China comes to the rescue of Iran

The Chinese and Iranian governments have announced that China will invest $400 billion to develop the Iranian oil and gas industry, a petroleum industry newsletter has reported.

The Iranian government has embraced the Chinese Belt and Road Initiative, also known as the New Silk Road, an ambitious plan to build infrastructure to unify the economy of the interior of Eurasia under Chinese leadership.

It will include $120 billion for new oil and gas pipeline, including a pipeline through Turkey in violation of U.S. sanctions.  All the equipment for the new projects will be provided by Chinese contractors.

China has the right to buy Iranian oil at a discount and pay for it in soft currencies it has accumulated in dealings with countries in Africa and Asia.  This amounts to an overall 30 percent discount from the world price.

China will employ 5,000 “security personnel” to guard its properties.  This means that any attack on Iran would involve risk of killing Chinese and inviting Chinese retaliation.

Presumably the Iranians, like the Russians, would prefer to sell to Europe, their natural market, for full price, but the U.S. government has blocked them from doing business in Europe in dollars.

The goal of U.S. foreign policy for 70 years has been to control the oil of the Middle East.  Now the oil of Iran is within the Chinese sphere of influence.

There is little intrinsic common ground between China, Iran and Russia.  The U.S. government has driven them together by waging economic warfare against all three.  In the process, it is antagonizing its allies in Europe by forcing them to act against their economic interests.

China’s foreign policy makes it economically stronger.  United States foreign policy is a drain on U.S. strength.  China is making friends.  The U.S. is making enemies.  This will end better for China than it will for the United States.

LINKS

China Defies Trump Big Time With $400 Billion Belt and Road Investment, 5,000 Security Personnel by Juan Cole for Informed Comment.  Hat tip to peteybee.

China and Iran flesh out strategic partnership by Simon Watkins for Petroleum Economist.

How Tehran Fits into Russia-China Strategy by Pepe Escobar for Asia Times.

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2 Responses to “China comes to the rescue of Iran”

  1. Bill Harvey Says:

    Thanks much to Phil for this one.

    I don’t quite get the points in this paragraph:

    “There is little intrinsic common ground between China, Iran and Russia. The U.S. government has driven them together by waging economic warfare against all three. In the process, it is antagonizing its allies in Europe by forcing them to act against their economic interests.”

    But overall this post serves to highlight the importance of the 2011 US Asia Pivot in current US policy in Iran- as well as in Venezuela and North Korea, not to mention the rest of the world.

    Don’t miss the links. The second article at the Escobar link helps us see where India comes into this mix. Here it might well turn out to be the case that the US will drive India into the arms of the Grand Alliance that is slowly taking shape against the world’s presumptive Sole Superpower.

    The US no longer has the power to simply point its guns and bark orders (not that it ever did, really). It’s scary to consider how all this will shake out.

    Thanks,
    Bill

    Like

    • philebersole Says:

      Bill, what I meant was that Russia and Iran would prefer to sell oil and gas to Europe, their natural market, and the Europeans would willingly buy Russian and Iranian oil and gas if they did not fear American economic sanctions.

      Europeans must deeply resent having their economic interests subordinated to American geo-political strategy, and I think that at some point this is going to blow up.

      If the United States government had chosen a different path, we Americans could have had good long-term relations with Russia, Iran and our European allies, based on mutual self-interest.

      China is an economic rival of the United States, but waging economic warfare against China won’t make the United States prosperous.

      But say for the sake of argument that the United States needs to engage in a geopolitical and economic struggle against China, it is crazy to go around the world making other enemies and driving them into the arms of China. Of course, this is crazy, period, regardless of what the Chinese do.

      Liked by 1 person

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