The claim that Roula was ordered to Tokyo to have this dictated to her is false on every level. This is a news story from an interview with a prominent biz exec, which we do the whole time. It's not an editorial.On Tue, 1 Nov 2022 at 13:30, Chas Freeman via Salon <salon@listserve.com> wrote:--“Nikkei-Owned Financial Times Begins to Crack on Sanctions”
A journalist contact who knows the ins and outs of the Financial Times exceedingly well pinged about a new article, Japan cannot survive without Russian oil, warns trading house chief, bleating about the oil and gas sanctions, and without saying so, the going-live-soon G7 oil price cap. Yes, Japan is a member of the G7.
The piece is noteworthy, as our alert colleague correctly noted, because the Financial Times has been a hardliner on Russia generally and the sanctions/economic war in particular.
His remarks:
Roula Khalaf was summoned to Tokyo to have this dictated to her…Khalaf is a careerist and there is no way she would have run this without being ordered to.
Consider additionally:
It is very unusual for the Japanese to make a stink like this. Using a venue like the Financial Times means they wanted the noisemaking to be noticed. The Japanese complain in public only after they’ve tried hard in private and gotten nowhere. This article looks to be the result of official Japan, which has sought and gotten some waivers from the oil and gas sanctions, believing it’s going to be in a very bad way without more relief.
Recall that the EU version of the oil sanctions, was set to add extreme provisions, like permanently barring any vessel that violated the price cap regime from ever getting any services from EU companies, like insurance or even one assumes, resupply at an EU port.
Remember further that Russia has said it simply won’t sell oil subject to a price cap regime. Experts anticipate that response would produce a big jump in oil prices. Japan is already in bad economic shape due to the yen being very weak at a time when commodity prices are high. The article points out that Japan gets 9% of its gas and 4% of its oil from Russia. Those levels may not seem like much, but as the cliche goes, you will be just as dead whether you drown in 6 inches or 6 feet of water.
Or Japan’s real concern may be that the imposition of non-leaky sanctions will lead to those aforementioned big oil price increases. Simon Watkins in a new OilPrice story contends:1
Oilprice.com sources: In the short term, Russia could secure at least three-quarters of the shipping needed to move its oil as usual to established buyers.
However, the imposition of the price cap regime is sure to produce near-term dislocations as the work arounds (and likely longer transit processes) are implemented, so the immediate shortfalls would be greater than the “three-quarters of the shipping” suggests. Would it be mere weeks, or more on the order of months for these new mechanisms to be working smoothly?
Or is the Japanese complaint more narrow, as in “We’ll cheat if we have to so don’t go looking too hard?” The interviewee is Masahiro Okafuji, the head of Itochu, long one of the smaller but sometimes particularly aggressive Japanese trading companies. Okafuji is also one of the few Japanese who has license to be candid.
Trading companies help preserve Japan’s cultural insularity by being major brokers of foreign trade transactions. They are still enormous in revenue terms with very small profit margins.
One could read Okafuji as effectively saying Japan needs foreign energy and the trading companies will get it, even if it infuriates the West. So he may be speaking from more of an institutional perspective. And given the fact that the US is escalating with China and Japan is America’s best military ally in the region, Okafuji and his confreres are likely counting on the US not being so self destructive as to cause a ruckus with Japan too by insisting on rigid compliance at a time when Japan simply can’t handle it.
Notice that Okafuji initially goes through the ritual of submission, that of course he and Japan will comply, then goes on to explain why this can’t and perhaps therefore won’t happen. This isn’t quite the Japanese “Very difficult!” with an inward hiss, which equals “no”, but it’s not terribly far from that either.
In an interview with the Financial Times, Masahiro Okafuji, chief executive of Itochu, which has Warren Buffett as a major shareholder, said the country’s continuing use of Russian energy after the invasion of Ukraine would hinge on support from the US and Europe for Japan’s position.
“Unlike Europe or the US, Japan depends on overseas for almost all of its energy needs so it’s not possible to cut off ties with Russia because of the sanctions,” Okafuji said at the company’s head office in Tokyo. “In reality, we cannot survive unless we continue to import from Russia, even if the volumes are smaller.”
Okafuji, who is among Japan’s most charismatic and aggressive business leaders, was also critical of the rising pressure on companies to prioritise geopolitics over commerce. The trend of “friendshoring”, where like-minded countries co-operate in supply chains to reduce geopolitical exposure, came with potential risk.
“It’s inevitable, but if such a trend continues, it will reduce the investment appetite of companies as well as their ability to innovate and compete, so it is negative for the global economy,” he said.
Japan has kept pace with western nations in imposing sanctions on Russia, but it has not withdrawn from large energy projects in the country since it relies on Russia for about 9 per cent of its liquefied natural gas and 4 per cent of its oil.
The Japanese government and Itochu, along with India’s state-backed ONGC Videsh, remain investors in the Sakhalin-1 oil project that ExxonMobil has quit. The prospects for the oil and gasfields project in Russia’s Far East region are even more uncertain after Russian president Vladimir Putin earlier this month signed a decree creating a new operating company that would be managed by state-run oil group Rosneft.
Even as Okafuji is trying to navigate Japan’s tricky position between the West and its energy supplies, some of those energy suppliers are getting noiser about not being on board with buyer attempts at price controls:
And India, which has repeatedly said no to siding against Russia and joining the G7 oil price cap bandwagon, is having to clear its throat yet again and say “No means no”:
____1 Watkins has a bad case of Putin Derangement Syndrome and so accepts Western disinformation without question, which distorts his analysis.
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