Sunday, July 22, 2012

East Asian tapering off: 'Washington does not actually want to "drive Iran towards a cliff"'

"...Conscious of the contradictions in maintaining close commercial ties with Iran while staying firmly positioned as a robust ally of the US, South Korean official statements attempt to ameliorate the situation by suggesting that Washington does not actually want to "drive Iran towards a cliff" and that Korea's trade with Iran is at acceptable levels. 
However, rhetoric from Washington is predictably harsher. As far as the rest of the world can see, US Secretary of State Clinton is continuing to emphasize her intentions to intensify the isolation and pressure if Iran does not take concrete actions to dismantle its nuclear program. 
The timing of the sanctions makes it even more difficult for East Asian economies. At a time of slow economic growth and declining exports, reduction of fuel imports or the increase in the cost of importing energy places a heavier burden on countries struggling to remain competitive in the international market. This is true elsewhere, but the consequences of the ongoing Iran crisis to the economies of South Korea and Japan are more pronounced because of their relatively larger reliance on Iranian oil. 
Replacing the oil supply is certainly possible, as many Middle Eastern oil kingdoms have stepped up to offer increased shipments to South Korea and Japan; however, renegotiating and streamlining new oil imports is both challenging and time consuming, and invariably more expensive. 
Furthermore, considering how the dispute between Iran and the United States is destabilizing the international oil market, the sanctions come as an unwelcome obstacle to South Korea and Japan's (and many others') drive towards economic recovery and growth. At the same time, Seoul and Tokyo's willingness to find ways to continue purchasing oil and transacting goods with Iran undermines Washington's sanctions-based approach towards denuclearizing the Middle East country. 
To top it off, it is not clear whether Iran would actually surrender its nuclear program because it faces increasing economic pressure. As the New York Times has noted, this may be the most comprehensive economic sanctions regime that the US initiated since imposing sanctions on raw materials going to Imperial Japan in the 1930s and '40s, which of course hastened the start of the Pacific War. 
More prevalently, while the tensions are not immediately obvious, South Korea and Japan's forced self-harm to their own economic interests may have deep consequences for the future of the trans-Pacific relationship.  ..."

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