China flouts Iran sanctions on oil as Trump-era pressure campaign crumbles

The Biden administration claims to be upholding the Trump-era pressure campaign on Iran, but there are clear signs sanctions are crumbling as China dramatically increases its purchases of embargoed Iranian crude oil.

A tripling of Chinese purchases since President Biden took office has given Tehran a financial lifeline and new leverage to fend off outside pressure, complicating the administration’s hope for a quick revival of the 2015 Iranian nuclear deal that President Trump repudiated.

Mr. Trump spent his last two years in office ramping up U.S. sanctions on Iran and on the countries and companies that tried to deal it. With China now openly flouting the sanctions, some analysts say, Tehran is emboldened to ignore Mr. Biden’s demand that it make the first concessions to come back into compliance with the nuclear pact.

“The administration may have believed that China was going to help them nudge Iran back into compliance, but that doesn’t look like it’s happening,” said James Phillips, a Middle East analyst with The Heritage Foundation. “It would be a huge mistake to let these sanctions be undermined to the extent that China is undermining them because the administration may be squandering its negotiating leverage with Iran.”

China’s purchases and shipments of crude oil from Iran more than doubled during February, from a 2020 average of 306,000 barrels per day to roughly 856,000 barrels per day, according to OilPrice.com.

The commodities data company Kpler estimated that China will import an average of 918,000 barrels a day from Iran in March, according to The Wall Street Journal, the highest total since the Trump administration imposed a full embargo on Iranian oil two years ago.

Republican lawmakers on Capitol Hill, many hostile to the nuclear accord, also have begun to take notice. They say the Biden administration is talking a big game on China but turning a blind eye to its violations of American sanctions.

China “is openly flouting U.S. sanctions and flooding bad actors like Iran, Venezuela and North Korea with cash,” Rep. Andy Barr, a Kentucky Republican who sits on the House Foreign Affairs Committee, told The Washington Times on Thursday.

“Unfortunately, President Biden and his administration have been asleep at the wheel, enabling [China’s] scheme,” he said, arguing that “the U.S. needs to send a strong message to Beijing that propping these countries up economically poses a global threat and there will be consequences … if it continues.”

Strategic goals

Mr. Phillips said that by allowing China to increase its purchases of Iranian oil without consequences, the Biden administration may also be playing into Beijing’s wider strategic goals.

“China not only has an interest in buying discounted oil from Iran,” he said in an interview. “It also has geopolitical incentives in the sense that it could prop up the Iranian regime with the goal of prolonging tensions between the U.S. and Iran in a way that prevents the U.S. from achieving its desired strategic pivot to Asia.”

Some say that gives Beijing strategists too much credit.

“If China tries to do that, it will be constrained and limited by its dependency on energy supplies from Saudi Arabia and other Gulf countries as well,” said Brian Katulis, a national security and Middle East fellow with the Center for American Progress. “There is only so much hedging China can do in today’s fractured Middle East, and China is much more dependent on that region’s oil these days than the United States is.”

Administration officials say they intend to enforce the existing sanctions on Iran’s oil sector, but there is little sign of that happening. The White House has instead focused on raising concerns privately with the Chinese in hopes they will change their behavior.

National Security Adviser Jake Sullivan and Secretary of State Antony Blinken raised the issue last week during their first face-to-face talks in Alaska with their Chinese counterparts. Officials say the meeting was rife, at least in public, with tension and disagreements on a range of fronts.

“Our discussions in Anchorage included our concerns about [China’s] purchases of Iranian oil, as well as other sanctions enforcement issues,” a senior administration official told The Washington Times on the condition of anonymity, adding that Chinese compliance with U.N. sanctions on North Korea was also discussed.

“We regularly raise these issues with PRC officials and will keep doing so,” the official said.

U.S. analysts have long been aware that China regularly skirts international sanctions on North Korea, but Beijing’s willingness to defy U.S. oil sanctions on Iran has received less attention in Washington.

Countries have long chafed at the “secondary” sanctions the U.S. has levied on entities that do business with Iran. The Trump sanctions were imposed unilaterally after Washington withdrew from the Iran nuclear deal, unlike the pre-deal sanctions that were broadly supported around the world.

Some believe Washington has either lost leverage over China or badly miscalculated Beijing’s overall approach toward the Middle East and the authoritarian theocracy ruling Iran.

Beijing has increased oil purchases after signing a deal in June on a special 25-year strategic partnership with Tehran. Pressed to find reliable sources of energy for its booming manufacturing sector, Beijing continues to pump money into energy infrastructure projects around the region.

Iran is not the only rogue international actor with whom Beijing is pursuing expanded oil ties. Several recent reports have pointed to a similar spike in Chinese purchases from Venezuela, also without retaliation from Washington despite U.S. sanctions targeting the South American nation’s petroleum sector.

The Trump administration imposed sanctions on Venezuela in a bid to drive out the nation’s authoritarian president, Nicolas Maduro. Beijing is reportedly flouting the sanctions, and Mr. Maduro is hanging on to power. Internal documents from Venezuela’s state oil company showed that direct shipments of oil to China resumed in November in direct violation of the U.S. measures, according to a report by Reuters.

Biden administration officials did not respond to questions from The Times this week about the Chinese-Venezuelan activity. However, administration officials insist there has been no policy change with regard to Iranian oil sanctions.

Making the first move

Under the 2015 nuclear deal, Iran agreed to limit its nuclear programs and open them to international inspections in exchange for relief from punishing international sanctions, including from China. But since the Trump administration began reimposing sanctions, Iran has ratcheted up its nuclear activities in violation of the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA).

The Biden administration says it is prepared to lift the Trump-era sanctions if Iran returns to compliance with the limits set by the JCPOA, but Iranian officials have demanded in recent weeks that Washington lift sanctions first. So far, neither side had blinked.

A State Department spokesperson said this week that “our current Iran-related sanctions remain in effect unless and until they are lifted as part of a diplomatic process.”

With regard to China’s increased purchases, the official said: “We will, of course, address any effort at sanctions evasion.”

Mr. Katulis said China represents a “big challenge across the board” for the Biden administration.

“Its energy purchases in Iran and Venezuela is just one of several arenas the Biden team is going to have to deal with,” he said, adding that the administration more broadly will “face considerable challenges reconciling competing parts of many of its stated goals on the foreign policy front.”

“The Biden administration seeks to prioritize democracy and human rights, but it also wants to build a coalition around the world to counter China,” Mr. Katulis said. “That presents certain wrinkles it needs to iron out in countries like India and key parts of the Middle East and Africa, where many countries are led by authoritarian, anti-democratic forces.”

Mr. Phillips, meanwhile, suggested that the administration has misplayed its hand with regard to the China-Iran dynamic.

“Perhaps the administration was counting its chickens before they hatched in the sense that it thought it would quickly go into talks with Iran and maybe it didn’t want to rock the boat over China’s purchases of Iranian oil,” he said.

“I gave the administration credit for making it clear that it will not lift sanctions unless Iran came back into compliance, but this seems like a backdoor way to release sanctions pressure on Tehran,” Mr. Phillips said. “If you don’t enforce the sanctions, what good are they? The administration talks a good ballgame, but if it doesn’t enforce the sanctions, it undermines its own publicly announced policy.”