Israel Prime Minister Benjamin Netanyahu and Greek Prime Minister George Papandreou visited Moscow on Monday. Their agendas were different, but their shared purpose was to seek Russia’s aid on points key to the national interests of each country.
Netanyahu traveled to Moscow to ask Russian President Dmitri Medvedev for “sanctions with teeth” against the Iranian energy sector to force Tehran to reassure the world that it is not developing a nuclear weapon. Iran, an oil producer, imports between 25 and 30 percent of its gasoline due to a lack of refining capacity. Russia is central to an effort to squeeze Iran with gasoline import sanctions because Moscow is a permanent — and thus veto-bearing — member of the U.N. Security Council, and because it could easily ship gasoline to Iran via its former Soviet Union neighbors (Azerbaijan and Turkmenistan in particular) if sanctions are imposed by the West outside of the United Nations.
Meanwhile, Papandreou journeyed to Moscow — officially to talk about business and military cooperation — as his country faces a wrenching economic crisis and possible default. While Papandreou was in Moscow, his finance minister attended the meeting of the eurogroup — finance ministers of EU member states using the euro — in Brussels. The meeting concluded with no clear plans to offer Greece financial assistance despite a dire situation from which there seems no clear exit. Athens is somehow supposed to raise 33 billion euro ($44.9 billion) by June, with investors becoming increasingly worried that Athens has no real chance of consolidating its budget — which it most probably does not.
The visit to Moscow therefore can only raise eyebrows and spark rumors that the Greek prime minister is in fact going to the Kremlin “hat in hand.” This was an avenue that both Iceland and Serbia took during their economic crises, and each time the EU responded with financial aid of its own to counter Moscow’s rising influence. A Russian loan to Greece — no matter what the actual size of the aid package — would be a psychological blow to EU unity. An EU member state — a eurozone state no less — finding financial assistance in Russia rather than among its fellow euro users would lay bare the EU’s inefficiency, particularly in times of crisis management. Moscow would therefore send a powerful message to Central European states that see the EU as a counter to Russian spheres of influence on their borders.
STRATFOR finds the fact that both Netanyahu and Papandreou are in Moscow — and that they are both asking for a favor — an indication of the growing consolidation of Russia’s power, a fine note to accent the Kremlin’s return to the center of Eurasian geopolitics.
While Russia sits in the catbird seat, China is in a less enviable spot. U.S. Secretary of State Hillary Clinton visited Saudi Arabia on Monday to meet with Saudi leaders and discuss sanctions on Iran — including China’s role. The Americans have attempted to assure China that its oil supplies will be preserved — even amid heightened tensions in the Gulf due to Iranian sanctions — by facilitating a deal with the Saudis to ramp up oil exports to China.
“While Russia sits in the catbird seat, China is in a less enviable spot.”
China has shown little inclination to buy into this scheme to wean itself off Iranian oil. In recent months China has not only continued importing from Iran, but also accelerated its exports of gasoline to Iran (which are likely to be a primary target of U.S. sanctions) and hastened deals allowing one of China’s roving national oil companies to produce natural gas in Iran’s giant South Pars field. Beijing has consistently opposed talk of Iranian sanctions, emphasizing diplomatic efforts instead, and variously delaying and downgrading its participation in P-5+1 negotiations since late December.
China is decidedly against Iranian sanctions in the interests of the country’s energy security and economic stability. Iran is China’s third largest oil supplier, providing 11 percent of China’s total — this is reason enough for China to resist sanctions. While sanctions may not specifically target Iranian oil exports, Beijing reasonably fears they could create a chain reaction jeopardizing its oil supplies not only from Iran, but also from the rest of the Gulf, since these shipments pass through the Strait of Hormuz where Iran is most likely to aim any retaliation. While China’s economic growth rate is high, serious vulnerabilities exist in the banking, property and export sectors, all of which the government is attempting to address without triggering a destabilizing slowdown. Now would be an exceedingly bad time for a sudden energy shock.
Moreover, much of the credibility of China’s claims to rising international status rest on its ability to defend smaller states like Iran that are antagonistic to the United States. If China drops Iran at the first sign of American coercion, a host of other states — in Latin America, Africa and Southeast Asia — will rethink whether they can rely on China for support. In such a case, Chinese leaders would struggle to allay domestic outrage at yet another example of acquiescence to the United States, while much of the political capital they have painstakingly built up in recent years through speeches, state visits and investments across the world would be squandered.
Yet there is little China can do to stop the sanctions drive. Unlike Russia, Chinese participation is not a prerequisite to a successful sanctions regime. It is logistically more difficult for China to circumvent sanctions, as the land routes are too long and the sea routes are at least implicitly subject to American naval coercion. This means Washington does not have to negotiate with Beijing, as it does with Moscow, to address its chief concerns and try to win it over. The Chinese are external to the international diplomatic process, and while they can veto a resolution authorizing U.N. sanctions, that would only encourage the United States to lead its allies in taking action outside the United Nations, diluting the influence of one of Beijing’s primary international platforms.
Worst of all for China, an outright rejection of sanctions, or an attempt to undermine them, would result in greater external pressure from an American administration that has already shown its willingness to target China’s economy through trade protections and other tools. Of course, the United States has not yet clinched the deal on sanctions. Much remains to be done, and (crucially) Russia has not committed either way, giving Beijing room to maneuver. Still, in essence, Beijing has no way to stop sanctions against Iran, and to oppose them it must decide if it is ready to withstand the American reaction.
