TEHRAN – Russia and China moved Thursday to extend their economic influencein Iran, while Europeans are finding it harder to ignore efforts byWashington to isolate Tehran economically.In one of the most concrete moves yet against renewed US efforts to chokeoff Iran economically, a Russian-led trade bloc signed an interim tradedeal with Iran and signalled plans to negotiate a free trade zone.
Meanwhile, Iran´s oil minister said that Chinese state-owned oil companyCNPC was ready to replace Total on a major gas field project in Iran if theFrench energy giant pulls out.
The fate of Total´s participation in the gas project demonstrates thedifficulty the European Union faces in resisting Washington´s move asEuropean firms stand to lose much more from busting US sanctions. Earlierthis month US President Donald Trump´s controversially pulled Washingtonout of an international deal with Iran that placed limits on its nuclearprogramme in return for easing economic sanctions.
China, Russia and EU members Britain, France and Germany were alsosignatories of the 2015 pact, opposed Washington´s abandonment of the dealwhich Iran had respected.
But companies around the world now face a difficult choice as Washingtonhas previously slapped huge fines on firms which bust US sanctions. Thisweek the EU launched work on a plan to keep the nuclear deal alive andFrench President Emmanuel Macron said Thursday that one reason is “so thatour businesses can remain” in Iran.
However Total has indicated it will go forward with the investment only ifit wins an exemption from Washington on the sanctions.
Other European firms are likely to make a similar calculation that the USmarket is worth much more to them than Iran. Danish shipping giant MaerskTankers said Thursday it would cease its activities in Iran, while Germaninsurer Allianz has also announced it plans to wind down its business dealsthere.
Russia, one of the strongest defenders of the Iran nuclear deal, tightenedits trade ties with Tehran. In the Kazakh capital Astana, the Russia-ledEurasian Economic Union trade bloc signed an interim trade deal with Iranthat lowers tariffs on hundreds of goods. The bloc that also comprisesArmenia, Belarus, Kazakhstan and Kyrgyzstan, also plans to begin threeyears of talks with Iran that aim to create a free trade zone.
Russian firms have less to lose from bucking US sanctions. Many majorRussian companies are already operating under tightening US sanctions overMoscow´s seizure of Crimea and its role in the Ukraine crisis. Russiancompanies also traded with Iran when US sanctions were in place before thedeal. “They are used to working within legal and economic constraints,”Igor Delanoe, an analyst at the Franco-Russian Observatory group, saidrecently.“The US has systematically forced Iran to turn more towards Russia andChina.”
Beijing also signalled that it intends to continue trading with Iran.“Under the prerequisite of not violating its international obligations, theChinese side will continue to carry out normal and transparent practicalcooperation with Iran,” said foreign ministry spokesman Geng Shuang.
He added that “the Chinese government always opposes the unilateralsanctions and the so-called long-arm jurisdiction that any country takesaccording to its domestic laws.”
The US says its sanctions apply to any transactions that are conducted indollars, which are used in most international transactions, in particularin trading of crude oil. But China has for years been working to increasetrade using its currency and in March a yuan-denominated oil contract waslaunched in Shanghai.
“With trade skirmishes between the US and China and all kinds of politicalissues, I see resistance from Chinese crude buyers to comply” with USsanctions, said Victor Shum, vice president of the Energy group at IHSMarkit, on CNBC TV.—AFP