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Opinion
September 28, 2018 www.intellinews.com I Page 21
ALACO DISPATCHES:
Could China scupper Trump’s bid to bring Iran to heel?
Yigal Chazan of Alaco
President Donald Trump’s strategy of pressur- ing Iran into making more security concessions through renewed sanctions looks set to be un- dermined by China’s apparent determination to continue importing Iranian crude, a key source of revenue that could throw Tehran an economic lifeline.
In May, Trump unilaterally withdrew from the international nuclear agreement — signed in late 2015 between Iran and the five permanent mem- bers of the Security Council, Germany and the EU. Sanctions relief in exchange for curbs on the country’s uranium enrichment programme had allowed Iran, OPEC’s third largest oil producer,
to achieve pre-sanctions crude export levels. But the US administration argued that the deal failed to stem Iran’s ballistic missile programme and its destabilising influence in the Middle East.
Washington now wants to squeeze Iranian oil sales — which generated $50bn in the last finan- cial year — to force Tehran back to the negotiating table. Trump is looking to secure a more wide- ranging nuclear agreement that would address the perceived shortcomings of the original deal.
The US president is hoping to draw Iranian con- cessions by doubling down on its weak economy. Since the nuclear deal took effect in January 2016, Iran has been unable to attract the levels of foreign investment it hoped for, due in large part to pre-existing non-nuclear US sanctions. Crude sales — which along with oil products account for most Iranian exports — have been unaffected by
Supreme Leader of Iran Ali Khamenei is seen (right side of picture) receiving Chinese President Xi Jinping in his house in 2016. Seated to the left of Xi is Iranian President Hassan Rouhani.
these measures, helping to take Iran out of reces- sion. But its finances remain in a parlous state, evidenced by recent nationwide protests over matters including steep price rises, the collapse of Iran’s currency, the rial, and high levels of un- employment.
The renewed US oil and gas sanctions come into force on November 4 — following the first wave
of sanctions introduced on August 6 that tar-
get 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 import-
ers 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 Euro- pean countries remain committed to the nuclear deal, their oil companies are now wary of engag- ing 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 Au- gust, reports suggested that Beijing which, like the Europeans and Russia, supports maintain- ing the 2015 agreement, told the US that it would not cut purchases of Iranian crude — valued at around $15bn — 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