China and Iran. Lessons from a Lab Rat

Remember the old chestnut? What’s the difference between a laboratory rat and a human being? The lab rat finally ceases scurrying through a maze when it realizes there is no cheese at the end. Human beings, on the other hand, never stop trying.

Confronted with the maze that is the Middle East and Central Asia these days, the Chinese are the lab rats. Take Iran, for instance.

Though careful not to directly challenge the Americans, China’s diplomats and businessmen have followed a sinuous route, publicly urging Iran to back away from plans to produce nuclear weapons, but refusing to support American and European calls for tougher sanctions.

True to form, the Americans have been pushing trade sanctions in various degrees of severity ever since American diplomats were taken hostage in Tehran back in 1979.

The Chinese argue the current stiff sanctions won’t convince the Iranians to stop their nuclear program. However, those sanctions have certainly helped the Chinese gain a remarkable foothold in Iran.

So much so, that today 15% of China’s petroleum and gas imports come from Iran, which makes Iran more vital to China than Saudi Arabia is to the United States [the Saudis provide 11% of U..S. petroleum imports].

At one time or another, all the great powers have had their eyes on Iran’s oil and gas reserves, the second largest in the world. But, because of the U.S. embargo, Iran suffered from a woeful lack of modern technology, engineering expertise, and capital.

The Chinese, however, have been willing to offer Iran much of what it needs to develop--as well as sophisticated arms, anti ship-missiles and nuclear technology.

In return, of course the Chinese obtained access to Iran’s massive energy reserves. In 2004, for instance, Iran signed a $100 billion dollar deal for a Chinese company to develop Yadavaran, Iran’s largest undeveloped oil field. That concession in exchange for China’s receiving 10 million tons of Iranian liquified natural gas annually for a period of 25 years.

 That deal was followed by other huge gas and oil exploration contracts, as well as a plan to deliver Iranian oil from the Caspian Sea, through a pipeline from Kazakhstan to China.
 In another convoluted agreement, a Chinese company CNPC bought the Iranian subsidiary of Sheer Energy in Calgary, Alberta, thus winding up with a 49 percent stake in another Iranian oil field.

The flourishing Chinese-Iranian trade is not restricted to the energy sector.
Chinese companies have won contracts to build everything from broadband fiber optics, to television sets, to automobiles, not to mention a $680 million contract to expand the Tehran subway system.
 And all the while, Washington has continued to view Iran as THE menace looming over the Gulf.

Thus the Americans made an ally out of Saddam Hussein after he invaded Iran, and continued to back him despite his use of nerve gas and long range rockets against civilian targets.

Again, in 1991 when Iraq’s Shiites and Kurds rose against the Iraqi tyrant following the first Gulf War, the United States stood by as tens of thousands of Iraqis were slaughtered by Saddam—despite the fact that George W. Bush had himself called for the uprising. The reason for the betrayal:  Washington was afraid that an Iraq governed by its Shiite majority would open the doors to an Iranian takeover of Iraq.

Fast forward twenty years. After having spent literally trillions of dollars to oust Saddam, U.S. troops are withdrawing from Iraq, leaving the shattered country governed by---a Shiite majority. Many of those Shiites sympathetic to Iran and still deeply embittered by America’s betrayal in 1991.

But even as they withdraw from Iraq, America has been pouring hundreds of billions of dollars into Iraq’s neighbors to ensure a massive and enduring military presence in the oil-rich Gulf. Their major purpose again, a bulwark against Iran.

In addition, Washington has reportedly been funding and training opposition groups in Iran to carry out activities that, were they directed against American targets, would certainly be labeled as “terrorist.”

That American military build-up in the Gulf has long provided Iran’s leaders with a rationale for developing nuclear weapons: not to incinerate Israel, but to defend Iran against an American/Israel attack. For years now, American officials have calmly and openly discussed such military action as an on-going and viable option.

What American officials don’t like to discuss is the fact—repeatedly cited by Iran’s leaders hard-line and moderate --that Israel, which clamors most shrilly about the Iranian nuclear threat, possesses an “illegal” nuclear arsenal that American has never been officially willing to deal with.

However, despite enduring U.S. hostility, the regime in Tehran is still very much in place, its nuclear weapons program still apparently active. And while revolts are still roiling much of the Arab world, the iron-fisted mullahs in Tehran have managed to squelch internal opposition. Indeed, there are those who argue that the embargo and constant threat of an American cum Israel military attack have in fact strengthened the hands of Tehran’s often feckless and feuding leadership.

And as all this has been going on, the Chinese have been prospering.  Chinese/Iranian trade has mushroomed from $3.3 billion in 2001 to $30 billion in 2010, and is expected to hit $50 billion by 2015.  The prize, though is the gas and petroleum.

No wonder, then, that the Chinese are as solicitous of Tehran’s interests as the folks in Washington are of the Saudis.

Their interest is not just economic.

Like Russia, China views Iran as a quasi-ally in their effort to check American power and influence in the Middle East and Central Asia.  One particularly ironic blow came in July 2005, when Iran (along with India and Pakistan) was granted observer status in the Shanghai Co-operation Organization, a regional-security arrangement—established to combat separatism, extremism and terrorism.

China’s activities in the Gulf, however, are not restricted to Iran. While the U.S. continues its huge military expenditures, the Chinese are making impressive inroads throughout the region—which, ironically, in the end, may cause them to back off their stubborn support of Iran.

More of that in my next blog.