Sunday, October 10, 2010

While the US keeps sanctioning, relations between China and Iran thrive

Beginning of July, Barack Obama threatened (and approved) the “toughest” sanctions ever passed by the Congress against Iran, in order to make it difficult for the country led by President Mahmoud Ahmadinejad to buy refined petroleum as well as goods and services from foreign companies to modernize its oil and gas sectors.

Although Obama announced that the door of diplomacy would stay open, the United States has always rejected any attempt that its Iranian counterpart has made to enter into a reasonable dialogue, since 2003 up to the last UN conference, when the US President, once again, ignored Ahmadinejad's efforts to an official meeting during his visit to the States.

Despite Ahmadinejad's reiterated statements that Iran's nuclear program has only peaceful purposes such as producing electricity, the United States and the European Union approved the sanctions additionally targeting Iran's financial, insurance, transportation and energy sectors, penalizing the companies supplying the country with gasoline.

According to such punitive measures, foreign banks that would do business with Iranian banks will not be allowed to access the American financial system, and the same applies to companies that would provide Iran with gasoline.

Now it's China's turn to be sanctioned. Last week the U.S. House of Representatives passed the Currency Reform for Fair Trade Act aimed at penalizing any country with an “artificially weakened” currency, clearly referring to the Chinese Renminbi, allowing the imposition of trade sanctions on China.

“It is untraditional for trade sanctions to be imposed on a country by the U.S. Government due to currency policy,” said David Besanko, economist and professor at Northwestern University, in an interview with Chinese News Agency, Xinhua. “It is counterproductive and if we are not careful it will lead to trade conflict with China,” he added.

This has had the rather obvious consequence of making relations between Iran and China thrive, while the United States, persisting in their aggressive policies, keep drifting away from productive relations with an increasing number of countries.

According to Al Manar Agency, President Mahmoud Ahmadinejad has announced that the two countries “could raise their trade volume to 100 billion USD within five years and invest up to 200 billion USD.”

While senior official of the Communist Party of China, Li Changchun, has been promoting stronger ties between China and Iran in order to face the “common enemy of imperialism,” Mr. Ahmadinejad endorsed a boost in the cooperation between China and Iran in order to “prevent the enemies from creating obstacles in the way of the development of the two countries.”

Although in July only Brazil and Turkey voted against the sanctions against Iran, China has now strongly condemned any aggressive approach to the nuclear issue and encouraged instead all possible diplomatic efforts. Criticizing America's policy of using military power in order to impose its will on global affairs, Li stated that "China is strongly against unilateral sanctions and pressure [exerted] by Western countries and the United States on Iran over its nuclear case," highlighting the importance of adopting counter-strategies.

In addition to stronger relations with Iran, China keeps strengthening its ties with Russia and the Gulf countries, that seem more willing to take the risk of being banned from doing business with US companies, than respecting the latest sanctions. Namely, while Democratic Senator Chuck Schumer and Republican Senator Jon Kyl urge Secretary of State Hillary Clinton to support penalties against Chinese and Turkish companies that are undermining the effectiveness of the sanctions by providing Iran with refined petroleum products, China and Russia are celebrating the building of the oil pipeline that represents the largest project so far between the two countries, and Beijing keeps expanding its diplomatic, economic and security interests in the Middle Eastern region, being Saudi Arabia China's largest oil supplier, and Iran China's third-largest supplier of oil.

As early as last week, Tehran has reportedly opened its airspace to Chinese warplanes in order to conduct joint military exercises with Turkey, following the drills Ankara and Beijing had been carrying out in Central Anatolia within the Anatolian Eagle maneuvres that saw the participation of the US and other Nato members too.

The US-backed sanctions against Iran don't seem to have been very effective so far inasmuch as many companies, especially in West and East Asia, are still carrying out profitable business with the Islamic Republic. Among the firms that are not abiding by the international sanctions are the European Shell, Total and Api. According to Italian News Agency FocusMO, in fact, Shell has bought from state-run National Iranian Oil Company at least 1,5 billion USD of crude, increasing its purchase from Iran by the 25%.

Similarly, the French Total has increased its investments by the 12% and the Italian Api has bought a further 70% of oil. Such businesses are made possible by the banks that are still accepting payments between foreign companies and Iran, among which there is the Italian financial institute Intesa-Sanpaolo, that has been so far refusing to block the transactions despite the sanctions.

At this juncture, one might wonder whether the US-backed sanctions against the Islamic Republic of Iran are having any result other than contributing in isolating the United States themselves within the landscape of global affairs.

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