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bne November 2018
Opinion 53
on August 6 that target areas including gold, steel, sovereign debt, the automotive industry and acquiring industrial process software and buying US banknotes – and Washington has been busy urging big importers of Iranian crude to find alternative suppliers. It has been considering temporary waivers for those, such as India, Iran’s second largest buyer after China, which might struggle to diversify their sources in the short term. While leading European countries remain committed to the nuclear deal, their oil companies are now wary of engaging with Iran because of the impending American restrictions.
Pledge under strain
China, which purchases over 25% of Iranian oil exports, is another matter, however. In early August, reports suggested that Beijing which, like the Europeans and Russia, supports maintaining the 2015 agreement, told the US that it would not cut purchases of Iranian crude – valued at around $15bn –
“With no sign of a downturn in US- China trade tensions, Beijing seems set to defy America over sanctions”
but agreed not to increase them. However, the pledge is likely to be put under strain by worsening trade relations between Washington and Beijing. Tit-for-tat tariffs on imports have been escalating over the last month or so. And tensions heightened with the US imposing duties on $200bn of Chinese goods, China responding with levies on $60bn of US imports.
There was a surge in China’s imports from Iran in July, followed by a marked drop in August, suggesting stockpiling in advance of the re-imposition of the US measures. The trend was also seen amongst other big importers of Iranian
crude and their purchases are likely to continue falling in advance of the November deadline. However, with Trump
upping the ante on trade, Beijing may feel its commercial interests would be further undermined if it were to comply with his urgings on oil imports from Iran. Setting aside retaliation for US hostility on trade, China’s arguments for pressing ahead, or increasing, imports from Iran include some of its refineries only being able to refine Iranian crude and the need to offset cuts by other importers to avert price rises.
Hardline position
Former US president, Barack Obama, is said to have managed to persuade Beijing to limit its investments in Iranian oil at a time when US-China relations were on a good footing. Trump is likely to struggle to do the same. He would have to step back from the trade war to stand a chance of achieving compliance on sanctions. But such an outcome appears unlikely given his hardline position on Chinese exports and China’s dependence on Iranian oil.
Indeed, there are already signs that Beijing is exploring means of circumventing US sanctions. Reports have suggested that Chinese oil importing companies have been transferring their cargoes onto Iranian tankers for delivery to China, with Iran insuring the shipments. International insurance companies and banks are reluctant to underwrite and finance such transactions for fear of being penalised by the Americans.
With no sign of a downturn in US-China trade tensions, Beijing seems set to defy America over sanctions, though the extent
of Chinese defiance remains unclear. Iran is hoping it will be sufficient to offer it an economic lifeline. Last month Iran’s foreign minister, Mohammad Javad Zarif, said China could play a pivotal role in helping to preserve the nuclear accord.
If that proves to the case, Trump may have to rethink his strategy for bringing Tehran to heel.
Yigal Chazan is an associate at Alaco. Alaco Dispatches is the business intelligence consultancy’s take on events and developments shaping the CIS region.
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May, 2018 www.intellinews.com @bneintellinews
Avast to enter London bourse in bid to raise up to $1bn Jaroslav Hroch in Prague
Avast, which owns the popular consumer antivirus company AVG, will apply to list its shares on the London Stock Exchange in the hope of raising $200mn (CZK4.1bn) in primary proceeds from an IPO, the Czech-founded company announced on April 12.
See page 2
St Petersburg's start-up scene flourishes on high talent and low costs
Contents
Avast to enter London bourse
in bid to raise up to $1bn 1 Avast to enter London bourse in bid to raise up to $1bn 2 St Petersburg's start-up scene
flourishes on high talent and low costs 3 Romania entrepreneur aims to put home-grown UAV defence technology industry on the map 6
FinTech
Russia's mobile major MTS increases stake in Ozon to 16.7% 9
Blockchain
Romanian startups at the heart
of blockchain energy trading rally 10
Central Europe
Russian-Lithuanian startup Gosu.ai
raises $1.9mn from Russian and
French investors 13
Eurasia
Iran hit by cyber attack that left US
flag on screens 14 Iranian government set to block hugely popular Telegram messaging app 15 Iran's black market phone disconnection drive pushes up legal mobile imports 15
Eastern Europe
Internet catches up with TV on Russian
ad market 17 Sales of connected appliances jump
in Russia 17 Russia's HeadHunter Group seeks
to raise $250mn with NASDAQ IPO 18 Russia ranks second in the world
for digital piracy 18 Russian messaging service Telegram raised another $850mn with ICO 19
Southeast Europe
Russia's HeadHunter Group seeks
to raise $250mn with NASDAQ IPO 20
The Regions This Month 21
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