International Sanctions on Iran Put Pressure on Chinese Diplomacy

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Jan. 24 – Recent sanctions placed on Iran by the United States and European Union, aimed at pressuring the Iranian government into halting its nuclear weapons program with a trade embargo, have caused a serious diplomatic dilemma for China – a major importer of Iranian oil.

The United States has introduced new legislation which will allow for punitive sanctions on foreign banks and businesses facilitating the Iranian oil trade. In a move that demonstrates the conviction of the U.S. authorities for upholding the new law, oil firm Zhuhai Zhenrong has been the first Chinese business placed under sanctions for selling petroleum products to Iran.

The Chinese government reacted angrily to the sanctions, which they say are not based on international law.

“Imposing sanctions on a Chinese company based on a domestic (U.S.) law is totally unreasonable and does not conform to the spirit or content of the UN Security Council resolutions about the Iran nuclear issue,” Foreign Ministry spokesman Liu Weimin said.

However, the U.S. is determined to lead efforts to stop Iran’s uranium enrichment program, which the United States and its allies believe is aimed at producing nuclear weapons. Iran maintains that their nuclear program is purely for civilian purposes.

Beijing has traditionally opposed the use of sanctions as a matter of principle and, in the Iranian case, Chinese officials are perhaps not as convinced with the merits of imposing an embargo as they might be if it was suggested by the UN Security Council. U.S. sanctions against Iran may also be viewed as hypocritical by Beijing, who will note that nuclear-armed Israel, by contrast, enjoys full U.S. support.

Ultimately, China has to consider the potential costs of damaging relations with its top two economic partners: the United States and the European Union. The importance of these ties to Beijing are indisputably more crucial than its relationship with Iran.

This was demonstrated in unusually frank terms for Chinese diplomacy by Premier Wen Jiaobao at the end of his recent tour of the Middle East. In Doha, Qatar’s capital, he said China “adamantly opposes Iran developing and possessing nuclear weapons.”

However, it is important to note that China has supported sanctions against Iran only as a means of compelling Iran to honor its commitments to international law. Maintaining a slightly different position than the West, Beijing recognizes Iran’s right to nuclear enrichment as long as it complies with the rules of the International Atomic Energy Agency.

In response to the embargo on their oil exports and foreign financial transactions, Iran has warned other oil-rich countries in the Middle East that they will be entirely responsible for escalating tensions in the region should they compensate for the reduction in Iranian oil exports by increasing their own production.

“We would not consider these actions to be friendly,” said Tehran’s Opec Representative Mohammad Ali Khatibi.

“If the oil producing nations on the Persian Gulf decide to substitute Iran’s oil, then they will be held responsible for what happens,” he added, in the Sharq newspaper’s report.
This presents a delicate problem for China, which imports 20 percent of Iran’s total oil output. Thus, any reduction would seriously destabilize Iran’s economy. Conversely, Iranian oil accounts for 11 percent of China’s total oil imports. Although this is a significant portion, it is still only China’s third largest supplier, after Angola and, crucially, Saudi Arabia.

In mid-January, Chinese Premier Wen Jiabao visited Saudi Arabia to further develop economic ties. The desert kingdom is far more critical to China’s energy security than Iran is. Thus, China must walk a fine line between the two regional powers; carefully maintaining important trade links, while confidently asserting a clear foreign policy that is not too out of sync with that of its powerful Western allies.

This means continuing to officially oppose the sanctions on Iran, while also insisting that Iran comply with international laws governing the development of nuclear capabilities.

However, if other major Iranian trading partners (particularly Japan and South Korea) begin reducing imports, China will perhaps gradually do the same so as not to appear as the main obstacle to the West’s plan.

Taking into account China’s diverse international partnerships, where economic and political priorities closely intertwine, it is possible to understand why China has taken this middle course so far. Such a course suits China’s preferred policy of non-intervention, but the question remains as to how China will respond should Israeli missiles eventually strike Iran, regardless of U.S, opposition, throwing global oil security into chaos.