China-Iran tango threatens US
leverage By Antoaneta Bezlova
BEIJING - After a week of intense bargaining,
Iran has again agreed to suspend its uranium enrichment
program to avert United Nations sanctions, further
undermining US-led international efforts to curb
Tehran's nuclear capabilities. And with the emergence of
an ever-stronger partnership between China and Iran,
Washington's woes are far from over.
This was
clearly evident when Seyed Hossein Mussavian, Iran's
envoy to the United Nations nuclear watchdog, the
International Atomic Energy Agency (IAEA), visited the
Chinese capital on the eve of an IAEA board meeting last
week to review an investigation of suspect Iranian
activities.
The United States contends that Iran
is trying to develop nuclear weapons - an accusation
that Tehran denies, insisting its nuclear ambitions are
for peaceful purposes.
According to Mussavian,
Chinese Foreign Ministry officials told him that Beijing
wants to see Iran's nuclear program handled by the
Vienna-based IAEA. "They are against referral of the
Iranian issue to the Security Council," he told news
agencies. Iran could face sanctions if the investigation
is turned over to the UN.
But in agreeing to a
comprehensive suspension of all nuclear activities that
could yield fuel for nuclear weapons on the weekend,
Iran has bought itself more time. The agreement itself
was due to be presented to the IAEA on Monday. Under the
terms of the deal, Tehran pledged to suspend all
activities related to plutonium reprocessing and the
enrichment of uranium, a process which can be used to
create nuclear weapons.
In return, France,
Britain and Germany - the European Union's so-called
"Big 3" - have offered a package of economic and
political carrots, including a promise to build a
light-water nuclear reactor.
Iran last week
threatened to derail the entire deal by requesting that
20 uranium enriching centrifuges be exempt from the
bargain. Under intense international pressure, Tehran
withdrew the demand.
How China's energy
hunger safeguards Iran Regardless of the deal,
the success of any UN action against Iran hinges on
Beijing's support, as it is one of five permanent
members of the UN Security Council with veto-yielding
power. And China, which has longstanding ties with Iran,
just happens to be searching for new energy reserves to
drive its booming economy.
Iranian Petroleum
Minister Bijan Zandaneh told China Business Weekly
recently that Tehran wants China to replace Japan as the
biggest importer of its oil and gas. "Japan is our No 1
energy importer due to historical reasons, but we would
like to give preference to exports to China," Zanganeh
commented during his visit to Beijing in late October.
Earlier this month, Chinese Foreign Minister Li
Zhaoxing, who has just crowned a year of negotiations
between the two countries, paid a rare visit to Tehran.
In a meeting with Iranian President Mohammad Khatami, Li
said Beijing would oppose US efforts to refer Iran to
the UN Security Council over its nuclear program.
The Chinese foreign minister also told Khatami
he had discussed Iran's nuclear issue with US Secretary
of State Colin Powell and British Foreign Secretary Jack
Straw, and made it known to them that Iran was
cooperating well with the IAEA. According to Li,
referring Iran to the Security Council would only make
things more complicated.
While commercial
contacts between Beijing and Tehran are at the core of
the relationship, and are set to grow significantly,
wider geopolitical elements are also coming into play.
Russia, India and other states may be encouraged to
break ranks on the nuclear issue if they see China
profiting from a strategic relationship with Iran.
Japan, which is even more reliant than China on
oil imports, might be unwilling to cede its share of
Iran's resources to Beijing and would likely resist US
pressure to punish Tehran for nuclear proliferation.
There are indications that Tokyo might oppose
Washington's efforts to apply sanctions in a bid to
force foreign companies to pull out of Iran's oil
fields.
China, which has become the world's
second largest oil importer over the past decade,
currently gets 13.6% of its oil imports from Iran.
Beijing has said it also wants to step up imports of
Iran's natural gas. Trade between the two countries hit
a record US$4 billion in 2003 - with Iran exporting
crude worth $2.5 billion to China. "As China's
booming economy has turned the country into one of the
biggest oil consumers in the world, Iran - as OPEC's
[Organization of Petroleum Exporting Countries']
second-largest crude oil supplier [after Saudi Arabia] -
can only be a natural partner for China," Zanganeh told
China Business Weekly.
Iran has an estimated
26.6 trillion-cubic-meter gas reservoir, the second
largest in the world. One of China's four major state
oil companies - the Sinopec Group - is being invited to
prepare a master plan for the development of the giant
Yadavaran gas field. This means a comprehensive
development, including exploration and drilling,
petrochemical and gas industries, pipelines and other
services.
In return, Sinopec Group will buy 250
million tonnes of Iranian liquefied natural gas over 25
years. The deal, outlined in an October 28 memorandum of
understanding between the two sides, is the largest Iran
has signed since 1996. The Yadavaran deal could well be
worth between $70 billion-$100 billion and could help
propel Sinopec into the ranks of the world's major oil
players.
In the long term, Beijing also hopes to
secure a pipeline project in Iran taking oil 386
kilometers to the Caspian Sea where it could link with
another planned pipeline from Kazakhstan to China.
For its part, Tehran is turning to China to
build motorways and underground railway lines in the
Iranian capital. After completing the first stage of the
Tehran Metro, China North Industries Corp (NORINCO) -
Beijing's military-run industrial and trade conglomerate
- will build a second line in a contract worth $836
million.
NORINCO beat Germany's Siemens and
South Korean bidders for the 19-kilometer link and will
be the top contender to build four other planned lines,
including a 30 kilometer track to the airport.
Meanwhile Iran's increasing appetite for
consumer goods is bound to provide huge opportunities
for Chinese companies eager to expand overseas. For
example, China's home-grown automakers' initial foray
overseas took them to Iran where Chery Automobile Co Ltd
opened its first overseas production plant in the
country in February 2003. Today, the plant manufactures
30,000 Chery cars annually.
China and Iran are
currently cooperating on 100-odd different projects,
according to diplomats.
The economic ties
between two of Asia's oldest civilizations will have
broad political implications for the United States.
Beijing's inroads into Iran's energy sector will hamper
US efforts to keep Tehran under pressure through the
economic embargo imposed in April 1995 under then
president Bill Clinton and the subsequent Iran-Libya
Sanctions Act in August 1996, which sanctions companies
that invest $40 million or more annually in oil and gas
projects in Iran or Libya.
US officials are also
concerned that some Chinese firms may be supplying
missile technology and dual-use chemical weapons-related
production equipment. In the past, Washington has
applied sanctions against 13 foreign companies which
have sold dual-use equipment or technology to Iran,
including offshoots of NORINCO.
