China stands firm on Iran and Security Council

Yahoo News:

Sat Sep 24,11:07 PM ET

China's hunger for oil will remain the force behind Beijing's opposition to bringing the Iranian nuclear issue to the UN, despite its abstention from an IAEA resolution on Iran, analysts say.

In a vote Saturday at the International Atomic Energy Agency (IAEA) in Vienna, Britain, France and Germany, backed by the United States, opened the way to refer Iran to the Security Council for suspected efforts to develop a nuclear bomb.

China and Russia abstained in the vote after a draft resolution was watered down to allow Iran to negotiate a settlement before a key IAEA report on Tehran's nuclear program is handed over to the UN in November.

Saturday's resolution, introduced by the EU-3, holds Iran in violation of international treaty obligations but omitted an explicit call for immediate UN action.

China, a permanent Security Council member with veto power, made clear this week that the issue must be resolved within the framework of the IAEA.

"China believes that using diplomatic means within the framework of the IAEA to resolve the Iranian nuclear issue is conducive to peace and stability in the region concerned," China's ambassador in Vienna Wu Hailong said.

"It is conducive to safeguarding the international non-proliferation regime, and is in line with the fundamental interests of all parties."

China also encouraged Iran and the EU to keep talking.

"We call upon the EU and Iran to take practical steps, at an earliest possible date, to resume their negotiations," he said.

Russia, China and non-aligned nations back Iran's right to what it says is a peaceful nuclear program and fear that Security Council actions could escalate into calls for trade sanctions, such as a ban on oil sales.

This would likely draw sharp retaliation from the Iranian oil giant, which China fears. Beijing's stance is partly because it has a policy of not interfering in other countries' internal affairs, driven by the fact that it does not want similar outside interference in its own domestic matters.

But mostly it is down to economic interests, in particular oil which China needs to keep firing its remarkable economic transformation, experts said.

In 1997 China negotiated a 1.3 billion dollar contract with Saddam Hussein to develop the al-Ahdab oil field in central Iraq, and in 2001 it was in talks develop the much larger Halfayah field.

"Between them, the two fields might have accounted for almost 400,000 barrels per day, or 13 percent of China's oil consumption in 2003," said Michael Schwartz, professor of sociology at the State University of New York who specialises in Iraq and Iran.

"However, like Iraq's other oil customers (including Russia), China was prevented from activating these deals by the UN sanctions then in place ..."

When the US invaded and set up the Coalition Provisional Authority all pre-existing contracts and promises were null and void, wiping out China's stake in Iraqi oil fields. So it turned to Iran, and sealed a 70 billion dollar contract to import Iranian oil.

Ehsan Ahrari, an independent strategic analyst based in Virginia who regularly writes on Iran, said that for these reasons, China would never agree to the issue being taken to the Security Council.

"China has been strengthening its ties in Iran, most importantly, in the energy field. It also has been doing business with Iran in the transfer of missile, and even nuclear technology," he said on his website www.ehsanahrari.com.

"China's voracious energy appetite is in dire need of Iran's considerable oil and gas reserves. As long as Iran needs China's missile and nuclear technologies, Beijing expects its oil purchase bills to become eminently manageable.

"Consequently, the Iranians are feeling comfortable that they have reasons to count on China's support."

China has a voracious appetite for oil to feed an economy ticking along at 9.5 percent annual growth, and has been searching for supplies in all parts of the globe.

The world's most populous country expects to import 130 million tonnes of crude in 2005, up from last year's record high of 122 million tonnes, making it the second largest importer in the world after the United States.