Page 1
of 2 TARGET IRAN,
Part 1 US sanctions send Iran into Asia's
arms By China Hand
From
a Western-centric point of view, the United States
and its allies are pushing Iran into a corner in
its efforts to rein in what Washington considers
Iran's move towards becoming a nuclear power. A
broader perspective would indicate that we might
simply be driving Iran into the arms of Asia.
On March 24, Iran's official media
reported that Iran will apply for full membership
in the Shanghai Cooperation Organization (SCO),
headed by China and Russia and containing a
fistful of continental Asian states.
Connoisseurs of irony will find fodder in
Iran's reported appreciation of the SCO's goals of
"anti-terror, anti-extremism, and anti-splittism"
as well as its discovery of the deep cultural
affinity between Iran and Asia. But consider this:
The two largest customers for Iranian oil are
China and Japan.
China has surpassed Germany as Iran’s biggest
trading partner.
The main market for Iran's gasoline purchases
has switched to Singapore.
The main investors in Iran's energy industry -
led by China - are all Asian.
In a
development that may involve substance as well as
symbolism, China will host the next round of G5+1
(UN Security Council members plus Germany) talks
in Shanghai on April 16 concerning Iran's nuclear
program. China's Assistant Foreign Minister for
the region, Zhai Jun, visited Tehran on April 9,
presumably to give the Iranian government a heads
up on China’s position going into the G5+1
conference.
Iran's Foreign Minister
Manuchehr Mottaki took the opportunity of Zhai's
visit to lobby for "an Asian union" including Iran
and China, presumably a step even beyond
membership in the SCO.
If Iran's state
media is reporting Zhai's remarks correctly, China
is not spurning Iran's advances: Zhai said that
China is prepared to cooperate with Iran in the
area of key industries such as oil and gas.
"Iran’s growth of power in the region and the
international arena is to Beijing's interest," he
stated.
Iran’s rediscovery of its Asian
side - and its turn away from Europe, which has
long served as a focus of Iranian aspirations,
economics, and diplomacy - is the most important
and perhaps least expected consequence of the
network of national financial sanctions that the
Bush administration has labored to pile atop the
toothless UN sanctions against Iran.
American efforts to isolate Iran through
the international financial system provide an
object lesson in the iron law of unintended
consequences. Instead of briskly destroying the
Iranian Death Star with the help of the US
coalition of the willing, the Americans appear to
be engaged in global whack-a-mole, with a
continuously expanding supply of holes and moles,
and Uncle Sam demanding more and bigger hammers so
he can win the game.
The United States has
devoted immense efforts over the past two years to
achieve international adoption of what is
essentially a US national sanction regime that
goes beyond the global consensus reflected in the
UN Security Council resolutions. The results have
been, at best, mixed.
In its last year in
office, the George W Bush administration has
apparently embarked on a risky path to escalate
its way out of the difficulties, contradictions,
ambiguities - and perceived ineffectiveness that
dog its Iran sanctions policy. As the US is well
aware, the sanctions chain is only as strong as
its weakest link. Aside from the United States,
Israel, the UK, and France, it has weak links all
the way across. One of the weakest links is, of
course, China.
China is a major trade and
energy partner of Iran, and has labored
consistently to limit and dilute UN Security
Council sanctions against Iran for its
uranium-enrichment related activities. As a
result, to US frustration, Security Council
sanctions remain highly targeted, directly
addressing individuals and organizations involved
in enrichment activity, and specifically preclude
military action.
There were attempts in
the Western press to present the latest Security
Council vote (14-0 with Indonesia abstaining) as a
sign of united world resolve to pressure the
Iranians for refusing to give the IAEA the answers
it wants about its allegedly abandoned weapons
program, or suspend uranium enrichment. However,
the Chinese quickly went on the record to counter
the Western interpretation with its own.
Courtesy of Xinhua, here’s what
Chinese-language coverage had to say (translations
by China Matters):
The resolution emphasized diplomatic
efforts, resumed dialogue and negotiations with
Iran ... balance between sanctions and
encouragement of negotiations. There are
strict limits on targets of sanctions ...
sanctions are "reversible", temporarily or even
permanently if Iran takes positive steps to
implement the Security Council
resolution. Different countries have
different interpretations of the resolution ...
roots [of deadlock] are in the severe lack of
mutual trust between the United States and Iran.
If this problem is not resolved, then there will
be no breakthrough on the Iran nuclear
question.
In other words, there is no
support for meaningful international sanctions
that would pressure the Iran regime.
Call for vigiliance In the wake
of this less than decisive outcome at the United
Nations, the US Treasury Department, exploiting a
generalized call in the resolution for "vigilance"
regarding financial dealings with Iran, announced
a broadening of national measures against Iran on
March 20.
From the Financial Times: "The
[US] Treasury department has issued a warning of
the risks of doing business with 51 state-owned
and seven privately held Iranian banks - in effect
the whole of Iran’s banking sector. The list
includes institutions specializing in export
financing and foreign investment, as well as
Iranian state-owned banks located as far away as
Venezuela, Hong Kong and the UK."
The
prospect of the United States implicating the
entire Iranian banking sector as an accessory in
terrorist financing and proliferation, thereby
cutting it off from the Western financial system,
is a source of real anxiety for Iran.
However, the looming US sanction also
looks like an attempt to deal with the unintended
consequences of its financial campaign against
Iran: Iran’s abandonment of the dollar and total
disconnection from the US financial system in
Iran’s economy, coupled with the wholesale shift
of Iranian trade and finance away from the United
States, first to Europe and now to Asia.
The Asian trend is symbolized by the
announcement of Iran’s oil minister this January
that, following successful negotiations with
customers in China and Japan, the entirety of
Iran’s energy sales - over $50 billion per annum -
are now conducted in euros and Japanese yen, and
none in US dollars.
Sometimes it looks as
if the United States, and not Iran, is getting
boxed into a corner. America’s difficulties can
best be illustrated by looking at the intertwined
cases of Germany and China. Depending on how you
look at it, Germany is either the keystone - or
the weakest link - of the US campaign to isolate
Iran, insofar as maintaining a European united
front against Tehran is concerned.
Here’s
how Der Spiegel reported the situation in July
2007: "But the US government is no longer content
with United Nations economic sanctions on Tehran -
Washington wants more ... American officials are
irked that German companies are still doing
business worth billions with Tehran. In
particular, Washington has little understanding
for the export guarantees Berlin still offers
firms, effectively helping the mullah regime to
buy new ships and power plant technologies.
"[The Treasury Department’s Deputy
Secretary for Terrorism and Financial Intelligence
Stuart Levey] demanded Germany cut its so-called
Hermes export credit insurance coverage when it
came to deals with Iran ... Levey told the
officials that Washington wanted Germany to scale
back all of its other economic ties with Iran as
quickly as possible.
"But Levey ran into
resistance from the Germans, who said his demands
were understandable coming from a country that has
no trade with Iran. Germany, however, exports more
than 4 billion euros (US$5.45 billion) in goods to
the country each year, creating thousands of jobs
... Besides, explained the Germans, the Hermes
cover has been excluded from UN sanctions against
Iran. In short, Levey could forget his request -
Germany would stick to the UN resolutions, but
would do no more.
"The United States did
not take no for an answer. The US was also not shy
about going around the [Angela] Merkel government
to go directly to Germany’s financial institutions
and lean on them to follow US policy regardless of
what their government’s official position was -
something the Merkel government most certainly
resented."
Again from Der Spiegel: "And
Levey hasn’t just been knocking on the doors of
government ministries while in Europe - he’s also
been visiting the continent’s captains of
industry. While in Germany he went to the
country’s financial center, Frankfurt, to try to
persuade the bankers there not to do business with
Iran. German financial institutions feel the
United States government has been engaging in
'downright blackmail', according to one banker.
Anti-terror officials from the US Treasury are
constantly showing up to demand they cut their
traditionally good relations with Iran. The
underlying threat from the men from Washington is
that they wouldn’t want to support terrorism,
would they?
"But there are no plans to
stop financing German exports to Iran. 'Of course
our member institutions respect all sanctions set
out in the UN resolutions,' says a spokesman for
the Association of German Banks. However, that
didn’t stop Deutsche Bank, along with German
industrial heavyweights BASF and Siemens, from
being put on a list by the US Securities and
Exchange Commission (SEC) for having contacts with
Iran."
Business continues German
attitudes toward the sanction regime are clear
from another Spiegel article:
[T]he economics department of the
German Foreign Ministry has collected revealing
data which [German Foreign Minister] Steinmeier
will use to back up his argument against EU
sanctions. Several French companies in the
automobile, energy and financial sectors -
including Peugeot, Renault, Total, BNP Paribas
and Societe Generale - have hardly reduced the
level of business they do with Iran, according
to the Foreign Ministry data. German exports to
Iran, in contrast, have dramatically declined.
Even more explosive is the data that
reveals US hypocrisy over sanctions. The German
Foreign Ministry accuses American firms of
bypassing the boycott against Iran, which has
been in place since 1979, by creating front
companies in Dubai to carry out their business.
German politicians have long internally accused
the United States of knowingly tolerating the
practice. Microsoft software is present in Iran,
as is Caterpillar heavy equipment. And it's
difficult to overlook the presence of brands
like Pepsi and Coca-Cola in
Tehran.
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