At Shanghai Expo, Ahmadinejad polite despite China's support for Iran sanctions
On visit to the Shanghai Expo, President Mahmoud Ahmadinejad alluded to 'pressure and intimidation' that China may have felt in the Iran sanctions vote. China, the largest customer of Iran oil, is treading carefully in the Middle East.
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Though China agreed in 1992 to build a nuclear reactor for Tehran, it canceled the deal a few years later under US and Israeli pressure. “We were the first to be cautious about Iran’s nuclear program,” Yin points out, while Russia went ahead with the Bushehr reactor.Skip to next paragraph
In Pictures Shanghai World Expo 2010 at night
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Sanctions don't bar China from buying Iran oil
At the same time, Chinese diplomats ensured that Wednesday’s UN resolution did not restrict foreign investment in Iran’s oil and gas industry, as Western nations had originally proposed. Oil exports are the primary source of revenue for Iran's government.
Beijing argued that the sanctions should focus on the target of international concerns – Iran’s nuclear program – and worried that damage to Iran’s energy sector would hurt the economy in ways that would make ordinary Iranians suffer.
They appeared to have more self-interested motives, too. Besides importing 11 percent of its oil from Iran in 2009, China is the largest foreign investor in Iran’s oil and gas fields, partly filling a vacuum left by Western firms.
US oil companies are forbidden by US law to invest in Iran, and European firms such as Norway’s Statoil and Italy’s ENI “are lukewarm because of political pressure” from their governments says Valerie Marcel, an energy analyst with the London-based Chatham House think tank.
Why Iran appreciates China's business
China’s continued willingness to develop new fields “is a symbolic show of support of great significance,” says Dr. Marcel. When under US pressure Japan backed off a deal to explore Yadavaran, one of Iran’s largest oil fields, in 2007, “Iran was very relieved” that the largest Chinese state-owned company, Sinopec, stepped in to the deal," she says.
Another state-owned giant, China National Petroleum Corp., took over the lead in a $4.7 billion deal to develop the South Pars field earlier this year after the French firm Total dragged its feet in negotiations.
These government-to-government deals, however, are subject to approval by the Chinese authorities, who may yet get cold feet, suggests Yin, with the Chinese Academy of Social Sciences.
“The government has restrained investment in Iran’s oil industry for fear that if we are the only country investing during sanctions, it might damage our international image and our reputation among Arab countries,” he says. “China will undoubtedly have to pay closer and closer attention to the risks attached to investment in Iran’s energy sector.”
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- Full China news coverage
IN PICTURES: Shanghai World Expo 2010 at night