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Playing US sanctions: China walks a fine line in Iran

Dr. James M. Dorsey

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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.”

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africaas well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.

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Middle East

NATO and the puzzle of a nuclear deal with Iran

Mohammad Ghaderi

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A meeting of NATO (North Atlantic Treaty Organization) Heads of State and Government was held on Wednesday 11 and Thursday 12 July 2018 in Brussels, Belgium. NATO leaders met in Brussels amidst a terse environment that threatens to further weaken the post-war order.

This year’s meeting came at a tense time for transatlantic relations since the US president is set to sit down one-on-one with Russian president Vladimir Putin on May 16 in Helsinki. One of the topics the US president sought to discuss with his Western counterparts in Brussels was “the nuclear deal with Iran” and its fate.  Regarding this controversial issue Time wrote:

“After ripping up the Iran nuclear deal in May, the Trump Administration is fanning out across the globe to rally support for a return to economy-crippling sanctions against Tehran.”

It continues: “The effort comes ahead of President Donald Trump’s trip next week to Europe, where he is expected to pressure leaders into joining the far-reaching campaign to handcuff major aspects of Iran’s economy, including driving oil exports to zero. If European allies don’t join, Trump has threatened secondary sanctions on any company that does business with Tehran.”

According to the Time and other Western sources, Donald Trump intends to press NATO leaders over the Joint Comprehensive Plan of Action (JCPOA), and “The president hopes his bare-knuckled approach will coerce European leaders to unite behind him, even as they publicly oppose a return to sanctions and scamper to salvage the existing nuclear deal without American participation. This is while the White House keeps to press its European allies for increasing the military and defense budget (to 2% of their GDP).

While the transatlantic tensions are raising day by day due to the imposition of tariffs on steel and aluminum imported from Europe, what meaning can negotiations on the JCPOA imply? Does Trump intend to make a deal with his European partners in this regard? Do NATO’s European members welcome the integration of the JCPOA amid their conflicts with the US?

The British Prime Minister Theresa May has recently asked other European countries to remain silent against Trump’s actions in imposing tariffs on imported goods from Europe, and not to seek retaliatory measures. She also asked European authorities to negotiate with the US president on the JCPOA. Indeed, what’s going on among NATO members?

The truth is that in near future, the JCPOA will turn to the Europe’s leverage for making deals with the United States in security grounds, an issue witch its signs we could well see in the Brussels summit. It shouldn’t be forgotten that in its calculations, the EU is still regarding itself as dependent to the United States. Those like Theresa May, Emmanuel Macron and Angela Merkel are adjusting their policies in the international system based on their security dependence on the United States. It might be possible that the European officials agree on “restraining Trump”, but that’s all, and we can’t expect them to go further as to fulfil their obligations in this regard. The EU would never confront the US seriously, since “resisting against the White House” is in no way defined in Europe’s strategies and tactics.

In the course of the G7 recent meeting in Canada, Donald Trump discussed various subjects with Angela Merkel, the German Chancellor, including Iran nuclear deal, tariffs on steel and aluminum imported from Europe, and the increase of NATO defense budget. But these talks resulted in the intensified disagreements among EU member states and Trump. The tensions were so high that the meeting ended with no final statement. Now the US president is pursuing the same approach I dealing with NATO states.

Trump and the European countries both regard the tensions raised in the international system as a “single package”. In this equation, Trump asks the European authorities to cease their support for the JCPOA and the continuation of the nuclear deal in exchange for a decrease in the US economic and security pressures. It should be noted that one of the main reasons for the European leaders’ refusal of offering a conclusive, detailed and effective package to Iran regarding the JCPOA was their secret negotiations with the American officials. Since the U.S. withdrawal from the nuclear deal, Mike Pompeo the American Secretary of State had been constantly in contact with the European troika’s foreign ministers, and announced them the exact positions and policies of the US government.

In the course of the NATO summit, we witnessed the continuation of the Europe’s paradoxical game playing towards the JCPOA. It shouldn’t be forgotten that the EU’s main strategy towards Iran and the JCPOA, is to make us remain as part of the nuclear deal as long as possible, and without benefiting from its advantages, so that the influence of the US sanctions would be multiplied. The offering of the EU’s unacceptable and useless package of proposals is also to be analyzed in the same vein; a weak package which is resulted from the special relations between the US and Europe.

First published in our partner MNA

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Middle East

God’s Grace: Reichstag Fire and July 15 Military Coup

Zakir Gul, Ph.D.

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“By the grace of God!” Some rulers use the cry to explain why certain events happen and why they play out as they do. They will argue that God, in allowing the events to happen, has bestowed his grace upon the ruler. Two rulers and two events—the Reichstag fire in Germany on February 27, 1933,and the military coup attempt in Turkey on July 15, 2016—illustrate the devastating consequences this twisted logic can have on the lives of ordinary people.When Adolph Hitler arrived at the scene, he told German Chancellor Franz von Pape, “This is a God-given signal” to crush Communists (and later opponents). Immediately after the failed military coup, Recep Tayyip Erdogan announced that the event was “a gift from God” and justification for Erdogan to start cleansing the military (and later purging opponents).

The similarities between the two events are striking in terms of beneficiaries, consequences and suspicions about the rulers’ true intentions going forward. Soon after the fire, Hitler started to consolidate his powers in the name of protecting the state’s security and democracy. To do so, Hitlersuspended civil liberties and shut the door on the rights and freedom of the country’s citizens. The fire in the heart of the countrywas used to justify the notion that the country was in a great danger. With decrees, Hitler purged his opponents, even though there was only one person considered to be responsiblefor the fire. Erdogan followed a similar path when he has declared a state of emergency after the coup attempt and consolidated his powers with radical changes in the country’s political and legal systems. With decrees, Erdogan purged hundreds of thousands of people under the guise of protecting the country’s security and democracy—even though soldiers who allegedly were involved in the coup attempt that night already had been into custody.In the political arena, Hitler increased the number of votes he received in the election that took place a week after the fire. Similarly, public support for Erdogan increased after the coup attempt. History does, indeed, repeat itself. These are two of many examples that could have been cited.

It may not be possible to know for sure who staged and orchestrated the Reichstag fire orthe military coup attempt; however, it is clear that the rulers’ purported motives are suspicious and their explanations filled with inconsistencies, given the many controversies arising from both events.The Reichstag firehas been discussed by scholars and historians who concluded that Hitler and his team—either directly or indirectly—helped to instigate the fire. Indeed, the arsonist responsible for the fire was pardoned years later. The military coup in Turkey wasa terrorizing and wicked deed against humanity and democracy, and the persons responsible must be identified and punished based on the rule of law and democratic values. It is, however, a Herculean task. Too many loopholes and controversies about the coup attempt need to be clarified. Erdogan should provide evidence-based, honest and objective explanations to remove the suspicions surrounding the coup attempt. Many answers are needed. For example,why did Erdogan refuse to answer questions from the major opposition party (the Republican People’s Party, or CHP) about the coup? Why has the investigation case report and the report of the parliament’s investigation committee deemed inappropriate and unsatisfactory even by some members of the committee? More important, why has an international committee not been allowed to investigate the case? Questions such as these highlight the many mysteries and suspicions that still surround the event two years after it occurred.

An independent international investigation committee should be established by the United Nations to examine the coup attempt and eliminate possible suspicions about Erdogan and his governing team. The committee also should determine whether thousands of people were responsible for organizing the coup attempt, as the government alleges, and clarify the following: whether some U.S. citizens, such as Andrew Brunson, who is still in jail, were among the primary plotters of the coup; whether some other U.S. citizens for whom bounties were offered were behind the coup attempt; and whether the United States was behind the coup attempt, as Turkish politicians and government officials claim—even though the United States has denied any involvement in the event.

Another independent international investigation committee should be established by the U.N.(or some other internationally accepted institution)to investigate the aftermath of the coup. Violations of internationally accepted human rights (as reported by credible human rights organizations such as Amnesty International and Human Rights Watch) that have been committed by government security and intelligence officials since the coup attempt should be investigated. The committee also should also determine whether persons victimized in any way (such as imprisonment, job loss, inhumane treatment, and deprival of constitutional rights and freedoms)were based on evidence or resulted from the arbitrary application punishment. A final task of the committee should be to investigate allegations of abductions, extrajudicial executions and torture by government security and intelligence agencies. As John Dalhuisen,Amnesty International’s Europe director, has said, “It is absolutely imperative that the Turkish authorities halt these abhorrent practices and allow international monitors to visit all these detainees in the places they are being held.”

An independent and objective domestic committee that consists of members from every political party in the country—regardless of the parties’ percentage of the vote among constituents—should be established to investigate the same issues the two international committees need to review. Care must be taken to ensure that the members of this domestic committee—unlike those serving on the committee that was formed after the coup attempt—can maintain their objectivity and are aware of their responsibilities. The committee should be transparent and its actions and discussions observed and by international representatives of the U.N., the Organization for Security and Co-operation in Europe, the European Union, and individual countries and/or journalists.

Finally, the European Court of Human Rights, an internationally accepted high court of which Turkey is a member,should determine for itself—rather than rely solely on the response from government officials—whether the country’s domestic legal and judicial system can be accessed openly and freely by all citizens and the attorneys representing them in legal matters.

It is only through these independent international and domestic investigations that the truth about the failed coup attempt can come to light.

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Middle East

Ghassan Kanafani, the Palestinian Pioneer Author of Resistance Literature

Sondoss Al Asaad

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The eighth of July marks the 46th martyrdom anniversary of Ghassan Kanafani, who was assassinated by the Zionist Intelligence;  Mossad, along with his 17-year-old niece Lamees. Days before their martyrdom, Lamees had asked Kanafani to diminish his activitism and to concentrate on his writings. He answered her,” I write well because I believe in a cause, in principles. The day I leave these principles, my stories will become purposeless. If I were to leave behind my principles, you yourself would not respect me.”

Kanafani was born in 1936, in Palestine, to a father who was a national activist in the resistance against the British colonialism. After the 1948 Zionist occupation, his family sought refuge to Syria, when he was 12-year-old. In the refuge camps, Kanafani wrote most of his novels which highlights the sufferings that the Palestinians endure in the diaspora. He won multiple awards for his works both during his life and posthumously. For instance, in “Umm Saad,” Kanafani’s protagonist is a symbol of the Palestinian women in the refugee camps.

Kanafani was inspired by Jamal Abd al-Nasser’s ideas of national independence and defiance of imperialism. Due to the decline of Nasserism after the 1961 failure to consolidate Egypt and Syria under a unified United Arab Republic, the ascendancy of imperialism and Zionism and the rise of communism; Kanafani, along with his comrade George Habash, resolved to adopt Marxism. They belived that the political crisis in the Arab world could only be solved by turning the anti-imperialist struggle into a social revolution.

In Lebanon, Kanafani adopted the Communist philosophy and become a leading member of the Marxist-Leninist Popular Front for the Liberation of Palestine (PFLP). He says, “The Palestinian cause is not a cause for Palestinians only, but a cause for every revolutionary, wherever he is, as a cause of the exploited and oppressed masses in our era.”

Besides, he was a prolific creative and brilliant novelist and the first to anticipate the “resistance literature” genre. His literary products and fictitious works have inspired a whole generation of resisting youth, both during and after his lifetime as they are greatly rooted in the Palestinian culture and cause. Kanafani dedicated his works to reflect on the Palestinians’ lives and the challenges they face under the Zionist occupation. He states, “My political position springs from my being a novelist. In so far as I am concerned, politics and the novel are an indivisible case and I can categorically state that I became politically committed because I am a novelist, not the opposite.”

The assassination of Ghassan Kanafani was the result of his commitment to the Palestinian cause and the resistance methodology. Today, his legacy echo within every free revolutionary who devoted his life to confront the imperialist conspiracies. Indeed, Kanafani was murdered merely because he had constituted an intellectual threat to the Zionist entity. He refused the negotiations with the enemy, pointing that it would be “a conversation between the sword and the neck […] I have never seen talks between a colonialist case and a national liberation movement.”

The chief thematic field of Kanafani’s writing was inseparably connected to the anti-imperialism struggle. He stressed that the Palestinian cause could not be resolved in isolation of the Arab ‘s social and political crisis. Further, he insisted on developing the resistance movement from being a nationalist Palestinian liberation movement into being a pan-Arab revolutionary socialist movement of which the liberation of Palestine would be a vital component.

Definitely, Kanafani played an influential role in raising consciousness on the issue of imperialism. He maintains, “Imperialism has laid its body over the world, the head in Eastern Asia, the heart in the Middle East, its arteries reaching Africa and Latin America. Wherever you strike it, you damage it, and you serve the world revolution. “Shortly after Kanafani’s obituary in Lebanon, “The Daily Star” stated, “He was a commando who never fired a gun, whose weapon was a ball-point pen, and his arena the newspaper pages.”

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