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The knife in Iran's back: Trump opens door to chaos

By       Message Vijay Prashad       (Page 1 of 2 pages)     Permalink    (# of views)   7 comments

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From Asia Times

From commons.wikimedia.org: Iranian President Hassan Rouhani {MID-308080}
Iranian President Hassan Rouhani
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On Tuesday night, Iranian President Hassan Rouhani went on television to talk about the reinstatement of sanctions by the United States against his country. He prepared the country for more privations as a result of the sanctions. Responding to US President Donald Trump's offer of a meeting, Rouhani said pointedly, "If you stab someone with a knife and then say you want to talk, the first thing you have to do is to remove the knife."

It is clear to everyone outside the US government that Iran has honored its side of the 2015 nuclear deal that it made with the governments of the five permanent members of the United Nations Security Council (the US, the UK, France, China and Russia) as well as the European Union. In fact, quite starkly, EU foreign-policy chief Federica Mogherini said, "We are encouraging small and medium enterprises in particular to increase business with and in Iran as part of something that for us is a security priority."

In other words, Mogherini is asking companies to resist Trump's policy direction. What she is saying, and what Rouhani said, is that it is the United States that has violated the nuclear deal, and so no one needs to honor the US sanctions that have been reinstated.

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Mogherini pointed to "small and medium enterprises" because these would not be the kind of multinational corporations with interests in the United States. But it is more than small and medium-sized enterprises that are going to challenge the US sanctions. China, Russia and Turkey have already indicated that they will not buckle under US pressure.

China

"China's lawful rights should be protected," said the Chinese government. China has no incentive to follow the new US position.

First, China imports about US$15 billion worth of oil from Iran each year and expects to increase its purchases next year. State energy companies such as China National Petroleum Corporation (CNPC) and Sinopec have invested billions of dollars in Iran.

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CNPC and Sinopec also have shares in Iran's major oil and gas fields -- CNPC has a 30% stake in the South Pars gas field and has investments in the North Azadegan oilfield, while Sinopec has invested $2 billion in the Yadavan oilfield.

China's Export-Import Bank, meanwhile, has financed many large projects in Iran, including the electrification of the Tehran-Mashhad railway. Other Chinese investment projects include the Tehran metro and the Tehran-Isfahan train. These projects are worth tens of billions of dollars.

Second, China is in the midst of a nasty trade war with the United States. In late August, Trump's government slapped 25% tariffs on $16 billion worth of Chinese imports into the United States. China responded with its own tariffs, with its Commerce Ministry saying that the US was "once again putting domestic law over international law," which is a "very unreasonable practice."

The "once again" is important. China is seized by the unfairness of the reinstatement of sanctions on Iran, not only for its own economic reasons but also because it sees this as a violation of international agreements and a threat to Iranian sovereignty -- two principles that China takes very seriously.

Sinopec, knee-deep in Iran's oil sector, has now said that it would delay buying US oil for September. Iran has now been drawn into the US "trade war" (on which, read more here).

The Chinese have been quite strong in their position. The Global Times, a Chinese government paper, wrote in an editorial, "China is prepared for protracted war. In the future, the US economy will depend more on the Chinese market than the other way around." This fortitude is going to spill over into China's defense of Iran's economy.

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Russia

Russia and Iran do not share the kind of economic linkages that Iran has with China. After the 2015 sanctions deal, Iran did not turn to Russian oil and gas companies for investment. It went to France's Total -- which signed a $5 billion deal. Russia and Iran did sign various massive energy deals ($20 billion in 2014), but these did not seem to go anywhere.

Russia's Gazprom and Lukoil have toyed with entry to Iran. In May, Lukoil directly said that it would be hesitant to enter Iran because of the proposed US reinstatement of sanctions. Lukoil's hesitancy came alongside that of European companies such as Peugeot, Siemens and even Total, which decided to hold off on expansion or cut ties with Iran. Daimler has now officially halted any work in Iran.

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Vijay Prashad is the George and Martha Kellner Chair of South Asian History and Director of International Studies at Trinity College, Hartford, CT His most recent book, The Darker Nations: A People's History of the Third World, won the Muzaffar (more...)
 

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