Page 1 of 2 Iran keeps China in a chokehold
By Yitzhak Shichor
Over the past few weeks, Iran has amplified its threats that, if attacked, it
would immediately close the Strait of Hormuz, a strategic chokepoint nestled
between the Gulf of Oman and the Persian Gulf.
Iranian Revolutionary Guards Corps commander Mohammad Ali Jafari has warned, in
no uncertain terms, that if attacked "one of [Iran's] reactions will be to take
control of the Persian Gulf and the Strait of Hormuz". He added, "[our]
capabilities in these crucial naval passages are so extensive that, in the case
of an attack, not only the enemy but also all those who assist him will no
doubt sustain [considerable] harm."
If Iran takes control of the Strait of Hormuz, the price of oil will spike
considerably, said Jafari.
He also recently said that the strait is within the range of Iran's
weapons and could easily be blocked for an unlimited period of time, while
Hassan Firouzabadi, chief of staff of Iran's Armed Forces, has insisted, "If
the country's interests are jeopardized … we will not let a single vessel pass
through the strait."
Expressing alarm, Persian Gulf governments led by Qatar have launched a series
of consultations in anticipation of the blocking of the strait to guarantee the
continuation of oil export - for which emergency plans had already been
drafted. A Saudi editorial headlined Closing Hormuz: Iranian Suicide warned
that blocking the strait would not only upset the United States but would turn
the entire world into a united front against Iran.
Hormuz is by no means a new vista for China. It was mentioned in Yuan Dynasty
sources and visited by Admiral Zheng He's naval expedition in 1412-13 and
1430-31. At least four Hormuz diplomatic missions came to China [1]. The History
of the Ming Dynasty says: "The country of Hulumusi [Hormuz] is situated
on the utmost border of the Western Sea. The trading vessels of the southern
barbarians come thither, and the nations of the Great Western Sea, as well as
the merchants of the Xiyu [Western Asia] meet for commercial purposes."
Today's China is one of them. Heavily dependent on Persian Gulf crude oil
imports and maintaining friendly relations with all parties involved, Beijing,
however, has not yet officially responded to Tehran's threats [2], though
undoubtedly it has been making its own preparations.
Following the US-Iran naval incident in the Hormuz Strait earlier in the year,
Hua Liming, former Chinese ambassador to Iran, told China Daily: "Neither
Washington nor Tehran seems to have a political will strong enough for a
military showdown in the Persian Gulf in the near term."
This issue was not raised publicly during President Mahmud Ahmadinejad's recent
meeting with Hu Jintao during his one-day visit to China on September 6. This
was their third meeting, Ahmadinejad’s second visit to China and his first to
Beijing. The Iranian president's stay was cut short by half and a scheduled
press conference was cancelled - no reason was given.
Using very general terms, Hu Jintao said that the two countries "would
strengthen international cooperation and jointly safeguard regional and world
peace and stability". Before his departure Ahmadinejad said in a reserved tone
that "good decisions" had been made; that the prospects of economic relations
are "good"; and that bilateral relations have been "satisfactory".
Beijing did not demonstrate much enthusiasm about Ahmadinejad's reelection, has
endorsed UN Security Council sanctions against Iran, and failed to support
Iran's admission to the Shanghai Cooperation Organization (SCO) - despite its
"dependence" on Iran's oil.
Growing, yet limited, dependence
China's oil imports vary considerably not only from year to year but also from
month to month. Yet the overall trend is clear: the Persian Gulf is a major
source of Chinese crude oil and in the long run China will likely become even
more dependent on this region for its energy needs than it is today.
The reason is that while Beijing has been attempting - albeit unsuccessfully -
to diversify its external oil resources - which are currently spread all over
the world - many of these resources are forecasted to dwindle and dry up within
the next two to three decades, while the same cannot be said of the supply in
the Persian Gulf.
According to most recent estimates, oil reserves of the Persian Gulf countries
account for nearly 56% of the world's total and, at current output levels,
assure continuous supply for 80 to 110 years [3].
In May 2008 nearly 30% of the world's total crude oil was produced behind the
Hormuz Strait, with the main producers being Saudi Arabia (with 9.4 million
barrels per day [bpd] or 12.62%); Iran (4 million bpd, 5.38%); the United Arab
Emirates (2.7 million bpd, 3.64%); Kuwait (2.6 million bpd, 3.5%); Iraq (2.5
million bpd, 3.3% and Qatar (938,000 bpd, 1.26%) [4]. Some of this oil goes to
China.
China's oil imports have been growing steadily, well above GDP growth. In the
first quarter of 2008 China imported 44.95 million tons of crude oil, up 14.9%
over the same period last year, while GDP growth lagged behind with "only"
10.6%. In 2007 China's crude oil imports rose 12.4% compared to 2006.
At present, around one-third of China's oil imports flow through the Hormuz
Strait. In the first half of 2008 (January-June), 29.75% of China's oil import
came from Saudi Arabia (656,000 bpd, 17.92%) and Iran (433,000 bpd, 11.83%)
[5]. Much smaller amounts came from other Persian Gulf countries.
When weighed against the rapid expansion of China's international economic
relations, the share of the Persian Gulf in China's foreign trade is quite
modest, though steadily increasing: in 2006 it reached a little over 3% of
China's trade turnover, or nearly 4% of its total imports, mostly crude oil.
Much more heavily dependent on Persian Gulf oil, other Asian countries such as
Japan, Taiwan, South Korea, India and Singapore obtain a much higher share of
their oil through the Hormuz Strait.
Almost two thirds of the oil traffic in the strait is directed at Asia. Of
about 17 million bpd shipped through the Hormuz Strait, 16% goes to Europe, 11%
to the United States and 66% to Asia. China is by no means the most important
customer.
In 2007 Japan accounted for 17.7% of Saudi Arabia's export, the Republic of
Korea 9.1% and China for only 7.2%. Taiwan and Singapore accounted for 4.7% and
4.5% respectively, according to the US Energy Information Administration.
Put differently, the share of Japan in Saudi trade, and consequently its
vulnerability to trade disruptions, is nearly 2.5 times greater than China's.
Japan imported 90.3% of its oil from the Middle East in July, of which 82.6%
was from suppliers that use the Hormuz Strait: 31.03% from Saudi Arabia, 30.96%
from the UAE, 15.89% from Qatar, 14.33% from Iran and 7.79% from Kuwait.
China's Iran connection: Oil and arms
China's limited reliance on Persian Gulf oil relative to the other Asian
economies in spite of the region's strategic significance, as well to its
overall international economic relations, is one reason for Beijing's
reluctance to flag the Hormuz Strait as an issue. Other reasons include the
fact that China does not want to jeopardize its economic benefits and political
advantages.
Despite Iran's threat to prolong the conflict, its capability to cork the
Hormuz bottleneck is limited and expected to be relatively short, say analysts.
"Iran could not 'close the Gulf' for more than a few days to two weeks" [6].
China, hypothetically, could withstand such an interruption, given the buildup
of its four strategic oil reserves that are expected to become operational by
the end of this year. With a total capacity of 16.4 million cubic meters (or
around 100 million barrels) they account for three months of Persian Gulf oil
supply to China - or about one month of total supply.
The Chinese undoubtedly prefer to conceal the fact that some of the weapons
that Iran and its Revolutionary Guards deploy along the Hormuz Strait, and that
are planned to be used for enforcing its closure, are either made in China or
based on Chinese technology sold to Iran.
Estimated at $4.483 billion - or 31.7% of the total - from 1979 to 2007,
China's arms sales to Iran are second only, and very close, to the former
Soviet Union and Russia which provided Iran with $4.967 billion of weapons - or
35.1% of the total [7].
These exported Chinese arms include the following anti-ship cruise missiles and
technologies for license production: the YJ-8 Sardine, Iran's derivation:
Kosar; the Saccade, Iran's derivation: Noor; the TL-10, TL-10A and possibly
TL-10B version; and the TL-6 and YJ-7 [8]. With a range of between 40 and 120
kilometers these weapons could cover the entire area of the Hormuz Strait.
China began to supply Iran with anti-ship missile in the mid 1980s during the
Iran-Iraq War. Consequently, HY-2 missiles (also known as Silkworm, Iran's
derivation: Raad) were deployed at Larak Island and at Kuhestak, covering the
narrow bend of the Hormuz Strait.
It is estimated that about ten HY-2s were fired by Iran before a ceasefire was
enforced on August 20, 1988. Still, most of them were fired at Kuwait (from the
Fau Peninsula seized from Iraq) -
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