To Pressure Iran, Squeeze Russia and China

The State Department’s sanctions czar, Robert Einhorn, likes to tout that the threat of sanctions has led to about $60 billion in energy projects being terminated in Iran. This figure mostly reflects the decision of European firms to back off. Germany and Italy, Iran’s most important European trade partners, have recently developed a political consensus—albeit a fragile one—in favor of tougher sanctions. Businessmen, however, remain wary. As Ulrich Ackermann, a spokesman for the German Engineering Federation, remarked: If “German companies pull out, will other, non-German companies replace us?” Thanks to Russia and China, the answer is “Yes.”

Russia and China have made it clear that the Iranian energy sector is still open for their business. In 2009, the Chinese National Petroleum Corporation (CNPC) replaced France’s Total in a contract to develop a major part of Iran’s South Pars gas field. Total had withdrawn from the deal because of increasing pressure from Paris and Washington.

Chinaoil, the trading arm of CNPC, had not delivered gasoline to Iran in 2009 but began doing so in 2010. Unipec, the trading arm of Sinopec—the China Petroleum and Chemical Corporation—also resumed gasoline sales to Iran in the spring of 2010 after a nearly six-year hiatus. According to Reuters, China’s Zhuhai Zhenrong has also started shipping gasoline to Iran, sometimes in cooperation with Litasco, the trading arm of Lukoil, Russia’s petroleum giant.

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