On Sunday London's Financial Times reviewed the difficult position into which Russia and China have been put by the U.S.-European drive to confront Iran on the subject of its nuclear program.[1] -- For China in particular, Iran represents "an especially difficult dilemma," reporter Richard McGregor wrote....
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World
Middle East & Africa
RUSSIA AND CHINA CAUGHT ON THE IRANIAN ISSUE
By Neil Buckley (Moscow) and Richard McGregor (Beijing)
Financial Times (UK)
January 15, 2006 - 21:05 UT
http://news.ft.com/cms/s/3c6c9564-85e7-11da-bee0-0000779e2340.html
The U.S. and European governments on Monday step up efforts to forge an international consensus on Iran, seeking Russian and Chinese support for a referral of Tehran’s nuclear dispute to the U.N. Security Council.
The London talks between senior foreign ministry officials come amid indications that Russia would not stand in the way of reporting Tehran to the UN, but signs of more resistance from China. Both Russia and China have to balance close relations with Iran, largely driven by commercial and energy interests, against the growing international anxiety over Tehran’s behaviour and the pressures for action from Washington and European capitals.
Part of President Vladimir Putin’s policy for revitalizing Russia’s economy has been to emphasize development of sectors where it still has strengths. Alongside natural resources and defence, nuclear technology is one of the few where Russia has a competitive advantage, controlling about a third of the world nuclear fuel market.
Along with Iran, Russia has been constructing nuclear power plants in India and China, and supplying fuel to Soviet-designed power plants in former Soviet republics and former eastern European satellites such as the Czech Republic, Slovakia, Hungary, and Bulgaria. Exports of nuclear technology amount to about $3.5bn (2.9bn euros, £2bn) a year.
In that respect, Iran represents a big opportunity, and has a long historical trading relationship with Russia. The Soviet Union was quick to replace the U.S. and France as Iran’s main supplier of nuclear technology after the 1979 Islamic Revolution.
The relationship continued with Russia after the Soviet Union collapsed, with the contract to build the Bushehr nuclear power plant signed in 1995. A new contract was signed last February in which Moscow promised to provide fresh fuel throughout Bushehr’s lifetime and, crucially, to provide for reprocessing and storage of used fuel on Russian territory, obviating the need for Iran to develop its own fuel cycle.
Alexander Rumyantsev, then head of Russia’s atomic energy agency, said late last year Russia had made about $1bn in the seven or eight years it had been building the Bushehr plant. That had contributed to a doubling of the annual value of bilateral trade between Russia and Iran to about $2bn a year.
But he also said the nuclear trade made up a relatively small proportion of total Russian-Iranian trade. Russia was interested in deepening co-operation in other areas such as oil and gas production, railways, and satellite communications. The trading relationship could be as big as $20bn a year, Mr. Rumyantsev added.
For China, meanwhile, the Iran issue presents an especially difficult dilemma, as Beijing places great importance on good relations with Washington, while at the same time cultivating resource-rich pariah nations such as Iran to ensure security of energy supplies.
China has expressed concern about Iran’s nuclear program and has said it is willing to discuss means to prevent it, but it has also shown reservations about using the U.N. Security Council to resolve the dispute.
Even if China is persuaded to agree to a referral of the Iran case to the U.N., it is unlikely to sign up to any sanctions that interfere with its trade in Iran, primarily oil imports. It will also at least wait to see what Russia does before declaring its hand.
But equally China has avoided over the last decade using its veto to torpedo any proposition in the Security Council backed with the full weight of U.S. power. China’s largest energy deal with Iran, a much-heralded $100bn, 25 year-long supply agreement sealed in 2004 for natural gas, has so far come to little, largely because the gas price has risen so quickly since the signing.
The terminals that need to be built in both China and Iran before the gas can be transported are not likely to be finished before 2010 at the earliest, meaning that the deal could be unaffected by the current tensions.
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