of competing states. It is maintained that both Iran and the US have been entrapped in such entanglement in the Persian Gulf. The three-decade long hostility between the US and Iran has pulled Beijing into the Iranian nuclear issue because of its economic and political relationship with Tehran, which has continued unhampered in spite of US’ continuous pressure in the past three decades. Two factors weigh heavily in the existing policy discord. First, Beijing and Washington have structurally different approaches to the ways and methods of international governance. Second, Iran is of a strategic value for China both as a provider of oil and as an asset to check on the US dominance in the Persian Gulf. Hence, Beijing is not likely to participate fully in the US-led security regime against Tehran at the cost of its established foreign policy practice and strategic interests. If the nuclear crisis puts the Chinese and US
73 These parameters include “Discouraging interstate conflict that can threaten allies (including Israel) and jeopardize other interests; Preserving the flow of energy resources and commerce that is vital to the US, regional, and global economies; Ensuring transit and access to facilities to support US military operations; Countering terrorism (CT); Stemming the proliferation of conventional and unconventional weapons; and Promoting economic growth, democracy, and human rights.” See, “Change in the Middle East: Implications for US Policy,” Congressional Research Service, March 7, 2012.
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policy in further discord, this will inevitably create greater tension between the two major powers in their relationship in the Middle East.
Three interrelated developments have led to the existing China-Iran energy nexus in the Persian Gulf. First, ever since Beijing overhauled its foreign policy doctrine in the Middle East from one of Third World solidarity to principle-based and economics-driven engagement in the early 1990s, it has worked to build relations in the Middle East on the ideas of mutual benefit and non-interference. China’s renouncement from the policy of export of ideology convinced the conservative Iranian leadership to seek better relationship. Hence, China-Iran relations developed along economic and political lines. Second, China’s ever growing energy
consumption and stagnant domestic production obliged the country to seek oil abroad by negotiating directly with the governments some of which have been ostracized from the
international energy regime, including Iran. Finally, the mounting Western sanctions over Iran’s nuclear energy program have stimulated Tehran to seek energy partnership with Beijing. As a result, it has offered China’s national oil companies (NOCs) exploration and production rights that have not been readily available in other regional markets long appropriated by powerful Western multinationals.
The US, on the other hand, has had no direct diplomatic, military and economic
engagement with Iran since 1979. Thus Iran-US energy relations have been non-existent for the past three decades. Furthermore, US’ dependency on the Middle East for its energy import has been in decline for over ten years now and, in about two decades, the North America region will achieve near self-sufficiency from the Middle Eastern oil (IEA, 2012). This is in stark contrast to China, which is projected to rely on the Middle East for over 70% of its total oil import by 2030. Thus, the lack of political and economic engagement with Iran rendered it much easier for Washington to sanction Tehran although it has thus far refrained from direct a military action since such a move would still threaten US interests if the region is destabilized in a war.
As it appears, contrary to the predictions that the US would be militarily disengaged from the Persian Gulf as it achieves energy self-sufficiency (Downs, 2006; Friedberg, 2005), it is now more involved due to enduring geopolitical considerations -- primarily to maintain
dominance in the region in order to prevent regional or outside powers to gain foothold, to
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provide protection for the countries positioned inside its alliance network, and to keep the strategic Gulf of Hormuz open for international energy trade and thus ensure price stability.
The hegemonic nature of the US policy could be best observed in the recent military build-up in the Persian Gulf amidst growing tension vis-à-vis Iran’s nuclear energy program (Auken, 2012).
On the other hand, China’s political and economic engagement in Iran is of a principled nature in which trade in oil is separated from nuclear proliferation. Thus China has continued energy trade with Iran even when it meant digressing from its traditional policy in the Middle East. This strategy has been best observed in the Syrian Crisis which could not be thought of in isolation from the Iranian nuclear issue. China has been firm in its support of the Syrians’ right for self-determination and vetoed three US-led UN resolutions against Damascus (Stea, 2012).
In this study, the Iranian nuclear issue is discussed comparatively from the US and Chinese perspectives with a focus on the role that energy plays in this trilateral setting. It first offers an historical account of US-Iran and China-Iran relations in the post-Cold War period.
Second, it looks at the divergent strategies of China and the US vis-à-vis the Iranian nuclear program and explores the underlying logic in the two countries’ strategies. Third, it provides an analysis of the China-US policy discord in the Persian Gulf and its implications for their bilateral relations. Finally, it sums up the analysis with a note on further research.
Iran’s Nuclear Energy Program: Chinese and US Strategies
Iran’s nuclear energy program dates back to the early 1950s. Throughout the Shah era, Iran has primarily cooperated with Germany, France and the United States to kick-start an ambitious nuclear energy program under which it planned to build about 20 nuclear power reactors by 1994. In 1957, the Shah signed a civilian nuclear cooperation agreement with the US. In the same year, Germany and France began to build two nuclear power units each. In the meantime, Iran made certain efforts to demonstrate that it did not pursue nuclear proliferation.
As a sign of good faith, Tehran joined the International Atomic Energy Agency (IAEA) in 1958 and signed the Nonproliferation Treaty (NPT) in 1968 (Leverett & Leverett, 2013). It also offered to the UN General Assembly a draft resolution, calling for establishing a nuclear-free zone in the Middle East as early as 1974 (Kerr, 2012; Reardon, 2012).
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The 1979 revolution brought a short-lived change in the Iran’s nuclear energy policy.
The new government remained highly skeptical of nuclear technology. Iran also suffered a considerable loss of brainpower because of the Revolution which led to a large scale flight of educated Iranians from the country. However, in the mid-1980s, Tehran’s nuclear energy program went through another major transformation as it moved from anti to pro-nuclear energy (CIA, 1988; Kahn, 1975). This change in policy is attributed to the use of chemical and biological weapons against Iran by the Iraqi Army during the Iraq-Iran War. The failure of the Western powers to address the issue forced Tehran to reconsider its strict anti-nuclear energy policy (Chubin, 2006: 7-10). Throughout the 1990s, Tehran’s nuclear program remained a consistent but low-scale concern until an exiled opposition group revealed the existence of secret nuclear facilities in Iran. The revelation caused a major international backlash and under growing Western pressure, Tehran agreed to expanded safeguards and inspections by the IAEA.
However, consistent differences of opinion between the West and Iran prevented a final deal on nuclear enrichment (Reardon, 2012: 15).
In 2006, the P5+1 Group, the permanent five members of the UN Security Council plus Germany, offered comprehensive proposals to Iran. Tehran’s initial reaction was positive and in September, the sides were about to reach a tentative deal. However, due to its requirement that Iran suspend all enrichment-related activities, Tehran rejected the offer. Successive failures in the negotiations on the nuclear issue and the inability of the sides to reach an agreement enabled the US to rally the UNSC to vote for the first sanctions resolution against Iran
(Resolution 1737) in 2006. Although much weaker than planned by the US due to Russian and Chinese reservations, R1737 prohibited many forms of civilian nuclear and ballistic missile cooperation with Iran, imposed financial sanctions on several Iranian entities tied to the nuclear program, and set a deadline for Iranian compliance. The Security Council passed the second resolution when Iran failed to meet the February 2007 deadline. The new measures extended financial sanctions to more state entities and banned Iran from exporting arms. About one year later, in March 2008, a third Resolution (R1803) came into effect, prompting more stringent measures against Tehran. Finally, the UNSC passed Resolution 1929 in June 2010.
However, none of the sanctions lived up to the US expectations because China and Russia
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blocked the inclusion of clauses that might do more harm to civilians than force the political elite to change opinion. Following this, in 2011 and 2012, United States and Europe enacted extensive sanctions on the Iranian finance and energy sectors, including punishing foreign firms doing business with the Iranian Central Bank (Reardon, 2012: 18-25).
Despite a long history of international scrutiny, the question of whether Iran has a clandestine nuclear proliferation policy has remained contested. Conflicting reports from the concerned parties and Tehran’s vehement denials of seeking nuclear armament have cast further doubt over Iran’s true intentions (Kerr, 2012: 2). For example, a National Intelligence Estimate by the Director of National Intelligence (DNI) of the US indicated in December 2007 that Tehran stopped its nuclear weapons program in 2003 under international pressure
(Mazetti, 2007). Similarly, at a US Senate Select Intelligence Committee hearing held in January 2012, the Director of National Intelligence stated that even though Tehran “is keeping open the option to develop” nuclear weapons, “[w]e do not know... if Iran will eventually decide to build nuclear weapons” (Clapper, 2012).
In November 2013 P5+1 meeting the sides reached a first step agreement on Iran’s nuclear program. Under the deal, Iran agreed to halt enrichment above 5% and neutralize its stockpile of near-20% uranium. Tehran also promised to allow inspectors to its enrichment facilities. However, later, conflicting statements from the sides have clouded the early optimism and suggested that the parties might have differences in their interpretation of the agreement.
Furthermore, the US went ahead with fresh sanctions on Iran, drawing angry comments from the Iranian side. Obviously, at this point, the Iranian nuclear issue is far from being concluded and major differences of opinion among various actors still exist.
US: From Friend to Foe
US engagement with Shah-era Iran was composed of two major components: energy and anti-communist alliance. On the energy front, in 1953, the CIA worked with the British secret service to restore the Shah Reza, who advocated extensive privatization of the energy sector, by overthrowing the government of Musaddeq who sought to re-nationalize the oil industry. The US benefitted greatly from the shift in energy policy in Tehran and maintained close relationship with the regime. With the redistribution of the British production shares,
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eight private U.S. companies were awarded 40% of the Iranian oil. On the ideological front, the Shah helped Washington in its anti-communist efforts in the ME. Tehran served as a forward base for clandestine operations on the border of the Soviet Union against “the expansion of communist influence and [as] a counterweight to the pro-Soviet Arab regimes and movements”
(Katzman, 2012: 6).
This two-pronged strategy came to an abrupt end in 1979 when the anger toward the two-decade long oppressive rule and growing anti-Western sentiment led to an Islamic revolution and the overthrow of the Shah regime in Iran, taking then Carter administration by surprise.74 As in many other newly established countries of East Asia in the post-World War II era, anti-colonialism created a popular discourse of resource nationalism among the Iranian masses who demanded full nationalization of the oil sector. Also, the new Iranian government became a firm advocate of non-alignment while it opposed firmly Soviet communism, as well.
In consequence, economically, Washington lost a reliable energy partner and, strategically, it lost an ally that functioned as a proxy in the Middle East. From that point on, US-Iran bilateral relations deteriorated quickly. The US government imposed first sanctions on Iran during the Embassy Hostage Crisis in 1979.75 Mutual hostility escalated further in 1984 when the US added Iran to the list of countries supporting terrorism. Yet, of all the issues of contention, Iran’s nuclear energy program has become the most controversial (Sanger, 2012).
Concerned that nuclear proliferation would lead to instability, increase the likelihood of a nuclear war and give nations “a sense of greater independence,” various US administrations made only cautious steps in providing Iran assistance in nuclear technology (Burr, 2009: 21).
Nevertheless, soon after the Shah’s assumption of power, Washington signed a civil nuclear cooperation agreement. Under the agreement, it promised Iran technical assistance and cooperation on research on nuclear technology (Poneman, 1982: 84). US supplied about 6kg of enriched uranium to Iran for fuel in a research reactor in September 1967 (NSA, 1980).
Washington was so confident of Tehran’s peaceful intentions that, in March 1975, the Energy
74 In his visit to Iran in the early days of 1978, President Jimmy Carter described Iran as “an island of stability in a turbulent corner of the world.” Less than a year later, students stormed the US Embassy.
75 The Embassy hostage crisis became the critical watershed moments, signaling an important shift in US-Iran relations.
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Research and Development Administration classified Iran as one of the least likely candidates to seek nuclear weapons (NSA, 1975).76 Thus almost a year prior to the Iranian Revolution, the two sides signed an agreement for the provision by the US of eight reactors.
However with the sudden fall of the Shah regime, Iran’s Western-backed nuclear program collapsed entirely as well, and the political and strategic delinking of Iran from the international system reduced the country’s status from a friend to a foe. Following geopolitical fault lines, Tehran’s nuclear energy program soon turned into a potential threat to regional and global security in the eyes of US policy makers. Thus a first set of anti-nuclear sanctions came in 1982 during the Reagan administration in which, along with 62 other countries, Iran was put on a nuclear watch list (Benjamin, 1982). A second round of sanctions against Iran came into force in 1995. The law stipulated that any foreign company investing over $40 million to the
development of petroleum resources in Iran would be penalized. These efforts seemed to pay off until fresh revelations showed that Tehran’s quest for nuclear technology remained unchanged in the early 2000s. This development gave way to the ongoing process of multi-party negotiations that lasted until this day.
It follows that post-Revolution US-Iran relationship has been dominated by mutual antagonism and distrust except for brief moments of limited interaction. At the core of this is a struggle between two different sets of values, one promoted by Iran as a country aspiring for regional great power status and the other by the US as an established unilateral hegemon (Bill, 1999: 44-46). Iran’s geostrategic significance as the gate keeper of the strategic Gulf of Hormuz (EIA, 2011) and its “fierce sense of independence” (Ramazani, 2012) have motivated US
administrations to consistently seek to prevent Tehran from rising as a regional powerhouse.
Iran’s nuclear energy program has become a crucial aspect of this struggle.
The United States has attempted to contain Iran through alliance diplomacy and military build-up in the Persian Gulf, hoping to keep Iran’s economy from developing, marginalize its regional standing and isolate it at international institutions. For these purposes, first, it has built a formidable military presence in the Persian Gulf, including a carrier battle group in Bahrain.
Second, it has sought to weaken regional actors such as Iraq and Syria, thereby prevent a
76 The list included India, Taiwan, South Korea, Pakistan, and Indonesia.
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regional bloc from emerging. Third, it has maintained an implicit patron-client relationship with anti-Iranian governments such as Israel, Saudi Arabia and several other Gulf monarchs (Bill, 1999: 44-46). Finally, it has fortified these clients militarily (Cohen, 2013).
At the center of the US’s Iran policy is the concern that a nuclear Iran would be a major regional power with an international posture more defiant of the established rules. Nuclear proliferation would drastically change the regional balance of power that currently favors the US allies and undermine US’ military hegemony. Beyond the Middle East, Tehran’s
nuclearization would have a ripple effect across the nations that identify themselves with the non-aligned grouping. Furthermore, Washington worries that Tehran may share its nuclear experience with other untrusted states such as Venezuela, Syria and North Korea. Finally, the US is concerned about Israel’s safety in the event that Iran achieves nuclear deterrence capability (Kerr, 2012: 2). Washington fears that if Iran achieved nuclear parity with Israel, this would erode Israel’s military superiority over the rest of the region and undermine its security.
China: An Act of Strategic Balancing
Due to the growing Western pressure on Iran’s nuclear energy policy, China-Iran relations shifted from the contentious arms’ sales and key technology transfers during the 1980s to more neutral trade in energy in the late 1990s. Overtime, energy has become the main axis around which the Sino-Iranian economic partnership revolves. In 2012, Iran became China’s fourth largest supplier of crude oil (10-12% of its total import), and currently China is Iran’s largest trade partner.77
Beijing established full diplomatic relations with the Shah’s Iran in 1971 and since then the two countries developed peaceful economic, military and political relations. China and Iran shared a similar vision of non-alignment, and economic and political sovereignty; ideas that were largely derived from their respective historical experience of anti-colonial struggle. Also, the fact that China and Iran had no history of war and both had been subject to the humiliating experience of neocolonialism reinforced the mutual social and political identification. Although
77 Although Iran remained China’s third largest supplier of oil for the most part of the previous decade, due to the latest round of financial sanctions on the companies that do business with the Iranian Central Bank, it slid to the 4th place in 2012.
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relations remained rather limited in the aftermath of the Chinese Revolution because of China’s cooperation with Russia and Iran’s opposition to Soviet expansionism, by the mid-1960s and particularly after the Sino-Soviet split, the two countries started to establish more substantial ties. As a result of the warming relations, in 1969, Tehran declared support for the PRC’s UN bid to replace Taiwan. Political rapprochement soon translated into greater economic cooperation:
For instance, bilateral trade volume during the 1960s reached at levels 20 times higher than the previous decade (Mackenzie, 2010; Huwaidin, 2002; Dorraj & Currier, 2007).
Today, cooperation in energy constitutes the backbone of the Sino-Iranian economic relations (Calabrase, 2006). Apart from a partnership that results from China’s ever-increasing energy needs and Iran’s vast amounts of hydrocarbon resources, US sanctions against Tehran have further encouraged more comprehensive ties between the Chinese and Iranian industries.
Indeed, as Iran has been forced into deeper isolation from international energy markets, China
Indeed, as Iran has been forced into deeper isolation from international energy markets, China