China’s Iran-Oil Import Angst – Part II: 2012 Following 2010 Script

Misinterpretations of China´s Opposition in 2010 and 2012

(Continued from Monday, 13 Feb 2012) The last time the Obama Administration wanted new sanctions on Iran, in 2010, Beijing started out loudly opposed, threatening to block the sanctions at the U.N., something Beijing had never before seriously threatened.

President Obama thanked Vice Premier Xi for China's support on Iran oil sanctions. NYT photo by Doug Mills, 14Feb12.

Overwhelmingly, observers at that time declared a major nodal point had arrived in the evolution of a new “multipolar world,” that the U.S. had lost its superpower status while China was feeling its new-found strength, was “standing up to the U.S.” and would block U.S. plans to sanction Iran.

At the time, looking at the facts at hand, I objected strongly to this assessment. (See: especially Middle East Economic Survey, and Q&A of this talk at the Middle East Institute Sept. 2009, in D.C.)  In fact, China ended up dropping this public campaign and agreeing to U.S. sanctions. No major confrontation whatsoever ensued.

Thus far, in 2012, China is again coming along, albeit slowly and step-by-step, with what is going to be a much more severe sanctions regime than that of 2010.

And Beijing is coming along for exactly the same reasons it did in 2010: because its objections are not fundamental, they are well-defined business-like worries about its energy security and investments in Iran.  The U.S. precisely knows this, and therefore knows exactly what to do to ‘take care’ of Beijing’s angst over Iran sanctions.

That’s not to say that there won’t be loud complaints or all sorts of give and take between Washington and Beijing; but things seem to be going exceptionally well this time, as compared to 2012. For example, this week, Vice President Xi Jinping, who will likely become China next leader, as its President, is in the U.S. and a bipartisan group of former presidential national security advisers presented Mr. Xi with a petition

“We believe that the value of these sanctions is to encourage the kind of diplomatic breakthrough on Iran’s nuclear activities that both of our nations seek,” read the letter from the security advisers group, the Partnership for a Secure America, based in Washington. “In the context of your historic trip to the United States, we therefore urge you to make clear that China will significantly reduce its imports of oil from Iran, uphold the applicable resolutions of the United Nations Security Council, and use its economic influence with Tehran, coupled with robust diplomacy, to help resolve this issue peacefully.” [Backers of Iran Sanctions Make an Appeal to China By Rick Gladstone, NYT, 13 Feb 2012.]

This might give the impression things are not going well as far as China agreeing to oil sanctions. However, on Tuesday (13 Feb.) Mr. Xi was at the White House, where, first, Vice President Biden has a meeting with Xi where he was tasked with giving him a bit of a tongue lashing on Syria, China’s currency policy and such.  However, according to press reports, Biden did seem to complain at all about China’s policy on Iran.  Moreover, shortly after this meeting, Mr. Xi was in the Oval Office meeting with President Obama.

Some of Mr. Biden’s message echoed  …. The president pressed him on trade practices and China’s currency, as well as on Syria, though he thanked China for its support of sanctions against Iran over its nuclear program. [Ibid, NYT; emphasis added - T.O'D.]

Indeed.  The point here is that, just like in 2010, any Chinese objections thus far in 2012 should not be seen as a fundamental demand that the U.S. not impose sanctions, or that the U.S. not confront Iran over expanding its regional power (via its nuclear program, its conventional forces or whatever).  China is not opposed to this basic thrust of U.S. policy against Iran.

Rather, Chinese objections in 2010 (when they were rather strong) as well as now (when they are much quieter) have been focused on the quite limited demand that, if the U.S. picks a fight with Iran that it do so in what Beijing sees as a “responsible” manner. A responsible manner would include, first, that the U.S. provide Beijing with another source for the oil imports China would lose and, second, that the U.S. guarantee China’s economic interests and investments already in-place inside Iran.  Beijing is simply complaining: “It’s not fair for Washington to start something with Tehran without taking care of our oil security and business interests!”

Washington & Riyadh are taking care of Beijing’s Energy Security Worries

And, indeed, Washington (with Saudi assistance) has a history of taking care of Beijing, and has established a certain reserve of good will in this regard from the last round in 2010 which it can draw upon.

In the previous round, in 2010, the father of modern U.S.-Chinese diplomacy, Henry Kissinger, was even enlisted by the Obama administration to make a trip to Beijing to sort out the arrangements. In the end, the investments that China had made in oil and gas before that round of sanctions were somehow ‘grandfathered in’ (Spanish: tratarlas como derechos adquiridos) in spite of the U.N. Security Council’s June 2010 sanctions.

In a discussion I had with a Chinese diplomat engaged with this issue, before the U.N. vote in 2010, they were really quite nonplussed at the idea that any investments Beijing had made in Iranian oil and gas before the day UN sanctions would take effect should be negatively affected in any way whatsoever, on the argument that those Chinese investments were made before the sanctions were to be imposed, and so, the logic went, must be exempt, else, in his words, “It’s not fair!”

Now, of course, if every country got such an exception, sanctions would be pretty meaningless. However, China has a UN veto (as it demonstrated over Syria recently, in concert with Russia), so, the Obama administration did indeed grant Beijing just such an exception in the 2010 round of sanctions. And, the administration is clearly ready to do something similar again with the 2012 sanctions. President Obama has been left sufficient leeway by Congress in imposing the sanctions to allow quid pro quos with states that have begun seriously decreasing their Iranian oil imports. [By the way, I can't resist asking readers to guess who Mr. Xi met with over dinner on the evening of his first day in D.C., before going to the White House?  Yes, to a dinner with Dr. Kissinger, America's very own Cardinal Richelieu, along with Brent Scowcroft and others. [ibid, NYT 15Feb])

To be Continued. (Part III: Beijing’s Attitudes on Geopolitics as v. on Business Relations, and etc.)

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2 responses to “China’s Iran-Oil Import Angst – Part II: 2012 Following 2010 Script

  1. Pingback: PDVSA ships fuel to Syrian regime: Chavez risks sanctions? | The Global Barrel

  2. Pingback: Oil Prices: Saudi Pumping Surge & US-EU Iran Strategy | The Global Barrel

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