China, Iran and the Saudis

All illustrations on this post are actual Iranian postage stamps.On some level, the debate over sanctioning Iran appears to boil down to what China's position will be — another sign of what one might call the slow but steady multi-polarization of Middle Eastern geopolitics. 

From Ben Simpfendorder's New Silk Road blog:

China’s foreign policy is at an inflexion point. The country is emerging as a major power, but that will require tough choices.

The toughest choices are usually found in the Middle East. The region doesn’t like major powers sitting on the fence, and it’s only time before China will be forced to climb down.

It is Iran that will likely force a decision. China has so far maintained its policy of non-intervention─as one Beijing-based policy advisor said to me, “if we intervene in Iran, it would set a bad precedent for our relations with other countries”.

Fair enough. But so would a failure to intervene. It would suggest that China isn’t concerned about its other regional partners, especially Saudi Arabia. Let’s not forget. Iran might supply 13% of China’s oil supply, but Saudi Arabia supplies an even larger 20%.

So what are the chances that China agrees to sanctions?

So far, it appears unlikely, at least to judge from media headlines. Yet, a recent article in Huanqiu, a hardline Chinese-language foreign affairs magazine, points to an increasingly nuanced positioned, and thus hints at the possibility of change.

The author, Yin Gang, works at the Chinese Academy for Social Sciences. His views aren’t official policy, but they are indicative of official thinking. The type of language he uses he is also refreshingly frank. So, I thought to highlight some of the more useful points.

First, the carrot.

“China understands Iran’s desire for nuclear deterrent capability. China’s nuclear deterrent capability was difficult to achieve under Western pressure. But times have changed. China and Iran are both signatories to the non-proliferation agreement. We should respect these principles”.

And, then the stick.

“China cannot ignore global opinion. It very well understands that its Arab and Jewish friends don’t want to see the Iranian nuclear problem end tragically”. He later continues, “Under no conditions will China accede to Iran’s demands, only to hurt the Arab and other countries feelings”.

How to explain the change? It appears to be Iran’s intransigence in the past year.

The International Crisis Group, which recently released a report on China's Iran policy, has more:

China will work to water down any Security Council resolution through a delay-and-weaken strategy that maximizes concessions from both Iran and the West.

For months, the United States and other countries have spent an enormous amount of diplomatic capital pressuring China to impose a new round of sanctions on Iran.

But this effort has yielded few results and merely serves to strengthen China’s strategic hand. The longer China holds out, the better treatment it gets from the West, which is hoping for sanctions that will likely do little to resolve the nuclear impasse anyway.

There are several reasons for Beijing not to impose meaningful sanctions.

Iran is China’s third-largest oil supplier and home to expanding Chinese energy and commercial enterprises. China and Iran also share a strong resentment of perceived American meddling in their domestic politics. The bond with Tehran helps counterbalance American interests in a region that some strategists in China consider part of its “grand periphery.”

Beijing has also led a charm offensive with Muslim countries since the Xinjiang riots in July 2009, partly in response to strong condemnations by top Iranian clerics of China’s administration of the restive western province.

Unlike the US and Europe, Beijing does not seem to see an urgent need to deal with the Iran nuclear issue. Trying to pressure Beijing by sharing Western intelligence on Iran is unlikely to have much effect.

Building an effective international coalition of countries – including Arab Gulf countries and those with Security Council membership – is a far better way to shape China’s Iran calculus.

So the calculation is that China is not so concerned about Iran's nuclear program, but concerned enough about its relationship with the US (and the leverage it can extract from the Iran issue) to avoid backing Iran. The alternative is then to weaken sanctions. There's been some agitation lately that Saudi Arabia wants Iran to act tough on Iran. Last week I cited a piece by David Ignatius: 

Prince Saud al-Faisal, the Saudi foreign minister, traveled to China late last week to enlist its support against Iran. The Saudi message to Beijing, according to one U.S. official, is: "If you don't help us against Iran, you will see a less stable and dependable Middle East."

Sanctions do have the advantage for the Arab Gulf countries of increasing reliance on them for oil, as I wrote before. However, backing tough sanctions does not mean Saudi would back a strike on Iran, as some have intimated. Saudi expert Jean-Francois Seznec:

It seems that, in fact, the Saudis are more worried about potential U.S. military action against Iran than they are about the Iranians’ ability actually to obtain nuclear weapons.  The Saudis may not express this view clearly enough to change views on Capitol Hill, but the U.S. executive branch is probably quite aware of Saudi worries about the prospect of U.S. military intervention in Iran.

In a nutshell, and to paraphrase Talleyrand, U.S. military action in Iran would be more than a crime—it would be a mistake or, more precisely, a series of mistakes, which would quite rapidly lead to the United States losing its influence in the world.  The economic “blowback” from any U.S. military action against Iran would be enormous, causing great harm to the United States.  More generally, military strength is no longer the true basis of national power in the modern world.  In the aftermath of a U.S. military confrontation with Iran, the new economic powerhouses—China, India, and Saudi Arabia—would have a shared interest in constraining the United States so that it could not act again to cause such damage to their interests.  In acting to realize that shared interest, these states would effectively lock the United States out of both Asia and the Middle East.     

On the economic front, a U.S. attack on Iran would lead to a major increase in oil prices, whether the Straits of Hormuz get blocked or not.  If only Iranian exports were taken off line, prices could still reach $150 per barrel, as 3 million barrels per day would be removed from the market and insurance premiums would reach the levels seen during the “tanker war” of the early 1980s.  If the Straits were blocked for some time, prices could go above $200 per barrel, as 16 million barrels per day in exports from the Gulf as a whole would have to find new ways to get to international markets.  In this scenario, Saudi Arabia could export up to 5 million barrels per day through the Red Sea, which would still leave the markets short of 11 million barrels.  Within 18 months, it might be possible to lay new pipelines to the Gulf of Oman that would bypass the Straits of Hormuz (mainly for oil exports from the United Arab Emirates), and Iraq could repair its strategic North-South pipeline to export oil via the Mediterranean.  However, even with these extraordinary measures, international markets would still be short of about 6 million barrels per day, and the impact on Asian economies that rely very heavily on Gulf crudes would be extreme.

Although, as I will discuss in greater detail below, Saudi Arabia would see a dramatic increase in its oil export revenues in such a scenario, the Saudis are nonetheless opposed to U.S. military action against Iran because, in their view, it could unleash complete havoc in the region. 

Why do I mention Saudi Arabia's (and I think most or all of the Arab world's) opposition to a strike on Iran in context of the sanctions? These are after all two quite different things. The reason there is a link is that it's hard to see tough sanctions going through without China's backing, which does not appear forthcoming. And soft sanctions are unlikely to have much of an impact on the Iranian regime — and perhaps tough population-centric sanctions wouldn't either.

Despite the view in neocon circles that sanctions would somehow bring more Iranians to support for the Green Movement, internal regime change in Iran still seems pretty improbable, especially in the context of a confrontation with the West. I suspect the neocons know this, but need sanctions to be implemented and then fail to be able to make the argument for a US-backed strike. And if it does come to a strike, probably by Israel, then the question becomes whether a direct attack on a sovereign state is a greater violation of international law then Iran's violations of the NPT, especially in the context of Israel's own nuclear program.