Iran is looking at Asia as a lifeline
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The Islamic Republic is tilting toward Asian countries in an unprecedented fashion. In the last few months, Iranian officials have increased their high-level talks and visits to Japan, China, India and South Korea.
Iran’s state-controlled media outlets covered the talks between Tokyo and Tehran as President Hassan Rouhani traveled to Japan to meet Prime Minister Shinzo Abe. The last time an Iranian president visited Japan was almost two decades ago, under the presidency of Mohammad Khatami.
Nevertheless, this time the objective of Iran’s negotiations with Asian governments appears to be different. In the past, the regime primarily looked at Asia through a geopolitical prism, countering US influence in the region and scuttling Washington’s foreign policy objectives in the Middle East and the Gulf.
But the reason behind Tehran’s current outreach to China and others is mainly economic, with Rouhani admitting the country is encountering the worst economic crisis since it was established in 1979.
Tehran is primarily pleading with Asian countries to invest in its energy sector and continue importing oil from Iran. Since the US withdrew from the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, Iran's oil revenues and exports have been steadily falling. Before the US pulled out of the nuclear deal and began taking a tougher stance toward the ruling clerics of Iran, Iran was exporting more than 2.5 million barrels per day (bpd). Iran's oil exports have since dropped to approximately 200,000 bpd. That represents a decline of more than 80 percent.
Sanctions have also imposed significant pressure on the Iranian government to such an extent that leaders are finding it difficult to run the affairs of the theocratic establishment as protests and dissatisfaction in the country continue to grow.
Before the sanctions were re-imposed, Iran exported roughly 75 percent of its oil to Asian countries, nearly 28 percent to China, 22 percent to India, 18 percent to South Korea and 8 percent to Japan.
In defiance of the US, China has not halted its oil imports from Iran after the US did not extend its waiver for Iran's eight biggest oil buyers: China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea.
Tehran is primarily pleading with Asian countries to invest in its energy sector and continue importing oil from Iran.
Dr. Majid Rafizadeh
But China and other Asian states have decreased their oil imports from Iran. For example, before the US waivers expired, China imported nearly 800,000 bpd from Iran. But in June 2019, Beijing only imported 210,000 bpd of Iranian crude.
In fact, the Iranian regime has become desperate for cash -- offering unprecedented discounts to its Asian oil-buying customers.
When China decreased its oil imports from Iran and nearly doubled its imports from Saudi Arabia, Iranian leaders first offered a discount of $1 per barrel of oil. The National Iranian Oil Company is also planning to issue prices for light crude and heavy crude which would be $7 and $8.50 lower than the Brent benchmark. Such a discount is unprecedented in the four-decade history of the Islamic Republic.
The Iranian regime cannot go long without substantially boosting its oil exports. It has the second-largest natural gas reserves and the fourth-largest proven crude oil reserves in the world, and the sale of these resources account for more than 80 percent of its export revenues.
That is why the Iranian leaders are asking Asian governments and companies to violate US sanctions and increase their oil imports. Iran’s Vice President Eshaq Jahangiri pleaded with a Chinese diplomat, “even though we are aware that friendly countries such as China are facing some restrictions, we expect them to be more active in buying Iranian oil.”
What actions can the US and its allies take in this situation? They ought to thwart efforts to lure Asian nations into skirting sanctions. One efficient approach would be to send a strong message that those companies importing oil from Iran will face sanctions as well. Recently, the US Treasury announced sanctions on six Chinese nationals, top executives and five Chinese companies including Chinese shipping company, Concord Petroleum Co. Ltd., Cosco Shipping Tanker (Dalian) Co. Ltd. and Cosco Shipping Tanker (Dalian) Seaman and Ship Management Co. Ltd for buying oil from Iran.
Asia has become Iran’s lifeline against US sanctions. Through diplomatic and economic pressure, Washington and its allies must persuade Asian governments to refrain from doing business and trade with the ruling clerics of Iran.
• Dr. Majid Rafizadeh is an Iranian-American political scientist and president of the International American Council. Twitter: @Dr_Rafizadeh.
