April 12, 2015

TWO THINGS HAPPENED WHEN WE SAT DOWN TO TALK...:

China's Already Preparing for a Post-Sanctions Iran (Shannon Tiezzi, April 08, 2015, The Diplomat)

Iran is eager to rid itself of international economic and financial sanctions that have crippled its economy in recent years. Two tweets from Iranian Foreign Minister Javad Zarif showed how much of an emphasis Tehran will place on getting the maximum number of sanctions removed as quickly as possible. Meanwhile, other negotiating powers, particularly the U.S., are keen to see Iran's compliance with the deal verified before any sanctions are lifted.

Iran, however, is not waiting for verification to seek expanded economic engagements - in fact, it's not even waiting until the final deal is unveiled in late June. According to Reuters, Iran has already sent a group of Iranian oil officials to China seeking increased investments and oil exports. Iran's oil minister, Bijan Zanganeh, is also expected to visit China in the near future.

Iran hopes to double its oil exports in the first two months after sanctions are lifted; China will be a crucial part of making that dream a reality. Prior to 2012, when sanctions took hold, Iran was the third-largest oil exporter to China. By 2013, Iran had dropped to sixth place, falling behind Oman, Russia, and Iraq.

Two Chinese state-owned oil companies, China National Petroleum Company (CNPC) and Sinopec, had already promised billions to Iranian oil projects before sanctions were laid down. Sinopec, for instance, has a $2 billion deal to develop an oil field in Khuzestan, while CNPC has a $2 billion contract for a field in North Azadegan. But as sanctions tightened on Iran post-2011, China's oil companies began to back away from further investments in Iran. CNPC, for example, withdrew from a deal to develop a natural gas field in South Pars in 2012, saying sanctions had made it too difficult to get the necessary equipment from western companies.

However, at the first sign of sanctions relief - the preliminary deal between the P5+1 powers and Iran reached in November 2013 - China moved quickly to recommit to Iranian oil. In the first six months of 2014, China's oil imports from Iran increased 48 percent from the same period the previous year. That pace slowed over the rest of 2014, but the year as a whole still registered a 28 percent increase in oil imported from Iran. In other words, China began acting on the expectation of permanent sanctions relief almost immediately - putting pressure on negotiators to actually reach a deal.

...Iran abandoned even the pretense of a nuke program and the sanctions regime collapsed.  The two parties are just explaining that reality to their hard-liners.

Posted by at April 12, 2015 8:07 AM
  

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