As EU tightens the screws, Iran looks toward China (VIDEO)

The Iranian government narrowly escaped a European ban on its oil exports today, as France failed to garner enough support for the unprecedented measure. But there is still a latent fear in Tehran that the sharpening decline in European relations – accelerated by this week's attack on the British Embassy in Iran – will lead to a disadvantageous rise in Russian and Chinese influence over Iran's economy.

While the European Union failed to agree to an oil ban today, they did impose sanctions on 180 individuals and companies affiliated with the Iranian regime, putting the Islamic Republic in an increasingly tight spot.

“The government as a whole and the business community are worried about the deterioration of relations with Europe,” says a Tehran-based analyst. “Iran's relationships with the Russians and Chinese will become lopsided because they'll expect preferential treatment from Tehran in order to continue the relationship. As a consequence, it will give the Russians and the Chinese a lot of leverage over the Iranians, which will translate into economic concessions – and that is problematic.”

Oil official: We may turn to China

After months of Europe – prodded in part by Washington – gradually increasing the pressure on Iran, tensions have dramatically escalated in recent days. On Tuesday, hard-line Iranian protesters upset about Britain's latest sanctions against Iran's central bank attacked the British Embassy in Tehran. In response, Britain shut the embassy and expelled Iranian diplomats from its soil.

If other European countries choose to downgrade diplomatic ties, or decide to tighten financial sanctions against Iran's central bank, the impact on Iran's economy and currency would be significant. Already, France, Germany, and the Netherlands have pulled their ambassadors out of Iran for “consultations.”

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