Why China supports sanctions on Iran: not much content but full of political implications

The UN Security Council is to impose sanctions against Iran today.

These sanctions are being billed by the US as tough, effective, and the most severe Iran has yet faced.

The new sanctions, actually, add very little that is new. The passage of sanctions is opportunity for tough talk but little tangible difference is offered over previous sanctions (see the new sanctions document here).

Flynt Leverett and Hillary Mann Leverett pick the document apart on their site, The Race for Iran:

In the main body of the resolution, there are, literally, no sanctions limiting the capacity of the Islamic Republic to produce and export hydrocarbons.

[…]Likewise, there are no sanctions barring the extension of financial services, insurance, reinsurance, etc. to Iranian individuals and entities.

China and Russia will support this resolution since the situation will not substantially change for them in regard to their dealings with Iran. Russia will still be able to deliver sales of S300 anti-aircraft missiles, and China can still invest in Iranian business, import energy, maintain its existing financial dealing via Iranian banks (I think China often trades in hard cash anyway when it comes to purchase of oil from Iran), and maintain its growing trade with Iran.

The Race for Iran adds that:

Among the entities “involved in nuclear or ballistic missile activities”, the United States was able to win the agreement of China and other Council members to include only one bank that had not been previously listed—and that bank is a subsidiary to Bank Mellat, which had been previously designated by the United Kingdom and the United States.

[…]Ostensibly, there are 15 entities listed as “owned, controlled, or acting on behalf of the Islamic Revolutionary Guard Corps”.  But this is seriously misleading.  There is, in fact, only one Revolutionary Guard-affiliated entity captured in the annex—the Khatam al-Anbiya construction company.  The other 14 entities are all either subsidiaries of Khatam al-Anbiya or subsidiaries of subsidiaries of Khatam al-Anbiya.

What the sanctions do embody is politics rather than economics. It hardens the political and diplomatic division between Iran and the US and Europe because of the rhetoric and symbolic quality attached to the application of sanctions as championed by the West. So, the rhetoric will make it more difficult for the West to conduct diplomatic dialogue and engage in economic transactions with Iran not because of new legal barriers but from political ones.

This will support and probably hasten the growing economic ties between Iran and China as well as other non-Western countries. This is to China’s advantage since it can deal with Iran while facing decreased international, mainly Western, competition; permitting it to more easily position itself as a vital economic and political entity to Iran. Essentially, the West is cutting itself out of the picture and giving China competition free access to Iran, which is geostrategically important: it can serve as a gateway to the Middle East and Central Asia, has access to the Persian Gulf and the Straight of Hormuz, has some of the largest deposits of oil and natural gas in the world, and has the potential to serve as an energy route to transit fuels from nearby countries that are also rich in hydrocarbons.

In 2009, China beat out the EU to become Iran’s largest trading partner. Trade with China amounted to some $36.5 billion while trade with the EU totaled $35 billion. Iran’s foreign minister indicated that trade with China had risen from $400 million in 1994 to $29 billion in 2008, growing at an average annual rate of 40% in the tail end of that period. In May 2009, China’s ambassador spoke at an Iran-China trade cooperation conference, stating that “The Chinese Embassy in Tehran will continue working with Iranian companies in order to expand cooperation between the two countries.”

China’s Ministry of Foreign Affairs indicates that its important economic projects with Iran include: “energy, transportation, machinery, building material, mining, coal, chemicals, nonferrous metal, etc. The main projects are subway in Teheran, multi-functional vessels, building of oil tanker, production line of cement plant, 4*32.5 thousand KW thermal power electrical machinery units in Arak, hydroelectric generation equipment, etc.”

More than “100 Chinese state companies” operate it Iran, according to Press TV. China is said to have more than $80 billion invested in the country’s energy sector, and Iran has, since 2009, opened five trade centres in China in Shanghai, Urumqi, Beijing, Hong Kong and Guan ju.