Iran announced a $3.2-billion natural gas deal with China on Saturday, a move that underscored the difficulty of using economic sanctions to pressure Tehran to bow to Washington’s demands on its nuclear program.
Iranian state television quoted a senior government official as saying the deal with a Chinese consortium, announced two days after the Obama administration renewed U.S. sanctions against the Islamic Republic, would eventually include an unnamed European country as a partner.
Under the three-year deal, China will help develop the South Pars field, a sprawling cavity beneath the Persian Gulf seabed that is part of what geologists describe as the world’s largest natural gas reservoir.
Washington has routinely renewed embargoes on doing industrial-scale business with Iran since the 1990s, even barring foreign companies that do more than $10 million a year of business with the Islamic Republic from operating in the U.S.
Under Washington’s pressure, the French energy giant Total has quietly scaled back plans to develop Iranian gas fields. But many companies still do business with Iran, especially from the rapidly expanding Asian economic and political powerhouses of India and China and in countries with few commercial ties to the U.S., such as Russia.
Iran says it supplies China with 14% of its oil and recently announced that it was signing a $1.3-billion deal for two methanol plants with the Danish firm Haldor Topsoe and a $260-million deal for a tire factory with Italy’s Maire Tecnimont.
On Thursday, the Obama administration extended U.S. sanctions for another year, a move Iranian President Mahmoud Ahmadinejad dismissed as “childish.” President Obama has called for talks with Tehran as a way of resolving a years-long dispute over the nature of Iran’s nuclear energy program and its support for Lebanese and Palestinian militant groups opposed to Israel.
Some European officials, frustrated after years of attempts at dialogue with Iran, say that Obama must work harder to coordinate his policies with Moscow and Beijing.
“The big challenge will be to get the Russians and Chinese on board for tougher actions and sanctions once [the Americans] try to engage and fail,” said a Western diplomat in Tehran, speaking on condition of anonymity.
Advocates of sanctions say they keep Tehran’s ambitions in check and its leadership isolated by denying Iran revenue and technical expertise.
But Iranian officials say sanctions hurt mostly ordinary people while convincing all Iranians of the need to forgo Western partners in favor of cultivating their own technological advances. That includes Iran’s controversial drive to master the enrichment of uranium, a process that can be used to produce fuel for a nuclear reactor or fissile material for a bomb.