TOKYO -- Japan inked an investment treaty with Iran on Friday designed to protect Japanese companies and their assets as they do business in the oil-rich nation now that international sanctions are lifted.
The accord, signed here by Japanese Foreign Minister Fumio Kishida and Ali Taiebnia, Iran's minister of economic affairs and finance, is expected to be ratified by the Diet and take effect this summer. Representatives from around 20 Japanese corporations attended the signing ceremony.
"A country that possesses much economic potential is a tremendously key partner," said Kishida, who hopes the treaty will deepen economic ties between the two nations. Those sentiments were echoed by Taiebnia, who said he looked to restore and further relations with Japan.
In addition to the treaty, $10 billion will be provided through Nippon Export and Investment Insurance and the Japan Bank for International Cooperation. The funds will be guaranteed by the Iranian government, allowing the Japanese side to avoid losses.
Including economic partnership agreements, Tokyo has signed similar investment treaties with over 30 states and territories, Japan's foreign ministry said. Those agreements, which grant Japan "most favored nation" status, let Japanese companies operate in high-risk countries. Export limits and similar restrictions that do not apply to third-party nations or domestic enterprises are prohibited.
Iran has signed investment treaties with roughly 50 nations including France, Germany, China and South Korea. German and French automakers already have decided to make forays into that market, which boasts a population of 78 million.
Chinese President Xi Jinping went to Iran in January. Visits by South Korean President Park Geun-hye and Japanese Prime Minister Shinzo Abe are in the works.
But sanctions could be reinstated if Iran violates the agreement over its nuclear program. And the U.S. political class is far from united on the issue.
"U.S. foreign policy toward Iran after 2016 is less than clear because it may change depending on the result of the presidential election," said Koichiro Tanaka, director of the JIME Center at the Institute of Energy Economics, Japan. "It is natural that the [Japanese] private sector is taking a cautious stance, since the energy sector requires long-term investments."
Tanaka also noted that antipathy toward foreign capital lingers in Iran due to the history of exploitation by big overseas oil companies.