Thread: Getting China to Sanction Iran

As insurance for foreign tankers becomes harder to find, Iran looks to boost its own tanker fleet.

World’s biggest oil tanker to join Iran fleet soon | Tehran Times | 16 April 2012

TEHRAN - Iran has procured a new oil tanker with a capacity of 2.2 million barrels, one of the world’s largest.

The tanker, which is valued at around $300 million, will join the Iranian fleet within the next few days.

The oil tanker is a ‘floating storage and unload vessel’, said Managing Director of Iranian Offshore Oil Company Mahmoud Zirakchianzadeh.

The National Iranian Tanker Company (NITC), Iran's oil shipping operator, is expanding its tanker fleet with the first of 12 supertankers to be delivered from China in May, fortuitous timing for the OPEC member as Western sanctions force Tehran to rely more on its ships to export oil, Reuters reported.

The new tankers, each capable of carrying 2 million barrels of crude, add much-needed capacity to NITC's fleet at a time when the number of maritime firms willing to transport Iranian crude has dwindled significantly amid European sanctions.

The EU will prohibit European insurers and reinsurers from indemnifying tankers carrying Iranian crude oil anywhere in the world from July, threatening to curtail shipments and raise costs for major buyers like China, India, Japan and South Korea.

The NITC managing director announced in December 2011 that 21 new tankers will be added to the national fleet by the end of 2013, raising the country’s crude transportation capacity to 180 million tons per year.

“Currently, Iran has 49 oil tankers operating in the national fleet,” the NITC director Mohammad Souri told Mehr news agency.

The Islamic Republic of Iran Shipping Lines managing director, Mohammad-Hossein Dajmar, has said that according to the United Nations Conference on Trade and Development (UNCTAD), Iran holds a 1.17 percent share of the total shipping capacity in the world, placing the country in 19th position.

Iran’s shipping line has currently 165 ships with a capacity of over 1,000 GT and 13 million tons.

U.S. Sees Positive Signs From China on Security Issues | NY Times | Apr 26 2012

By MARK LANDLER and STEVEN LEE MYERS
Published: April 26, 2012

WASHINGTON — When China suddenly began cutting back its purchases of oil from Iran in the last month, officials in the Obama administration were guardedly optimistic, seeing the move as the latest in a string of encouraging signs from Beijing on sensitive security issues like Syria and North Korea, as well as on politically fraught economic issues like China’s exchange rate.

As with so many signals from Beijing, though, its underlying motives for reducing its imports of Iranian oil remain a mystery: Are the Chinese embracing Western sanctions? Or, as some experts suspect, are they trying to extract a better price from one of their main suppliers of crude?

The answer is probably a bit of both, according to senior administration officials who acknowledge that they do not know for certain. But for the White House, which has labored to build a more constructive relationship with China, Beijing’s motives may matter less than the general direction in which it appears to be moving.

For years, China stymied efforts to pressure Iran. Now, in addition to throwing its weight behind the sanctions effort, officials say, Beijing is also playing a more active role in the recently revived nuclear talks between Iran and six world powers — the United States, China, Russia, Britain, France and Germany. While in past negotiations, Beijing has followed in lockstep the positions taken by Russia, this time Chinese diplomats are offering their own proposals.

“One of the key elements of making this work is unity among the major powers,” said a senior administration official, who spoke on condition of anonymity to discuss diplomatic exchanges. “The Chinese have been very good partners in this regard.”

...

China’s calculations on Iran are just as complex. It is Iran’s biggest energy customer, accounting for more than a fifth of its oil exports. But under American sanctions law, it will be subject to punitive measures at the end of June, unless it shows a “significant reduction” in its imports from Iran or wins a waiver from Mr. Obama on national security grounds.

The Chinese government wants to avoid those punitive measures, American officials and Western diplomats said. Given Iran’s isolation, analysts said China might also have concluded that it should diversify its sources of supply. And American officials said China shares the urgency of the United States and Europe in preventing Iran from obtaining a nuclear bomb.

The Chinese, said Clifford Kupchan, the Middle East director for the Eurasia Group, a Washington consultancy, “have been bad actors” in the years of diplomacy over Iran, though in recent weeks “their diplomatic rhetoric is tougher and their oil purchases are lower,” he said.

The question is whether China is simply waiting out Iran to extract a better price. With Japan and South Korea also cutting purchases to avoid American sanctions, Iran is being forced to stockpile oil in tankers anchored in the Persian Gulf. Unless it shuts down its oil wells, analysts say Iran will run out of storage capacity by summer.

That is when China’s intentions will become clearer. By then, however, Mr. Obama will have had to make a critical decision on whether to exempt China from the new sanctions.

Relevant Portion of the sanctions law that applies to Iran

Sec. 1245. Imposition of sanctions with respect to the financial sector of Iran.

China waiver still outstanding | Reuters | Jun 11 2012

By Timothy Gardner and Susan Cornwell
WASHINGTON | Mon Jun 11, 2012 10:25pm EDT
(Reuters) - The United States extended exemptions from its tough, new sanctions on Iran's oil trade to seven more economies on Monday, leaving China the last remaining major importer exposed to possible penalties at the end of the month.

China, which alone buys as much as a fifth of Iran's crude exports, and Singapore, where much of the country's fuel oil is blended, did not receive such waivers, ramping up pressure on two important U.S. trade partners in Asia.

Beyond the 27-country EU, which has banned Iranian imports from July under separate sanctions, other buyers of Iran's crude have pledged to cut purchases by up to a fifth.

Geng Shuang, a spokesman for the Chinese embassy in Washington, said his government "opposes unilateral sanctions imposed by one country on others". He added that China will push for a diplomatic solution to the Iran nuclear issue through negotiations.

RELIEF

Banks and other institutions in the economies that received waivers will be given a six-month break from the threat of being cut off from the U.S. financial system under sanctions signed late last year by President Barack Obama.

China, Japan, India and South Korea cut imports by about a fifth from the 1.45 million barrels per day they were buying a year ago as they prepared for the sanctions to come into effect.

The cuts and threat of sanctions have helped drain Iran's oil revenues by an estimated $10 billion since the start of the year, said Senator Robert Menendez, a Democrat who helped craft the measures.

"While I look forward to seeing the actual levels of reductions made by each country, I presume that they will be on par with the significant reductions in purchases made by Japan," which cut its buying by about 15 percent to 22 percent, he said.

Oil traders had largely expected the exemptions after the cuts, with Obama seeking to tread a fine line between tightening the screws on Tehran and triggering a squeeze on global oil supplies that could tip the U.S. economy back into recession.

"The White House doesn't want to see 1 million barrels per day (bpd) of Iranian exports cut when oil prices are still relatively high, but at the same time they want to make sure the sanctions still have some bite," said Andy Lebow, senior vice president of energy at Jefferies Bache in New York

"No one thinks they're going to slap sanctions on China."

The bigger issue for markets will be whether separate European sanctions blocking access to tanker insurance cause shipments to grind to a halt from July 1.

CHINA TALKS

Although China did not immediately receive a waiver, it does not necessarily follow that the United States will impose sanctions on the country from June 28. A U.S. official said last week it would take some time for Washington to gather evidence to support punitive measures against banks that have processed oil transactions.

It was not immediately clear why the administration did not grant China an exemption. Backers of tough sanctions on Tehran believe China has received clandestine cargoes of oil from Iran, which has disabled tracking devices on some of its shipments.

Senior U.S. officials sidestepped questions about those issues in a conference call with reporters, but said the dialogue with China on the issue was constructive.

"We are in discussions with China. It would be premature to comment further on where those discussions might lead," a senior official said.

He said the United States continued to outline to China the requirements of U.S. law "and we are engaged in a good-faith dialogue to be able to work toward a solution that in our view addresses the fundamental point here, which is how do we reduce the volume of purchases of Iranian crude oil".

Bob McNally, head of the Washington-based oil consultancy Rapidan Group, said Obama may have delayed a decision on China to avoid criticism he is soft on Beijing ahead of the U.S. presidential election on November 6.

"I wouldn't be surprised to see China raked over the coals a little longer before a decision is taken on whether to grant them a waiver," he said.

Obama is under pressure from Congress, which may pass even tougher sanctions on Iran.

"If the administration is willing to exempt all of these countries, who will they make an example out of?" said U.S. Representative Ileana Ros-Lehtinen, a Republican and chairman of the House Foreign Affairs Committee.

China & Singapore get a waiver.

Regarding Significant Reductions of Iranian Crude Oil Purchases | DoS | Jun 28 2012

I can't understand the hysteria over the possibility of Iran developing nuclear weapons, and apparently neither can Beijing.
Given Iran’s long history of not having invaded anyone else (the attack on Russia, a few hundred years ago, was a response), it doesn’t make sense.

Originally Posted by DOR

I can't understand the hysteria over the possibility of Iran developing nuclear weapons, and apparently neither can Beijing.

What? China was the one who provided evidence to the IAEA of Iran's nuclear weapons development.

Originally Posted by DOR

Given Iran’s long history of not having invaded anyone else (the attack on Russia, a few hundred years ago, was a response), it doesn’t make sense.

Does attack by proxy count? And the Iranians did march all the way to Basra.

"I can't understand the hysteria over the possibility of Iran developing nuclear weapons..."

If the "...hysteria..." is bothersome to you then perhaps you might take a moment or two and focus, instead, on some of the more sober elements of Iran's recent behavior that's promulgating concern here and there.

Please forgive me but we've had long discussions here involving a number of issues surrounding this concern. Many people every bit as bright as yourself are deeply worried without necessarily indulging in "...hysteria...". Some might view your gross simplification as disparagement. Let's hope unfairly so.

Allow me to provide a modest primer. I'll use some key-words hoping they may provoke a deeper curiousity on your part- Israel, Non Proliferation signatory, Enrichment "Rights", UNSC Resolutions.

Given your considerable intellect, I've little doubt but the above shall prove a veritable launching-pad towards entirely new vistas of understanding, thus lifting any vestige of "...hysteria..." that may otherwise be clouding your perspective.

Let’s try that again.

“I can't understand the hysteria” . . . nothing about not believing it to be true.

But, this level of concern over a country that really hasn’t been all that war-like in a few hundred years is odd. North Korea, on the other hand, deserves all the concern, hand wringing, sanctions and diplomatic effort we can convince any nation to exercise. But, why is Iran in the same camp?

If (as OoE points out) using proxies is the key issue, then there are plenty of others who should be on the list. By the way, I recognize the concern about handing operating nukes to terrorists, but this hasn’t happened with North Korea, Pakistan, India or the other supposed underground nuclear powers, past or present.

Originally Posted by DOR

But, this level of concern over a country that really hasn’t been all that war-like in a few hundred years is odd.

Excuse me? What is the Iran-Iraq War?

Originally Posted by DOR

North Korea, on the other hand, deserves all the concern, hand wringing, sanctions and diplomatic effort we can convince any nation to exercise. But, why is Iran in the same camp?

North Korea doesn't have a working nuke. And she is legally allowed to do so, having her program after she left the NPT. Iran, by ALL EVIDENCE, is using the NPT to get her nukes.

I would like to point out to you that the USSR threatened war against China precisely because she was not an NPT member. And we both know just how close to war they actually came.

Originally Posted by DOR

If (as OoE points out) using proxies is the key issue, then there are plenty of others who should be on the list.

Iran started the Hezbollah-Israeli War.

Originally Posted by DOR

By the way, I recognize the concern about handing operating nukes to terrorists, but this hasn’t happened with North Korea, Pakistan, India or the other supposed underground nuclear powers, past or present.

Of course it happened. Twice. Once by China to Pakistan and then Pakistan to Iran, Libya, and North Korea ... or do you excuse state sponsored terrorism?

Iran-Iraq? Correct me if I'm wrong, but Sadaam attacked Iraq in the 1980s, and that's why Rumsfeld had that memorable photo op.

DPRK is "legally allowed" to have nukes? Okay, but so what? I've never thought this subject was one of legalities, but rather one of global survival.

Proxy wars: not an Iranian monopoly.

State-sponsored terrorism is not the same as handing nukes to non-state actors to do with as they wish. Big difference.

So, back to the question: Why is Iran a special case, deserving threats of war?

Originally Posted by DOR

So, back to the question: Why is Iran a special case, deserving threats of war?

No offense intended, but I seriously doubt any answer to that question will sway you. I say that because you appear to be a well-informed person who by now is familiar with all the reasons why so many countries are opposed to a nuclear armed Iran. If none of those reasons resonate with you, nothing will.

Originally Posted by DOR

Iran-Iraq? Correct me if I'm wrong, but Sadaam attacked Iraq in the 1980s, and that's why Rumsfeld had that memorable photo op.

Your exact words here.

Originally Posted by DOR

But, this level of concern over a country that really hasn’t been all that war-like in a few hundred years is odd.

Your non-war-like Iranians were not happy with just kicking Saddam out of the country. They wanted Basra as a gateway to Baghdad and they refused to listen to any terms Saddam was offering, especially when they were Basra's gates.

Your claim that Iran has never been warlike falls flat with a thud

Originally Posted by DOR

DPRK is "legally allowed" to have nukes?

That is the whole key point. Absent any outside help, NK nukes are nothing more than big duds. They are legally allow to have their program but without help, their incompetence doesn't give them any.

Originally Posted by DOR

Okay, but so what? I've never thought this subject was one of legalities, but rather one of global survival.

How about reading extremely carefully. IRAN IS USING THE NPT TO GET NUKES. An action even the Chinese are adamant against and suspended all nuclear trade.

Originally Posted by DOR

Proxy wars: not an Iranian monopoly.

But an extremely short sighted and dangerous one.

Originally Posted by DOR

State-sponsored terrorism is not the same as handing nukes to non-state actors to do with as they wish. Big difference.

So you're perfectly happy handing nukes over to Qaddafy. The guy who did multiple PAN AMs, including Lockerbie, Berlin disco bombing, and ordered the shelling of his own cities and ordered his snipers to shoot women and children. So, instead of hiding a bomb onto a plane over Lockerbie, you want to give him the ability to hide a nuke in an oil freighter heading for New York.

State terror has been FAR, FAR, FAR, FAR more lethal than any non-state terror. And I, for one, will not tolerate willingly handing them more assets.

Originally Posted by DOR

So, back to the question: Why is Iran a special case, deserving threats of war?

Because the Mullahs ain't as stupid as the Kims, Iran is not dirt poor like the DPRK, and the NPT gve Iran access to nuclear technologies she needed to get nukes, access that the DPRK no longer has since they left the NPT.

Originally Posted by Officer of Engineers

Your non-war-like Iranians were not happy with just kicking Saddam out of the country. They wanted Basra as a gateway to Baghdad and they refused to listen to any terms Saddam was offering, especially when they were Basra's gates.

This is an interesting observation. Had watched a documentary which i linked here recently that said, had the Iranians sued for peace at the time of Basra they could have claimed a victory and would not have had to endure a much longer war and in the end had to settle for much more unfavourable terms and no victory.

The only reason not to sue for peace is Iran thought they could have got more. maybe even as you said intended to go for more. Just two years after the revolution there was a lot of fervour about than strategic sense. What with them purging generals from the previous regime.