Chinese businessman Sheng Kuan Li didn’t worry about sanctions when he decided in 2010 to invest $200 million in a steel mill in Iran that started producing ingots and billet within months of the lifting of punitive measures against the Islamic republic as part of 2015 international nuclear agreement with Iran.
With no operations in the United States, Mr. Li was not concerned about being targeted by the US Treasury. Mr. Li, moreover, circumvented financial restrictions on Iran by funding his investment through what he called a “private transfer,” a money swap that was based on trust and avoided regular banking channels.
In doing so, Mr. Li was following standard Chinese practice of evading the sanctions regime by using alternative routes or establishing alternative institutions that were in effect immune.
To be able to continue to purchase Iranian oil while sanctions were in place, China, for example, established the Bank of Kunlun to handle Chinese payments.
The Chinese experience in circumventing the earlier sanctions will come in handy with Beijing rejecting US President Donald J. Trump’s renewed effort to isolate Iran and force it to make further concessions on its nuclear and ballistic missiles programs as well as the Islamic republic’s regional role in the Middle East by walking away from the 2015 agreement and reintroducing punitive economic measures.
Chinese foreign ministry spokesman Geng Shuang said in response to Mr. Trump’s announcement that the People’s Republic was committed to the deal and would “maintain communication with all parties and continue to protect and execute the agreement fully.”
China’s likely willingness to circumvent US sanctions is one factor that will influence Iran’s decision on whether it will stick to the agreement. Iran’s decision depends on the readiness and ability of the other signatories – Britain, France, Germany and Russia – to also stand up to the United States.
China’s experience in circumventing sanctions could come in handy as Europe, that like China has rejected Mr. Trump’s move and vowed to ignore the sanctions, weighs ways of putting its money where its mouth is by attempting to shield European companies from potential US punitive action. One possibility would be to use alternative Chinese financial networks.
Nonetheless, this time round, rejecting and violating US sanctions may prove for China as well as the other signatories to be a trickier undertaking. Last time round, China and the other signatories were part of an international consensus that aimed to force Iran to accept restrictions on Iran’s nuclear program even if they at times circumvented the sanctions.
China and other signatories are in the wake of the re-imposition of US sanctions likely to be operating in a far more confrontational environment in which the subtext of Mr. Trump’s decision as well the positions of Saudi Arabia and Israel appears to be a policy that seeks to achieve regime change in Tehran.
Saudi Arabia as well as the United Arab Emirates have suggested in recent months in their 11-month old economic and diplomatic boycott of Qatar that they are willing to quietly sanction those who fail to support them.
There is little reason to doubt that they would do the same in their confrontation with Iran with Saudi Crown Prince Mohammed bin Salman describing the dispute with Qatar as “trivial’ in comparison to the kingdom’s existential battle with Iran.
Saudi Arabia demonstrated its greater assertiveness by forcing major multi-national financial institutions to choose sides in the Gulf spat. In response to Saudi pressure, JP Morgan and HSBC last month walked away from participating in a $12 billion bond sale.
Earlier, Doha Bank, Qatar’s fifth-biggest lender, was forced to reduce the size of a two-year, $575 million bank loan that it had raised in December 2015 to $400 million, when it sought a one-year extension of the facility because Chinese, Hong Kong and Japanese banks opted not to participate.
In the utmost consequence, China’s concerted effort to remain aloof of the Middle East’s multiple conflicts could be severely compromised if it were forced to take sides in a conflict between Iran, a country with which China feels that it has much in common and that it in the past has helped develop its ballistic and nuclear programs, and Saudi Arabia, a more recently found friend that is economically important to the People’s Republic.
To be sure, greater Saudi assertiveness does not mean that the kingdom does not have to tread carefully in potentially seeking to penalize China and others for their potential refusal to go along with Mr. Trump’s confronting of Iran.
Saudi Arabia desperately needs foreign investment to implement Prince Mohammed’s Vision 2030, a far-reaching plan for social and economic reform that aims to diversify the kingdom’s conservative society and oil-dependent economy and turn it into a 21st century, knowledge-based state.
China, moreover, is one of Saudi Arabia’s foremost oil export markets. While the Saudi military remains focussed on US and European arms purchases, China, at a time that a military confrontation with Iran is not beyond the realm of the possible, is a source of weaponry the United States has been so far unwilling to sell to the kingdom.
With the United States refusing to share its most advanced drone technology, China agreed last year to open its first overseas defense production facility in Saudi Arabia. State-owned China Aerospace Science and Technology Corporation (CASC) will manufacture its CH-4 Caihong, or Rainbow drone as well as associated equipment in Saudi Arabia. The CH-4 is comparable to the US armed MQ-9 Reaper drone.
The stakes in the battle to save the Iranian nuclear deal in the wake of Mr. Trump’s decision go however far beyond a belief that the nuclear deal is serving its purpose in curbing potential Iranian nuclear ambitions and economic opportunity.
Leveraging its experience, an effort by China together with Russia and Europe that keeps the Iranian nuclear deal in place and thwarts US sanctions would deliver one of the heaviest body blows to US credibility and perceptions of US power since Mr. Trump came to office in January of last year.
Said a Middle Eastern diplomat: “A successful countering of US sanctions would demonstrate beyond doubt limits to America’s ability to impose its will. That would have wide-reaching consequences, not in the least question marks in Saudi Arabia and Israel on the degree to which they can risk continuing putting most of their eggs in Washington’s basket.”
Saudi Arabia’s Entertainment Plans: Soft Power at Work?
Saudi Arabia recently broke ground on its ambitious “entertainment city” known as Qiddiya, near Riyadh. The splashy launch, attended by 300 dignitaries from around the world, highlights a frequently overlooked aspect of Saudi Arabia’s Vision 2030 plan: the entertainment industry as a growing economic sector. As the kingdom diversifies its economy away from reliance on petro fuels, Crown Prince Mohammed bin Salman has been keen to showcase the increasing openness of his country, promoting festivals, concerts and sports events and ending the country’s 35-year ban on cinemas.
These projects are partially intended to bolster the economy and attract FDI—but not only. Saudi Arabia is also playing catch-up with other regional actors, such as Qatar and the UAE, in terms of cultural output and cultural participation. With Qiddiya and the other cultural projects in the works, Saudi is now carving out a road for itself to become a regional culture hub.
Thefirst phase of Qiddiya, which includes high-end theme parks, motor sport facilities and a safari area, is expected to be completed in 2022. Saudi officials hope the park will draw in foreign investment and attract 17 million visitors by 2030; the final phase of the project is expected to be completed in 2035, by which point the entertainment resort will be the largest in the world, dwarfing Florida’s Walt Disney World.
Beyond these financial incentives, however, the Qiddiya project is Saudi Arabia’s answer to events like the Dubai Expo 2020 or the Qatar World Cup 2022 and suggests that the kingdom is trying to position itself as the next big destination for lucrative events – which also add to the idea that entertainment, culture, and innovation are key to Saudi Arabia’s economic vision and success.
Vision 2030’s emphasis on entertainment raises a key question: is Riyadh attempting to increase its soft power across the region in a constructive and proactive way? The answer to that question is yes.
In the immediate future, Qatar and the UAE will remain the region’s foremost entertainment and cultural hubs. From Qatar’s Islamic Museum of Art, which famous architect I.M. Pei came out of retirement to design, to Dubai’s theme parks, including a $1 billion behemoth which is the world’s largest indoor theme park, these two Gulf states are demonstrating their prowess to develop an arts and culture scene. In Doha, Qatar is exemplifying its unique outlook towards world affairs by emphasizing humanitarianism and fourteen centuries of history. Qatar is also hosting the World Cup in 2022, intended to bring Doha center-stage in the sports world. Abu Dhabi’s Louvre has been referred to as “one of the world’s most ambitious cultural projects”, while advertisements throughout the emirate insist that the museum will cause its visitors to “see humanity in a new light”.
Despite these Gulf states’ head start on developing vibrant entertainment sectors, there is still room for Saudi Arabia to offer something new. For one thing, some of its neighbors are dealing with trouble in paradise: Qatar’s once-strong economy is under increasing strain as the UAE, Saudi Arabia, Bahrain and Egypt boycott it; meanwhile, the company which owns many of Dubai’s largest theme parks lost $302 million in 2017.
The Qiddiya project also represents a particular vision that’s distinct from neighboring countries’ cultural programs. Qiddiya is designed to mix desert heritage and the ethos of the past with the technological advances of the future. The intended result is to be a fusion between aspirations and building on those achievements from desert to post-modernity, on a colossal scale.
The project is crafted both to satisfy domestic demand—it includes plans to build 11,000 homes to serve as vacation homes for Riyadh residents— and to compete directly against Saudi Arabia’s neighbors in the Gulf. With two-thirds of the Saudi population under the age of 35, building a thriving entertainment sector is particularly important.
The kingdom is hoping to use its idea of mixing the past with the future in Qiddiya to significantly alter the flow of tourist revenues in the Gulf. The UAE, Qatar and Bahrain rely on tourists from the Gulf and beyond for essential cash inflows—including the $30 billion a year Saudis spend on tourism abroad every year. By providing new entertainment options in-country for Saudi Arabia’s citizens and residents, who pay more than any other country’s citizens while on vacation, Riyadh aims to redirect some of this overseas tourism spending back into the kingdom. It’s set up concrete goals to this effect, hoping to increase domestic spending on culture and entertainment from about three percent of household income to six percent. Saudi Arabia also likely hopes that Qiddiya will attract significant international tourism as well—one senior official tied the park’s creation to the goal of making Riyadh one of the top 100 cities in the world to live.
Of course, it is likely to be a long wait before the kingdom itself starts producing the cultural output that will make it a real entertainment hub; after all, Saudi public schools still do not teach music, dance and theater, and the kingdom lacks music and film academies. But by taking the first steps of embracing the vast economic potential of the entertainment sector, the kingdom may well be on its way there.
Israel, Ukraine, and U.S. Crack Down Against Press
On Wednesday, May 16th, Russian Television reported recent crackdowns against the press, on the part of both Ukraine’s Government and Israel’s Government. One headline story, “9 journalists injured by Israeli gunfire in Gaza ‘massacre’, total now over 20”, reported that Israel had shot dead two journalists:
“Yaser Murtaja, 31, a cameraman for Palestinian Ain Media agency, died on April 7 after he was shot by Israeli forces the previous day while covering a protest south of the Gaza Strip. He wore a blue protective vest marked ‘PRESS’.”
“Ahmad Abu Hussein, 24, was shot by Israeli forces during a protest in the Gaza strip on April 13. He died from his injuries on April 25. He was also wearing a protective vest marked ‘PRESS’ at the time.”
The other 18 instances were only injuries, not murders, but Israel has now made clear that any journalist who reports from the Palestinian side is fair game for Israel’s army snipers — that when Palestinians demonstrate against their being blockaded into the vast Gaza prison, and journalists then report from amongst the demonstrators instead of from the side of the snipers, those journalists are fair game by the snipers, along with those demonstrators.
Some of the surviving 18 journalists are still in critical condition and could die from Israel’s bullets, so the deaths to journalists might be higher than just those two.
Later in the day, RT bannered “Fist-size gunshot wounds, pulverized bones, inadmissible use of force by Israel in Gaza – HRW to RT” and presented a damning interview with the Israel & Palestine Director at Human Rights Watch.
The other crackdown has been by Ukraine. After the U.S. Obama Administration perpetrated a very bloody coup in Ukraine during February of 2014, that country has plunged by every numerical measure, and has carried out raids against newsmedia that have reported unfavorably on the installed regime. The latest such incident was reported on May 16th by Russian Television, under the headline, “US endorses Kiev’s raid on Russian news agency amid international condemnation”. An official of the OSCE (Organization for Security and Cooperation in Europe) stated there: “I reiterate my call on the authorities to refrain from imposing unnecessary limitations on the work of foreign journalists, which affects the free flow of information and freedom of the media.” An official of the CPJ (Committee to Protect journalists) stated: “We call on Ukrainian authorities to disclose the charges and evidence they have against Vyshinsky or release him without delay. … We also call on Ukrainian authorities to stop harassing and obstructing Russian media operating in Ukraine. The criminalization of alternative news and views has no place in a democratic Ukraine.” However, as reported by RT, Ukraine’s Prosecutor-General called the editorial policy of the anti-regime RIA Ukraine “anti-Ukrainian” in nature, amounting to “state treason.” So, the prosecutor is threatening to categorize and prosecute critical press under Ukraine’s treason law.
The U.S. regime is not condemning either of its client-regimes for their crackdowns. (It cites Ukraine’s supposed victimhood from “Russian propaganda” as having caused Ukraine’s action, and justifies Israel’s gunning-down of demonstrators and of journalists as having beeen necessary for Israel’s self-defense against terrorism.) In neither instance is the U.S. dictatorship saying that this is unacceptable behavior for a government that receives large U.S. taxpayers funds. Of course, in the U.S., the mainstream press aren’t allowed to report that either Israel or today’s Ukraine is a dictatorship, so they don’t report this, though Israel clearly is an apartheid racist-fascist (or ideologically nazi, but in their case not against Jews) regime, and Ukraine is clearly also a racist-fascist, or nazi, regime, which engages in ethnic cleansing to get rid of voters for the previous — the pre-coup — Ukrainian government. People who are selected individually by the installed regime, get driven to a big ditch, shot, with the corpses piling up there, and then the whole thing gets covered over. This is America’s client-‘democracy’ in Ukraine, not its client-‘democracy’ in Israel.
May 16th also was the day when the U.S. Senate Intelligence Committee voted 10 to 5 to approve as the next CIA Director, Gina Haspel, the person who had headed torture at the CIA’s black site in Thailand where Abu Zubaydah was waterboarded 83 times and blinded in one eye in order to get him to say that Saddam Hussein was behind the 9/11 attacks; and, since then, Zubaydah, who has never been in court, has been held incommunicado at Guantanamo, so that he can’t testify in court or communicate with the press in any way. “The U.S. Government has never charged Zubaydah with any crime.” And the person who had ordered and overseen his torture will soon head the agency for which she worked, the CIA.
Whether the U.S. regime will soon start similarly to treat its own critical press as “traitors” isn’t clear, except that ever since at least the Obama Administration, and continuing now under Trump, the U.S. Government has made clear that it wants to seize and prosecute both Edward Snowden and Julian Assange for their journalistic whistleblowing, violations of “state secrets,” those being anything that the regime wants to hide from the public — including things that are simply extremely embarrassing for the existing rulers. Therefore, the journalistic-lockdown step, from either Israel, or Ukraine, to U.S., would be small, for the United States itself to take, if it hasn’t yet already been taken in perhaps secret ways. But at least, the Senate Intelligence Committee is strongly supportive of what the U.S. Government has been doing, and wants more of it to be done.
JCPOA in Post-US Exit: Consequences and Repercussions
The Joint Comprehensive Plan of Action (JCPOA) or otherwise known as the Iran nuclear deal signed by the P 5+1 in 2015 was widely hailed as a landmark achievement made possible by sincere dialogue and diplomacy. Indeed, the agreement is to a greater extent an achievement of the nuclear non-proliferation regime that helped checked the increasingly disturbing power symmetry in the Middle East which in return has managed to contain the transformation of low intensity conflicts into all out wars. A relative stability is the hallmark which resulted from JCPOA in the Middle East which is extremely volatile region of the world. A vital question is: how these achievements are going to be affected by the US withdrawal from it?
The US withdrawal from JCPOA will adversely affect the aforementioned three areas of its accumulative achievement with variant degree. First, it has negative consequences for the norm that negotiated settlements in international arenas has the potential and lasting credibility to minimize violence or other coercive means led by war. The momentum and confidence the diplomatic means have garnered in post- JCPOA scenario will come to the crushing halt. The sealed and mutually agreed upon agreements in international arena especially in which the US is the potential party, will come under extreme scrutiny leading to an environment of gross trust deficit. Therefore, on the first instance this withdrawal has negative lasting consequences for the diplomatic norms in itself.
Secondly, US exist from the deal does not augur well for the nascent nuclear non-proliferation regime. This regime has a dearth of good precedents like the JCPOA which has deterred a nation from acquiring and operationalizing nuclear weapons as is the case with Iran. Keeping in view this backdrop of this institution, JCPOA has been its glaring example wherein it has managed to successfully convince a nation to not pursue the path which leads towards the nuclear weapons. Therefore, the US withdrawal has shaken the confidence of the non-proliferation regime to its core. It has engendered a split among the leading nations who were acting as sort of de facto executive to enforce the agreements on the nuclear ambitious states. Therefore, this US withdrawal has undoubtedly far reaching repercussions for the non-proliferation as an institution. This development may affect the nature and its future development as an institutional mechanism to deter the recalcitrant states to change their course regarding the nuclear weapons.
Thirdly, in relation to the above mentioned negative consequences on diplomacy and nuclear non-proliferation regime, the US withdrawal from the deal has far serious security ramifications for the volatile and conflict ridden Middle East. It has multiplied the prospects of all-out war between Iran and its regional rivals on one hand and Iran and Israel on the other hand. Just tonight the announcement of Trump exiting JCPOA and the Israeli aggression on Syrian military bases substantiates the assertion that there exists a correlation between this US withdrawal and the Zionist regime`s regional hegemonic designs. It has extremely positive message for the Saudi Arabia. The impulsive and overambitious Crown Prince Muhammad bin Salman (MBS) went on extended tours in the US and Europe to convince Western leadership that Iran should be contained. Therefore, element of stability in the region – contained low intensity conflicts – got serious motivation to turn into all-out-wars with non-exclusion of nuclear options at the disposal of Zionist regime in the Middle East. The Middle Eastern region with this exit of the US is going to observe substantial turmoil in the months to come which will have some extra regional ramifications.
As a conclusion it could be argued that the US exit has some far reaching repercussions for the diplomatic norms, non-proliferation regime and above all for the volatile Middle Eastern region. All these ramifications resulted from the US withdrawal will also in return have some serious consequences internally and externally. The status of the US as the sole super power of the world will be diminished with this decision. It will create an unbridgeable gap in the West. Henceforth, the EU foreign will be more autonomous, integrated and autonomous in her conduct.
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