Iran’s nuclear program: Will oil ties prevent China from backing tough Iran sanctions?

Iran’s largest trading partner, China, is bracing itself for renewed international pressure to dial back its ties with Tehran in the wake of a United Nations report that Iran appears to have worked on a nuclear weapon. French Foreign Minister Alain Juppe called Wednesday for a meeting of the UN Security Council, threatening “sanctions on an unprecedented scale” if Iran refuses to cooperate with the international community over its nuclear program.

Beijing is caught between its growing energy reliance on Iran, its third largest oil supplier, and its oft-stated commitment to nuclear nonproliferation.

As Israel signaled that it may be prepared to launch a military strike against Iranian nuclear facilities, Chinese Foreign Ministry spokesman Hong Lei stressed the importance of “avoiding fresh turmoil in the Middle Eastern security environment.”

He urged Tehran to “demonstrate flexibility and sincerity, and engage in serious cooperation with the agency,” referring to the UN’s International Atomic Energy Agency. But he called for “dialog and cooperation to resolve the Iranian nuclear issue” when asked about the prospects for further unilateral US sanctions.

China has voted for four rounds of limited UN sanctions against Iran, but has resisted any embargo that might damage its oil and gas ties with Iran. Official Chinese figures show that Iran shipped over 20 million tons of crude oil to China in the first nine months of this year – nearly a third more than the same period last year – and that overall trade rose 58 percent from 2010 to $32.9 billion. China is also an important supplier of gasoline to Iran, which lacks refining capacity. At the same time, however, Chinese analysts say, a spate of major oil and gas exploration contracts between Iran and Chinese state owned companies such as China National Offshore Oil Corporation (CNOOC) and China National Petroleum Corporation (CNPC) has slowed over the past two years.

In an apparent bid to stave off wider international economic sanctions, “China is behaving very cautiously in its bilateral ties,” says Yin Gang, a Middle East expert with the China Academy of Social Sciences. “Deals have been frozen.” “The Chinese seem to have disengaged further from Iran,” agrees Willem van Kamenade, a Beijing based analyst of Sino-Iranian relations. “They have yielded to pressure by not engaging in major new oil and gas deals for the last year.” With an outright embargo on Iranian oil sales unlikely, given the impact such a move would have on oil prices and the world economy, China may be ready to consider further sanctions of some kind, says Mr. Yin, though the Foreign Ministry spokesman made no mention of them Wednesday. “China has backed sanctions in the past,” says Yin. “If the Security Council debates the issue again, China may continue to support them.”

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