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Sanctioning Iran: It’s up to China

As Iran sustains uncertainty about its nuclear program, Western governments are stepping up sanctions to bring the regime to the negotiating table. The United States’ latest sanctions have targeted Iran’s financial sector, while the European Union agreed last week to ban Iranian oil imports by July this year.

In response to these growing pressures, Iran is threatening to close the Strait of Hormuz, a transit point for a fifth of the world’s traded oil. The Iranian government is also threatening the EU with an immediate ban on oil exports, thereby demonstrating its willingness to retaliate.

The Islamic Republic claims it is enriching its supply of uranium for energy and medical purposes, but many suspect that Iran’s primary intention is to develop a nuclear weapon. While the International Atomic Energy Agency (IAEA) has previously reported on Iran’s experiments and research into nuclear weapons, the Agency has yet to prove that Iran is really capable of developing such weapons. Iran has refused to provide extensive information to the IAEA, which it accuses of harbouring a pro-Western bias.

It is important to keep in mind that nuclear reactors are an attractive source of energy, representing an important component of a state-building process. Polls suggest that the Iranian nuclear program enjoys strong domestic support. This suggests that the possible effect of sanctions on the Iranian population is ambiguous: will hardships boost opposition or rally support for the government in the face of international injustice?




What is certain is that sanctions are having a considerable impact on the regime and the daily lives of Iranian citizens. The oil embargo is striking the achilles heal of the regime: an estimated 40% of its revenue comes from crude oil exports. EU and U.S.’ banking sanctions are destabilizing Iran’s monetary stability, causing climbing inflation and the Rial’s exchange rate to slide. Accordingly, one should expect Iranian importers as well as individual consumers, among others, to voice discontent. Moreover, the Islamic Republic is becoming increasingly politically isolated in the Middle East. Its status as a regional power is weakening, and the survival of its main ally, the Assad regime in Syria, is uncertain. Meanwhile, other potential regional hegemonies, such as Saudi Arabia, are criticizing Iran’s nuclear ambitions and encouraging sanctions.

Thus, the policy of sanctions is proving to be very effective, and has gathered considerable support. Ultimately, however, it is China that holds the key to solving the crisis. China has consistently criticized sanctions against Iran, and remains the only major power still actively trading with the country. Indeed, it ranks as the biggest buyer of Iranian crude oil. Sinopec and China National Petroleum Corporation, both state-owned giants, have invested massively in Iranian oil fields. China is actually benefiting from Iran’s isolation: as its sole major customer, it has the leverage to negotiate discounts on the price of oil it buys from the regime. By deciding to impose temporary sanctions on Iran, on the other hand, China could deal a final blow to the Islamic Republic’s resistance, forcing it to comply with international supervision of its nuclear program.

China stands to gain economically from trading with Iran, but it will have to balance its commercial interests with the political implications of supporting Iran, which would negatively affect its relationship with the U.S. Following the suit of other countries and imposing sanctions against Iran would represent a historical redirection of Chinese foreign policy. Likely, in the long-run, this tack would accrue China benefits by easing relations with the U.S. and other Western governments.

Clearly, China has a decisive role to play in coercive bargaining against Iran. It has the opportunity to gain considerable international recognition and  avoid an escalation to war – an unlikely yet imaginable outcome, especially when one hears the hawkish rhetoric of Israeli officials and Republican candidates vying for their Party’s nomination. More than simply case study of the effectiveness of sanctions, this crisis will put China’s soon-to-be superpower status to the test. Beijing faces a choice between pursuing more immediate commercial interests or promoting international stability and peace. Western governments should focus their energy on convincing Chinese officials that the risks of supporting the Islamic Republic outweigh the benefits.


–  William Debost


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