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China-U.S. Partnership Key for Iran Nuclear Deal

Apr 01 , 2015

As China, Russia, and the Western powers engage in nuclear negotiations with Iran strive to meet their March 31 deadline for a framework agreement, which according to plan would lead to a more detailed implementation package by June, China has become a key partner for Washington’s Iran end game.

Chinese and U.S. negotiators both want to limit how much uranium Iran can enrich and keep that enrichment at the low 5% level required for fueling commercial power reactors. They are also collaborating to foreclose to Iran and plutonium path to a nuclear bomb by demanding clear constraints regarding Iran’s Arak heavy water reactor. Chinese and U.S. diplomats both insist on stringent verification and monitoring arrangements with frequent and intrusive inspections of Iran’s declared and possibly undeclared nuclear activities. Finally, Chinese and U.S. negotiators are comfortable with any nuclear deal lasting one rather than several decades.

After years of fruitless efforts to prevent Iran from conducting any uranium enrichment, U.S. negotiators today join with their Chinese counterparts in seeking to contain rather than eliminate Iran’s nuclear weapons potential. Both governments now presume that Iran’s uranium-enrichment program has proceeded too far to be completely eliminated, and thus pursue the less ambitious goal of keeping this capacity limited and transparent to external monitoring. Their shared focus is now on lengthening the time Iran would need to apply its growing civil nuclear energy capabilities to the production of nuclear weapons—thereby extending the warning time they would have to detect any militarily significant diversion.

In the past, Iran and the United States differed sharply in how they approached the Iranian nuclear file. China has used its veto power in the UN Security Council to block strong sanctions resolutions submitted by Washington. Chinese analysts argued that those Iranians who might want nuclear weapons would seek them primarily for defensive reasons—to deter a U.S. or Israeli attack—but not as a means to confront other countries or to support international terrorism. They downplayed the prospects that Iran would soon acquire nuclear weapons, and if obtained, use them. Meanwhile, Chinese companies have exploited U.S. successes in convincing Western firms to disengage from the Iranian economy by replacing them. Over American objections, China also joined Russia in supplying weapons to the Iranian armed forces and certain dual-use technologies that have assisted Iran’s nuclear research and missile development programs.

But Beijing has never wanted Tehran to have or seek nuclear weapons. Iran’s pursuit of a nuclear arsenal could raise the prospect of a war in the Middle East that would threaten China’s energy supplies and decrease its trade and investment opportunities. It could also lead additional countries beyond the Persian Gulf to seek them, including countries like Japan and South Korea that are of greater security concern to Beijing.

However, while Chinese policy makers do not want Iran to acquire nuclear weapons, they oppose the use of military force or severe sanctions to prevent it. In the P5+1 nuclear talks, Beijing and Washington have differed on such questions as whether Iran must come clean about its earlier covert nuclear-weapons-related activities; how rapidly to relax the UN sanctions on Iran; and China’s refusal to respect the supplementary sanctions that the United States and its allies have imposed on Iran outside the UN Security Council. These non-UN sanctions often have extra-territorial provisions that apply to Chinese firms with business with Iran. The Chinese government rejects this claim of extra territoriality on principle.

Although Beijing might welcome a modest relaxation of tensions between Washington and Tehran, Chinese policy makers do not want a comprehensive reconciliation that would restore the Iran-U.S. strategic and economic partnership that existed before the 1979 Iranian Revolution.

In contrast, China might welcome the removal of barriers keeping Iranian oil and natural gas off international markets as well as the downward pressure on world energy prices this would ensure. But Chinese corporations could suffer from the likely drive of Iranian businesses to replenish their inventories of Western goods and technologies, thereby diverting purchases away from Chinese firms. Iran’s alienation from Western countries has meant that Chinese companies face less Western competition for Iranian trade and investment opportunities. In 2009, China surpassed the European Union as Iran’s largest trade partner. Chinese firms investing in Iran have become adept at exploiting Western sanctions to “backfill” for the departing foreign firms. But Chinese firms would need to offer better commercial terms to their Iranian partners to compensate for any renewed Western competition.

The present state of limited tensions between Iran and the West best suits Beijing interests. The current friction leaves China as Iran’s major economic partner, diverts U.S. attention and pressure away from East Asia, and encourages Tehran to seek Chinese backing. Chinese policy makers have exploited their pivot position to press Tehran to make concessions regarding its nuclear activities while demanding compensation from the West for backing sanctions and rendering other assistance regarding Iran. We see this dynamic at work even in the current talks.

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