Wednesday, November 9, 2011

To Stop Iran, Lean On China

TODAY, the International Atomic Energy Agency released a report on Iran’s nuclear program. It provides the most convincing evidence to date that Iran is close to producing a nuclear weapon.

But as Iran nears the nuclear threshold, the best way to stop it may be by punishing the Chinese companies that supply Tehran and enable its nuclear progress.

The Obama administration seems to understand this. The late September visit to China by David S. Cohen, the Treasury Department’s new under secretary for terrorism and financial intelligence, included the most explicit warning yet to Beijing that its banks and financial institutions could face sanctions if they continued to do business with Iranian entities.

The move is significant. More than a year ago, President Obama signed into law a series of sweeping sanctions cumulatively aimed at throttling Iran’s energy sector. Yet so far, China has mostly gotten a pass on its engagement with Iran.

Those ties are broad — and getting broader. In recent years, China’s economic dynamism has brought with it a voracious appetite for energy. This has made energy-rich Iran a natural strategic partner. In 2009, Iran ranked as China’s second largest oil provider, accounting for some 15 percent of Beijing’s annual imports.

In exchange, China has aided and abetted Iran’s quest for nuclear capacity.

Diplomatically, it has done so by complicating oversight of Iran’s nuclear program, and by resisting the application of serious sanctions against Tehran. More directly (and dangerously), it has turned a blind eye to Iranian acquisitions of sensitive technology and materiel for its nuclear program from Chinese sources.

Over time, Chinese leaders have become convinced that Washington prioritizes bilateral trade with Beijing over security concerns about Iran, and that it therefore won’t enact serious penalties for China’s dealings with Iran. This has allowed Chinese officials to pay lip service to international efforts to rein in Iran’s nuclear program while quietly playing a key role in nurturing Tehran’s nuclear quest. The result is clear: when it comes to Iran, China today isn’t part of the solution; it’s part of the problem.

As David Albright of the Institute for Science and International Security has noted, China is becoming Iran’s key enabler, supplying much of the equipment that Tehran needs to keep its nuclear effort up and running in the face of international sanctions. “China does not implement and enforce its trade controls or its sanctions laws adequately,” Mr. Albright argued earlier this year. Indeed, a concerted Chinese crackdown on firms involved in nuclear commerce with Iran would effectively cripple Tehran’s atomic program.

Washington, worried about potentially destabilizing economic effects, has historically shied away from putting pressure on Beijing over its ties to Iran. But if the Obama administration is serious about halting Iran’s nuclear program, it must do so by sanctioning companies like the China National Offshore Oil Corporation, or Cnooc, which has been developing Iran’s mammoth North Pars natural gas field since 2006, and PetroChina (which supervises the import of some three million tons of liquefied natural gas annually from Iran). Both are publicly traded on the New York Stock Exchange and therefore subject to penalties under existing law.

Mr. Cohen’s recent jaunt to Beijing was intended to convince the Chinese government that it must decisively curtail its ties to Tehran, or face real economic costs. This message needs to be coupled with the application of concrete economic penalties — from bans on United States-based energy projects to prohibitions on financial transactions that fall under American jurisdiction — that are intended to persuade Chinese companies, including Cnooc and PetroChina, to scale back their economic contacts with Iran. At the same time, greater targeted sanctions and asset freezes are needed to bring to heel Chinese individuals and entities that are currently complicit in Iran’s nuclear advances.

After all, the last, best hope of peacefully derailing Iran’s nuclear drive lies in convincing Beijing that “business as usual” with Tehran is simply no longer possible.
By Ilan I. Berman vice president of the American Foreign Policy Council. New York Times

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