeini is beginning to exhibit
growing economic strength as well as signs of political stability
and moderation. Nakasone emphasized the latter at Williamsburg
while urging the Western allies to make new approaches to Iran.
Japanese officials also argue that Tehran should not be driven
into the arms of the Soviets by Western hostility, particularly
given the growing evidence of Khomeini's resistance to Soviet
actions in Afghanistan and Moscow's attempted subversion of Iran
through the Tudeh party. This reflects Tokyo's long held fear
that continued conflict in the region will increase Soviet
According to the Foreign Ministry, Abe's principal objective
in Iran will be simply to improve communication and mutual
understanding with the Khomeini government. Japanese officials
have characterized this process as encouraging Tehran to open its
windows to the West. The presumed effect will be to bolster
pragmatic, less ideological forces as the basis for political
moderation. Iranian Foreign Ministry officials have encouraged
this thesis in Japan by portraying the present Iranian regime as
committed to peace and stability in the region and improved
living standards at home.
Abe will also probably seek.a better Iranian understanding
of Japan-US relations and, in the process, perhaps hope to soften
Tehran's views of the US. Until recently, Iranian Government
statements complained that Japanese policy was controlled by the
United States--a charge that Tokyo made strenuous efforts to
refute. While Iranian officials now acknowledge Tokyo's
independence despite its ties to Washington, their suspicions
have been rekindled by Nakasone's evident determination to
strengthen the US-Japan relationship.
In discussions with Abe, Iranian officials will presumably
emphasize a recent theme--that the Japanese and Iranian economies
are complementary and that, despite major differences in their
political systems and outlooks, both are Asian countries that
have much in common, including the experience of being
manipluated by a superpower. As the Iranian Foreign Minister put
it recently, "We wish to have economic and trading ties with
those countries which do not intend to dominate Iran. We think
Japan is one of those countries." Iranian officials can be
expected to press Abe with the argument that there is a clear
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potential for greatly expanded trade and investment that is not
being realized--largely because of Japan's failure to complete
the massive Iran J an Petroleum Company plant at Bandar-
Khomeini.
Signed in 1971, the agreement between the Mitsui Corporation
and the Iranian Government is the largest single Japanese project
in the Middle East. With the project 85 percent complete, the
outbreak of the Iran-Iraq war halted construction in September
1980. Mitsui is convinced that the plant has become uneconomical
b
ecause of the changing oil market and rising repair and
construction costs. Mitsui had been prepared to write off its
investment as a total loss and try to collect from MITI's
overseas investment insurance fund.
The Iranian Government, on the other hand, is determined to
see the project through. After initial attempts to coerce Mitsui
failed, Teheran offered to guarantee the profitibility of the
project and to cover all additional construction costs if Mitsui
would resume work. Mitsui would not have to invest further in
the project and would receive interest payments on outstanding
loans. Tentative agreement has been reached on these terms.
Unresolved is the question of when, or whether, Mitsui would
receive a repayment of its $328 million equity investment and
when construction actually will be resumed. Baghdad has declared
the plant site to be in the war zone and has warned Japan it will
be attacked if work resumes. Mitsui refuses to send a permanent
construction team to the site while the possibility of an attack
exists. Tehran, in return for its concessions, insists upon an
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early resum
ti
f
p
on o
work.
Iran has made repeated attempts to persuade the Japanese
Government to put pressure on Mitsui. Tokyo has responded that
while it hopes an amicable solution can be reached and
construction resumed it cannot dictate to a private
corporation. The Japanese Government does have a financial stake
in the outcome because of its loans to Mitsui and its overseas
investment insurance and a political stake because Tehran has
made the project the test of Tokyo's intentions toward Iran. In
the likely event that a final agreement has not been reached
between Mitsui and Tehran before his arrival, Abe could find the
roj
t t
b
p
ec
o
e the most difficult problem of the trip.
Two other noteworthy issues that Abe will face in Iran
concern oil imports and technical assistance. In the past three
years, negotiations between Tehran and the Japanese trading
companies over the volume and price of Iranian oil, exports to
Japan have been difficult and at times acrimonious. In 1980-81
Iranian oil exports to Japan fell to a fraction of-their former
level because of Tokyo's reaction to the taking of the American
host.ag.es, efforts to diversify its suppliers, and, most
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important, high Iranian prices. Within the past few weeks,
however, contracts have been signed that point to a significant
increase in imports from Iran this year--perhaps 350,000 b/d
compared with 240,000 b/d in 1982. Tehran will likely press Abe
to persuade the tra inn companies to further accelerate
purchases.
Abe will almost certainly encounter Iranian
insistence that technical assistance be rapidly expanded,
including the reopening of the Japanese International Cooperation
Agency office closed during the revolution.
Iraq. In certain respects, Tokyo sees Iraq much the same
way it does Iran--as a major oil supplier and market for Japanese
exports. But while Tehran has been able to maintain a
substantial volume of oil exports, Raghdad has not. The effect
is evident in Iraq's desperate shortage of foreign exchange and
its dependence on economic assistance from the Persian Gulf
states. For Japan, the most important consequence is that Iraq
cannot pay, either for current imports or past debts. As one of
Iraq's principal creditors and suppliers Japan has a major stake
in Baghdad's current difficulties. And Iraq has looked to Japan
with increasing urgenc for economic assistance and for deferred
payments for imports.
Japanese firms are heavily engaged in construction projects
in Iraq. At present these firms have approximately thirty-five
such projects, involving several thousand Japanese workers. They
face the dilemma of whether to suspend operations if payments are
not met, or whether to continue work on the assumption that Ira
will eventually be able to meet its obligations.
The debt issue is technically between Japanese private firms
and the Iraqi Government. However, Tokyo is involved because of
the effect this growing problem has on Japan-Iraq relations
generally, and more specifically because of a credit line to Iraq
begun by Japan in 1974. Only one fourth of the total $2.0
billion in credits has been drawn and the 9 year term of the
original loan expires August 15 of this year. Iraq has asked for
an extension, hoping to use it to pay Baghdad's debts to Japanese
construction companies. The Japanese Ministry of Finance has
vetoed- these requests because the credits were only for agreed on
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projects and the original interest rate is now below OECD
guidelines. The Ministry of Foreign Affairs has sent a special 25X1
envoy to Iraq to seek a way out of this impasse b
arrives.
so, late press reports indicate Abe will offer a five
year extension on the official credit line. F -1
Abe will probably raise the issue of Iraqi threats to attack
the Bandar-Khomeini project; Tokyo has already filed a strong
official protest. He may, also cite the threat of a possible new
Iraqi attack against the Kharg Island oil terminal complex used
by Japanese tankers. Press reports of the recent Iraqi purchase
of Exocet missiles from France has generated new fears for the
f
t
f f
sa
e
y o
oreign shippers at Kharg Island.
Prospects
Although Tokyo, Tehran, and Baghdad all have an interest in
Abe's success, the trip is not without risks. There is little
prospect that Abe can achieve any progress toward a cessation of
hostilities. Japan lacks sufficient leverage and Iran is, by all
indications, determined to pursue a military outcome. In fact,
during Abe's visit, the scale of fighting may escalate with new
Iranian attacks along the northern portion of the front. Heavy
fighting while he is in the region could embarrass Abe by
highlighting the limits of Japan's influence and by possibly
creating a situation where the Foreign Minister would appear to
be favoring one side or the other.
In Iran, the added danger is that Tehran will press hard in
'
public for Abe
s support of its position on the petrochemical
project--something Abe will probably be unwilling to do. In
Iraq, the credits question may provoke similar public
disagreement. Abe, who clearly wants publicity out of this trip
faces the real possibility that he will get the wrong kind.
On balance, however, the visit is more likely to prove a
plus rather than a minus. Both Tehran and Baghdad attach great
importance to their economic relationship with Tokyo and both
hope to gain tangible benefits from Abe's visit. The continuing
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I I
softness in international oil markets puts both Iran and Iraq in
the position of needing Japan. At least for the moment Abe's
trip should highlight Japan's unique access to both of the
belligerents and could pave the way for an even larger Japanese
economic presence in both countries once the war ends.
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SUBJECT: Foreign Minister Abe's Trip to Iran and Iraq
Distribution:
1 - DDI
1 - DDI Registry
1 - Executive Director
1 - D/OEA
1 - C/OEA/NA
1 - C/OEA/NA/J
1 - C/Production/OEA
1 - PDB Staff
1 - C/NIC
1 - NI0/EA
5 - CPAS/IMC/CB
2 - OCR/ISG
1 - C/PES
C/EA
C OEA/SE
C/OEA/CH
Richard Armitage, Department of Defense
Cdr. James Auer, Department of Defense
Paul Wolfowitz, Department of State
John R. Malott, Department of State
James Jackson, Department of State
David Long, Department of State
Steve Grummon, Department of State
Wayne White, Department of State
Ralph Lindstrom, Department of State
Frank Ricciardone, Department of State
Gaston Sigur, National Security Council
Geoffrey Kemp, National Security Council
Richard Childress, National Security Council
Dave Peterson, Department of Commerce
Doug Mulholland, Department of Treasury
DDI/OE (4 August 1983)
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