Following the threat of sanctions by the United States, Iranian oil exports fell this year from 2.5 million barrels a day in 2011, to the current level of 1.5 million. The decrease has been hard on Tehran, which does not have extensive refining capabilities, and has seen the value of its rial drop along with the flow of incoming dollars. Last December, a law passed in Washington imposed heavy restrictions on the banks of countries that imported Iranian crude, threatening them with exclusion from doing business with US institutions unless their government significantly reduced the amount of oil bought from Iran, with the goal of removing funding for the feared Iranian nuclear weapons project.
Along with an initial exemption for 10 European states (Italy among them) and Japan, last month saw the additional exemptions of India, Malaysia, South Korea, Sri Lanka, Turkey, South Africa, and Taiwan. The inclusion of the latter, and the exclusion of China, gave rise to the most openly hostile position towards Beijing held by the current US government, and in a hasty and unsurprising turnaround not long thereafter, China, along with Singapore, was granted an exemption as well.
The reduction in Chinese oil imports from Tehran in the first half of this year was a determining factor, as Hillary Clinton expressed with satisfaction, “A total of 20 world economies have now qualified for such an exception. Their cumulative actions are a clear demonstration to Iran’s government that Iran’s continued violation of its international nuclear obligations carries an enormous economic cost.” Beijing is satisfied as well, both for the results obtained and for the indirect confirmation that the sanction system is ineffective- behind the usual diplomatic statements lies a more complex situation.
The reduction in Chinese imports that led to the exemption by the US Department of State was actually due to negotiations between China and Tehran over a reduction in the price of Iranian crude. Iran has also agreed to take payment in the form of Renminbi and other products. Washington can accept this because the Chinese currency is not easily exchanged and does not lead to dangerous purchases by Iran. As its 13th largest contributor, the central Asian state sells 21% of its production to China, which has tripled its oil imports over the last five years.
The volatility of the various positions is representative of the complexity of the situation. China does not wish to damage relations with the United States, and although it seeks to use the Iranian situation as leverage for more concessions, it is wary of being too exposed to a country as objectively dangerous and at risk of war as Iran. China is dealing with every side at a complex negotiating table. One this, however, is clear and for certain: Chinese objectives are oriented towards the strict safeguarding of national interests. For the moment these goals appear to be met, although set in an uncertain and unstable picture. With difficulty, China is learning that being the second largest economy in the world, and its largest exporter, comes with complex international obligations that cannot be swept away with the usual refrains of non-interference.