Iran Looks to China, Russia to Break out of US Sanctions

The four rounds of United Nations Security Council sanctions on Iran are likely about as far as Russia and China are willing to go. Even the new charges against Iran apparently contained in the forthcoming International Atomic Energy Agency report (which do not rise to the level of accusing Tehran of having an active nuclear weapons program or of having diverted uranium to it), according to Reuters, are unlikely to impress China and Russia.

The problem is that sanctions on the Iranian financial and banking sector are already so extensive that the only way to go beyond them is to start a boycott of Iranian petroleum and gas.

But China simply won’t go along with any such policy. In fact, China increased its petroleum imports from Iran in the first half of 2011 by 50% over the previous year. China took 650,000 barrels a day from Iran last June, making the latter the third biggest supplier, following Saudi Arabia and Angola. China also increased its naphtha imports from Iran by 280% over the previous year!

China is now the world’s second-largest petroleum importer, after the United States, and clearly sees imports from Iran as an important part of its energy mix. So China is not voting at the UN to inflict on itself a shortfall of over half a million barrels a day of petroleum

Iran exports about 2.4 million barrels a day of petroleum, of which China imports a little over a fourth.

Moreover, it would not be a good thing for anyone to have a global boycott (essentially a blockade) of Iranian petroleum, since that move would take the 2.4 million barrels a day off the world market and drive prices up to several hundred dollars a barrel.

So it just isn’t going to happen.

(Another significant Iranian export market, India, has been able to pay down its $5 billion in arrears, using the Turkish Halk Bank, and there are rumors that Tehran might turn, or has turned, to a Russian bank as well. India had temporary difficulties in paying for Iranian oil because, at President Obama’s urging, Delhi kicked Iran off the South Asia banking exchange.)

Russia’s Foreign Minister Sergei Lavrov recently issued a stern warning against any use of military force against Iran, cleverly reminding Israel and the US that only self-defense or a UNSC resolution could authorize such an attack in international law, and neither is in evidence.

Iranian foreign minister Ali Akbar Salehi attended the summit of the Shanghai Cooperation Organization, which groups China and Russia with four Central Asian states. Tehran is seeking to move from observer status to being a full member.

The SCO may prove a congenial home for Iran. It is an area where the US has little diplomatic clout, and the US is seen as bogged down in Afghanistan.

The new, more pro-US International Atomic Energy Agency is willing to speculate about Iran’s nuclear enrichment program in a way that Mohammed Elbaradei never was. I have argued that Iran is seeking “nuclear latency” or the “Japan option,” that is, it does not want to now construct or store a nuclear warhead. Rather, Tehran wants the ability to construct a nuclear warhead in a short period of time if it became necessary to deter an invasion of the sort the US inflicted on Iraq. If Iran actually constructed a nuclear device and detonated it, the action might well produce North Korea-style sanctions and isolation. But latency has almost the same deterrent effect, and is much less costly in global political capital.

21 Responses

  1. I read recently that the Shah also talked about building nuclear weapons, so this is nothing new regarding Iran. My question is whether they signed the Nuclear Non-proliferation treaty? If they did, are there any special sanctions attached if they violate it? I recall Saddam Hussein and Qaddafi signed it and violated it anyway. Israel and India never signed it so it can’t be said they were misleading anyone.

    • I recall Saddam Hussein and Qaddafi signed it and violated it anyway.

      You recall wrong. Osirak was a publicly known reactor of a type with nearly no weapons potential. Saddam Hussein never diverted fissile material to a weapons program, and all of the uranium in Iraq was exactly where Iraq had told the IAEA it was all along.

      Gaddafi also never diverted fissile material to weapons. Neither Iraq, Libya or Iran ever were as close to making a weapon or could make them as quickly and easily as Japan, Brazil, Germany or Canada could today.

      Simply put, the United States is committed to a different standard for access to nuclear technology for countries that could break Israel’s regional nuclear monopoly.

      You, like most casually informed Westerners, have been subject to a decades-long campaign of lies told on Israel’s behalf.

      If Brazil, Japan or Canada were located where Libya, Iran or Iraq is, with the same exact nuclear policies & programs, Barack Obama would present any of them to you as the world’s greatest threat to humanity. And he’d lie to you about why.

      Democrat or Republican, the US commitment to Israel forces the US political system to engage in this deception.

  2. Juan: Some more explanation would be helpful.

    I don’t understand international banking (or national, either: what’s a bank doing with credit default swaps anyhow?) but — as to Iran — I wonder:

    Why doesn’t Iran sell its oil for Yuan (Chinese currency) and begin the movement away from the dollar as the international exchange mechanism for oil? Could they? Would China like that? Can Iran easily spend dollars? Would such a step take them out of the web of banking institutions controlled by the USA?

    • 1. it was OPEC in ’71 that decided to denominate all oil sales in US $, in effect replacing Bretton Woods and gold that year. Iran is an OPEC member, so ditching the US $ might be a problem there.

      2. China has been propping up the US $ and driving down the yuan for years so we can keep buying cheap Chinese crap so we can survive on the falling wages Wall Street allots us. If the Chinese let the $ fall to its real value, their holdings of hundreds of billions of US $ in Treasury bonds and other forms also collapses, leading to panic and anger among the Chinese population. But the same thing happens if they sell those holdings. See, we’ve trapped them just like we’ve trapped the Japanese and Saudis before them.

  3. But latency has almost the same deterrent effect, and is much less costly in global political capital.

    What you’re describing as latency is also legal. It is a status held by dozens of other countries that Israel does not consider adversaries or potential adversaries.

    Preventing Iran from reaching a technological threshold that Japan, Brazil, Canada, Germany and many other countries have reached requires constantly and blatantly lying about many legal and technical aspects of Iran’s nuclear program.

    Barack Obama and Yukiya Amano are willing to tell these lies as part of the Western campaign to ensure that fewer than 6 million Jewish people remain in a dominant position over more than 400 million non-Jewish people in their region.

    Deception and distortion about Iran’s nuclear program is but one of the costs of ensuring a majority Jewish state in a region where a majority of people, given the option, would choose for there to be no set-aside majority Jewish state just as the people of Southern Africa chose for there to be no set-aside majority White state in their region.

  4. China and Russia may continue supporting the Iranian Islamic republic as a policy of containment against the United States. However, recent financial situations have put Russia and China in vulnerable positions. Any more instability will empower the US government even more as credit will dry up for all others. The question is if China and Russia have realized that already the live body of the Islamic republic is less valuable for them that its dead one.

    • You claim that “recent financial situations have put Russia and China in vulnerable positions”. You must not have noticed that the recent G20 meeting begged the Chinese to rescue the Euro. link to latimesblogs.latimes.com

      China, holding all the cards, has not yet agreed.
      Russia, with significant petroleum resources, can only benefit from any action that disrupted Iranian oil supplies.
      Only the fact the the dollar is the world’s reserve currency is keeping the US deficit economy afloat.

      Q- might I suggest some reading some financial news? I prefer the Economist, but The Wall Street Journal with it’s loony editorial page or any newspaper business page might help.

      • By US deficit economy I meant mainly trade deficit, not just government budget deficit.

      • China’s economy is over extended beyond the point of no return. Russia, exactly, is hostage to the oil prices and under the mercy of world’s ailing banking system.

  5. So a mike was alledgedly left on by accident in which Sakorzy was heard by reporters telling Obama that Netenyahu was a lair in addition to some other carp. It takes one week to get reported. I wonder if that was one week to get reported in the US. In anycase and more importantly I wonder if it really was just an accident that the mike was left on and these comments were comments that the public was not supposed to hear. It seems like an awfully convienient or inconvienient coincidence.
    I just want to remain ananomouse.

  6. Too bad that through most of our species’ presence here, we the people have not figured out a way to keep the netan-yahooos and Cheneys and Ahmacrazybads and Qadaffyducks from “rising to the top.” Along with the endless stream of Brass and profit-seekers and camp-followers and imperial-court sycophants and High Priests of one stripe or another.

    Too bad our collective powers of “innovation” can’t come up with something other than a bunch of different ways to bump uranic atoms hard enough to release all that pent-up binding energy. link to hyperphysics.phy-astr.gsu.edu Or stick a Hellfire or Scud or Shavit where the sun don’t shine.

    So we have all these convoluted stratagems, this Game of RISK! played by exotic, inaccessible, sneaky, subtle, sophisticated people who have not a clue or care about the possible range of behaviors of the game pieces or more than an extractive interest in the nature of the game board, and not a whit of empathy or fellow-feeling for the little tribalists who slave away making the wealth that gets skimmed to fund all those self-perpetuating, potentially mostly negative-sum, power plays and projections. So spme of us can believe that “China is holding all the cards…”

  7. Given the hyper-cynical foreign policies followed by China and Russia – support of Gadaffi in Libya and Assad in Syria – this is hardly a surprise. In any event, this issue shouldn’t get dismissed as mere sabre-rattling. Reuters’ sources understated the extent of the report (Make up your own minds here: link to graphics8.nytimes.com )

    The report raises many suspicions about the repeated protestations by Iran’s regime about its supposedly limited ambitions for tap nuclear technology for the nation’s energy needs. In 2003, Bush opponents correctly seized upon the IAEA warnings to point out the weaknesses in the White House’s arguments. Let’s be consistent here and apply the same standard. The IAEA is raising a serious warning here. To dismiss it out of hand would be wrong-headed.

  8. Even when attacked with WMDs by Iraq, Iran did not retaliate with its own chemical weapons.

    So what use would nuclear weapons be if they refuse to even use chemical weapons ?

    • Again, I’m being cautious here. Let’s not jump to conclusions. But the situation bears watching. Iran may not “go nuclear” on an opponent in a future conflict. Then again, it’s hard to predict who would be running the show – is it Ahmadenijad? Is it Khamenei? Is it the military? And what would their calculations include if the target were Israel? Would they be tempted? Would they be swept up in the moment? Or would cooler heads prevail and would they understand the implicit threat of American retaliation? Given their history, Iran probably would not use WMD in a conflict. But “probably” is an awfully thin reed to lean on. I would prefer that Iran abandon its nuclear ambitions – along with every other state in the region. Just because the US and USSR managed to last decades w/o blowing each other off the face of the Earth doesn’t mean others will be so lucky.

      • john caddidy
        “Just because the US and USSR managed to last decades w/o blowing each other off the face of the Earth doesn’t mean others will be so lucky.”

        Others are not that stupid to wipe each other off the face of the earth.

        If Sadam had the Bomb, a million Iraqi’s would not have been killed by telling lies upon lies by the axis of three evils.

        The only way out in the present situation without having a nuclear capability if China also anchors its aircraft carrier with nukes at Bandar Abbas or any other Iran port. It is not that only USA & the west has its interest in the region, China’s interest is also growing in the same region by the day.

  9. […] Juan Cole says the international community is running out of options: The problem is that sanctions on the Iranian financial and banking sector are already so extensive that the only way to go beyond them is to start a boycott of Iranian petroleum and gas. But China simply won’t go along with any such policy. […]

  10. It was recently reported that Israel had test fired a nuclear warhead carry long range missile capable of hitting Iran!!

    My question is why would they want to lob a missile onto a large country such as Iran, knowing full well there’s going to be retaliations?

    Could it be that the curiously, lack of retaliations from Iraq and Syria when they were bombed, has served to embolden the Israelis to do the same in Iran, with complete impunity?

    What if the Israeli population forms the belief that they are no longer safe living in Israel because of their own strikes – due to potential retaliatory acts from Iran, and start to pack up and relocate to the USA, leaving Israel with alot of empty houses?

    • …– due to potential retaliatory acts from Iran, and start to pack up and relocate to the USA, leaving Israel with alot of empty houses?…
      That works.

  11. —“My question is why would they want to lob a missile onto a large country such as Iran, knowing full well there’s going to be retaliations?”—-

    As retaliation, PiaP

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