America / Europe / Foreign Policy

The Enablers: How China Undermines U.S. Sanctions In Iran

The sanctions imposed against the Iranian regime have had crippling implications on the nation since their enforcement. On Tuesday, the European Union added to the fusillade of sanctions by toughening restrictions on the central bank, and by imposing new ones against major Iranian state companies in the oil and gas industry, including the National Iranian Oil Company (the company imbedded in controversy for decades from the CIA overthrow of Mosaddeq to the Islamic Revolution of 1979).

Such focused restrictions aim to attack Iran at its most vulnerable source of revenue, oil, and statistics support the notion that the sanctions are working. The energy watchdog, International Energy Agency, reports the country produced the lowest amount of oil in nearly 23 years, and reports by the Rhodium Group further add that oil revenues are down 60% since last year. These effects culminate in a currency crisis for the nation: The rial has lost 70% of its value since a year ago, and inflation sits at a heavy 25%.

Even so, the government of Iran remains afloat. If the sanctions were really working, the results would be much more dramatic. Moreover, the volatile fluctuations in currency exchange attack the Iranian people, not the government who wisely holds billions of dollars in foreign accounts. The real issue is to identify the source of the problem: The enablers to the regime. This is one area where the U.S. and Iran share a common characteristic: China is each nation’s biggest trading partner.

No matter where you stand on the issue of sanctions, the attitude towards China should be universal. In June of this year, Secretary of State Hillary Clinton issued a list of 19 countries exempt from the oil embargo against Iran. Inexplicably included on this list was China, who remains Iran’s largest recipient of oil.  This represents a running theme of laxity with the Chinese government that must be reformed significantly.

The basis for the exemption was that China showed a decrease in the importation of oil the previous two months; however, the muddled motivation was simply a negotiating tactic to lower their costs for import. This decrease was clearly oblivious to American interests, and China continues to play by its own rules scot-free. In fact, the importation of Iranian oil increased by 35% in the month following the exemption. In giving away these unwarranted passes, the U.S. government undermines its own policies, and there should be no exceptions to the rule. The government must either fully commit or withdraw altogether because any middle ground serves no purpose in accomplishing anything.

In reality, the effects of the embargo on China would not be dire in any stretch of the imagination. China is the largest importer of Iranian crude oil at 22% of their output last year, but the figure represents just 8.5% of their total imports. Moreover, sanctions by the U.S. and E.U. against oil imports provide only a limited effect. The U.S. has not imported Iranian oil in over three decades, and the collective oil importation for the E.U. for 2011 was 18%. While that is a considerable portion of their exports, an embargo by China would over double the effects of the sanctions.

Greater pressure on China would also have a domino effect for other U.S. interests in the region. For example, Iran has a vested interest in Syria, and is the primary aid to the Syrian government. If you prevent the revenue stream from Chinese purchases, it would hinder Iran’s ability to provide financial support for the Syrian regime. Iran and Syria represent the lone Shia governments in the region, but without financial backing, there is no hope for long-term stability.

In lieu of extending their reach to unstable nations, the U.S. should focus on the country in which it has a direct influence. There is interdependence between the U.S. and China, and it is in China’s best interest to follow U.S.-led policies, especially with their $1.3 trillion investment in U.S. bonds. If the U.S. strengthens its position with China, it will have no other choice but to acquiesce.

The sanctions thus far have had quantifiable results on the Iranian nation, yet there is no sign the nation is any closer to world peace, a domestic revolution or a cease of the nuclear program. The sanctions appear misguided because they teeter on the middle ground of ineffectiveness. Instead of progressing towards any change in the nation, the sanctions hurt the masses of helpless citizens. Moreover, the newest wave of sanctions, which China unsurprisingly opposes publically, is just tiptoeing through this drawn out conflict. No matter the stance on the imposition of sanctions, the existence of them is indubitable. If the government chooses this path, it must fully commit or rescind them altogether. The next step is not more sanctions from the same sources, but rather from the nation enabling the conflict in the first place.

One thought on “The Enablers: How China Undermines U.S. Sanctions In Iran

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