Hua Liming, former Chinese ambassador to Iran
Stuart Eizenstat, a former senior official at the US Treasury and State departments
The US announced last Tuesday it would exempt 10 EU countries and Japan from its Iranian sanctions act, since all have significantly cut their oil imports from Iran. China and India are not on the list, and their banks now face the risk of being cut off from the US financial system. What drove US policymakers to take such tough measures? Will it trigger a major Sino-US dispute? Global Times (GT) reporter Gao Lei invited Hua Liming (Hua), former Chinese ambassador to Iran, and Stuart Eizenstat (Eizenstat), a former senior official at the US Treasury and State departments who helped draft sanctions against Iran during the Clinton administration, to talk about these issues.
GT: Why did US policymakers decide to extend sanctions to countries who import oil from Iran? What domestic and international factors motivated this change?
Eizenstat: The United Nation Security Council (UNSC) has on four separate occasions, supported by China, voted for multilateral sanctions against Iran for violating its obligations to cooperate with the International Atomic Energy Agency (IAEA) on its nuclear program. The US and the EU both recognize that the opportunity for a diplomatic solution to Iran's nuclear program is closing.
To avoid a military strike, either by Israel or the US, which would have profoundly negative consequences, there have been a series of ever-tougher sanctions, particularly in the financial area, to try to bring Iran back to the negotiating table to find a diplomatic solution. This has imposed significant economic harm on Iran, but has not stopped their nuclear program.
Hua: From 2006-10, four different sets of sanctions on Iran have been passed by the UNSC. These sanctions were pushed by the US, but were deemed ineffective since they didn't include clauses that will cut off Iran's oil exports and punish Iran's central bank.
Unable to shut down the engine of Iran's economy with the support of the UNSC, the US then has decided to set up its own sanctions on Iran.
However, these unilateral sanctions won't be effective without other countries' cooperation, which is why the Obama administration has imposed this forceful clause this time to push other countries to work with the US.
GT: What risks are likely if the US continues these policies? Will it ultimately damage the US's own interests?
Hua: One imminent risk is an oil price hike. With pressures growing internationally and domestically, the Obama administration has to take up the risk in order to avoid a direct military confrontation that may be triggered by Israel and accusations from the Republicans of being "soft."
Eizenstat: There may be some resentment, but it will be limited. The EU has adopted similar financial sanctions, and the Brussels-based SWIFT system has expelled up to 30 Iranian banks from its data transmission program, virtually preventing the Iranian banks from engaging in international transactions.
The Obama administration has waived sanctions against Japan and 10 EU countries that have reduced their imports of Iranian oil. China does not need to use the Iran Central Bank for its oil purchases.
Effective sanctions are the most important step that can be taken to prevent Israel from taking military action against Iran. China should recognize this reality as well.
The fact that Iran has finally agreed to return to the bargaining table indicates that the sanctions are effective. The Iranian currency, the rial, has fallen more than 40 percent in value against the US dollar, it is difficult to insure ships delivering products, including refined oil to Iran, and unemployment has shot up.
Iran must recognize it has a choice: Comply with UN obligations, which China has supported, or face ever-tougher economic sanctions or the possibility of an Israeli military strike.
GT: China has already stated that it will not comply with the unilateral US sanctions on Iran. How will the US respond?
Hua: The US expects China to stay on its side in sanctioning Iran. But this is merely wishful thinking because China has a huge economic stake in Iran, and it will not give up its national interests for the benefit of the US and Israel. However, it is still too early to predict whether the US will sanction China over this.
Chinese President Hu Jintao has talked to US President Barack Obama on this issue in Seoul, though their priority there is to solve the North Korea nuclear crisis. We still need to wait for more information about their talks.
China has cut some oil imports from Iran. This may draw speculations that China is considering "alternatives." But this is not true.
China cut oil imports from Iran purely due to market reasons as the price had risen. It was not driven by political factors.
Eizenstat: The Obama administration has considerable leeway under the law to take into consideration factors such as the impact on global oil prices from any sanction.
I would assume there will be intensive bilateral negotiations to avoid a confrontation. But China should see it in its own interests to take positive steps to reduce its dependence upon Iranian oil.
GT: What is the ideal solution to this conflict of interests between China and the US?
Eizenstat: The ideal solution to this potential conflict between China and the US is for each country to recognize how intertwined their economic and political interests are in convincing Iran to fulfill its UN obligations, and for China to make it clear that it will reduce its dependence upon Iranian oil if Iran does not act promptly.
China's leadership would be decisive. Saudi Arabia has agreed to supply crude oil to make up for any reduction of oil imports from Iran.
Hua: China and the US are increasingly reliant on each other. They share many common interests, though they have different perspectives. China's goal is self-development, so it will try to keep its external environment as peaceful as possible.
The US, however, wants to hold on to its global hegemonic status and thus must flex its muscles in troubled regions. The US needs to understand and respect China's interests to avoid unnecessary conflicts and to maintain a healthy relationship.