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Opinion
September 28, 2018 www.intellinews.com I Page 22
imports have been escalating over the last month or so. And tensions heightened last week — the US imposing duties on $200bn of Chinese goods, China responding with levies on $60bn of US im- ports.
There was a surge in China’s imports from Iran in July, followed by a marked drop in August, sug- gesting 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 under- mined 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 posi- tion 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 import- ing companies have been transferring their car- goes 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 suffi- cient 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.