05262019Sun

Iran Concentrates on Trade With China

Flag of Iran and Flag of China

By Pooya Stone

Iran is in a very difficult position because of the pressure stemming from U.S. sanctions. The U.S. State Department has said that waivers on imports of Iranian oil will not be extended and maintains that its aim is still to reduce Iran’s oil exports to zero.

This is starting to have a real effect now on the Iranian economy and Iran is finding it difficult to persuade countries to cooperate. The EU had promised to take steps that guarantee trade with Iran and it has started to set up INSTEX – a mechanism that will, if it works, circumvent U.S. sanctions. However, it is not certain that the mechanism will work and the United States has warned the EU that it will be keeping a close eye on developments.

Several Iranian officials have made it very clear that they are not depending on EU measures any more, with many saying that INSTEX is too little, too late.

Iran is now hedging its bets on China and last week the speaker of Iranian parliament visited the country to discuss economic relations. Larijani said before the visit that the purpose would be to strengthen the close ties the two countries have.

It became very clear, through some very telling statements, that the decision for Iranian officials to visit China came from high up. In other words, the trip was ordered by the Supreme Leader Ali Khamenei who has the last say over all matters. There were several references to the visit being a decision made by “the establishment”.

A member of the Iranian parliament, Mohammad Javad Jamali, said that the visit was prompted by the U.S. sanctions on Iran, which he described as “unjust” and “severe”. He pointed out that Europe is more or less following the sanctions and that Iran has no choice but to “use all its potential and capabilities to open other doors”.

Jamali indicated that the Chinese appear to need some assurances that the regime is in complete agreement and it is not just one faction that wants to move forward in this direction. Perhaps it was very evident to the Chinese that Iranian President Hassan Rouhani is nothing but a pawn to the Supreme Leader and that he has very little say in how the country is run.

The Iranian regime is no longer able to rely on the EU despite what started off as promising. The EU criticised U.S. President Donald Trump for pulling out of the nuclear agreement and made it clear that it does not support the sanctions that were re-imposed. However, despite its promises to take measures to get round the sanctions, it has lost momentum and is not satisfying Iran.

What comes from China remains to be seen, but it does not look promising that China will risk its substantial trade with the United States just to help Iran out. Especially given its belligerence in the region.

It seems that the Iranian regime will probably have to turn elsewhere.

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