Top US official on Iran says China’s oil purchases are ‘funding Iran’s terrorism’

Owen Churchill

Washington’s top official for Iran accused China on Friday of financing terrorism by continuing to buy Iranian crude oil and urged Beijing to take the “long view” by siding with the Iranian people rather than the government in Tehran.

Speaking the day after the Trump administration sanctioned several Chinese entities over their purchases of Iranian petroleum and crude oil, US Special Representative for Iran Brian Hook said that Washington and Beijing shared the same interests in a more peaceful Middle East.

“[But] for as long as they're funding Iran's terrorism through oil purchases, the Middle East is going to be unstable,” Hook said in an interview with the South China Morning Post.

Thursday’s action by the US departments of State and Treasury was the latest salvo in a string of punitive moves against Chinese companies over their alleged purchase of crude oil and petroleum from Iran.

Iran’s Kharg oil terminal in the Persian Gulf, shown on March 12, 2017. The US has sanctioned several Chinese entities over their purchases of Iranian petroleum and crude oil. Photo: EPA-EFE

The sanctions, which targeted several mainland Chinese and Hong Kong-based companies as well as the chairman of one of the entities – a Chinese national – block any US-based assets of the sanctioned parties and prevent any US citizens from engaging in transactions with them.

The targeted entities, which also included a Dubai-based company, had “collectively transferred the equivalent of hundreds of millions of dollars” to Iran’s National Iranian Oil Company throughout 2019, according to the Treasury.

“We hope that we don't have to keep sanctioning China,” said Hook. “But we will continue to sanction any sanctionable activity.”

China urges US to ‘immediately halt’ sanctions on Chinese firms with Iran ties

Following US President Donald Trump’s decision in 2018 to withdraw from the multilateral Joint Comprehensive Plan of Action (JCPOA) nuclear deal with Iran, the US issued waivers to several countries to continue trading with Iran while they sought alternative supply chains.

After those waivers expired in May last year and the threat of US sanctions loomed, Chinese imports of crude oil and petroleum from Iran plummeted, dropping from a monthly value of more than 11 billion yuan (US$1.6 billion) in April to around 3.9 billion yuan (US$562 million) in May, according to Chinese customs data.

Imports continued to dwindle throughout 2019, coming in at around 1.9 billion yuan (US$274 million) in November, the most recent month for which data is available.

“We’re very pleased with the success we’ve had with our sanctions – our sanctions are working,” said Hook. “The [Iranian] regime is weaker and its terrorist proxies are weaker.”

Iran’s alleged funding of militia in the region was a justification the White House used for a US drone strike earlier this month that killed the country’s top military official, Major-General Qassem Soleimani.

Beijing decried the move at the time as “US military adventurism” and charged Washington with aggravating “tensions and turbulence in the region.”

China and Iran: a relationship built on trade, weapons and oil

The Chinese government has also assailed the Trump administration’s economic sanctions against Tehran, accusing Washington of flouting international law and exercising “long-arm jurisdiction”.

The potentially complicating effect that sanctions against Chinese entities could have on the wider US-China relationship – already strained by a costly trade war – had not been part of the administration’s calculus in pursuing the punitive action, Hook said.

Announcing a previous round of sanctions against another Chinese entity in December, US Secretary of State Mike Pompeo said that such action was “aimed not at China, not at the Iranian people, but at the leadership of the Islamic Republic of Iran”.

Iranian Foreign Minister Mohammad Javad Zarif (left) and his Chinese counterpart Wang Yi during a meeting in Beijing on February 19, 2019. Photo: EPA-EFE

As Washington and Beijing have clashed over Iran, Tehran is facing its own domestic challenges, with antipathy among Iranians towards the government cresting in recent weeks over the military’s accidental downing of a Ukrainian airliner carrying dozens of Iranians.

“The regime is facing a crisis of credibility and legitimacy because its own people don't support it,” said Hook, who called on Beijing to seize the moment to take a stand against Tehran. “China should be taking a long view and thinking about the Iranian people and not just the regime in Tehran.”

In talks with Chinese officials in both Washington and Beijing, Hook said, he had made clear that “we would like China to not violate our sanctions and support the world's leading sponsor of terrorism”.

As US and Iran step back from the brink, China faces energy security risk

“We would like to see China diplomatically isolate Iran so that we can get to a new and better Iran nuclear deal,” said Hook, referring to a successor deal to the JCPOA.

That 2015 agreement promised relaxed economic sanctions against Tehran in return for commitments from the Iranian government to scale back its nuclear weapons development programmes.

Hook said that the other signatories to the JCPOA – China, Germany, Britain, France and Russia – had “largely looked the other way” while Iran expanded its arsenal of non-nuclear missiles, and said that the US seeks a new deal that covers “not just the nuclear programme”.

Earlier this month. Trump called on the JCPOA nations to “work together toward making a deal with Iran that makes the world a safer and more peaceful place”.

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