The Dangerous Iran-China Partnership

[Wall Street Journal, 22Feb07] Ilan Berman - Financial pressure by the U.S. and other Western governments is beginning to have a real impact, chilling investment into Iran's energy sector, but these gains are in danger of being erased, thanks to the growing economic partnership between Tehran and Beijing. In December, the China National Offshore Oil Corporation (Cnooc) signed a memorandum of understanding to develop Iran's massive North Pars natural gas field. At the same time, PetroChina inked a deal to annually import three million tons of liquefied natural gas from Iran. The China National Petroleum Corporation (CNPC) is finalizing a $3.6 billion project to explore and exploit Iran's South Pars gas field. Cnooc and PetroChina are publicly traded companies on the New York Stock Exchange and potentially are subject to the provisions of the 1996 Iran-Libya Sanctions Act which is intended to curb Iran's "ability to support acts of international terrorism and to fund the development and acquisition of weapons of mass destruction and the means to deliver them." But Cnooc, PetroChina and CNPC are appendages of the Chinese Communist Party, and the application of sanctions against them would be tantamount to an act of economic warfare with China. Other foreign multinationals have begun to take their cues from Beijing and signed energy-related agreements with Iran, such as Royal Dutch Shell, Spain's Repsol, and Malaysia's L1. Bilateral sanctions are a critical tool in the U.S. economic arsenal. By actively enforcing such measures, policy makers in Washington have the ability to hammer home the point that trade with an increasingly intransigent Iranian regime is not cost-free - and to force Iran's trading partners to choose between doing business with Tehran and conducting commerce with the U.S. U.S. policy must be geared toward making China and its economic fellow travelers aware of the gravity of the unfolding Iranian nuclear crisis - and providing them with the political rationale to make the right choices about partnership with Tehran. Raising the costs for China to do business in the Islamic Republic seems like a very good place to start. The writer is vice president for policy at the American Foreign Policy Council.

2007-02-22 01:00:00

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