ARmy Rumour SErvice

To misquote The Communards old lyric ' There's more to life than U.S/EU interests'........

BBC News - Iran oil sanctions divide Asia's four largest economies

15 January 2012 Last updated at 16:15
Iran oil sanctions divide Asia's four largest economies
By Puneet Pal Singh
Business Reporter, BBC News, Singapore

Mr Geithner visited China and Japan in a bid to drum up support for sanctions against Iran

Oil has been one of the most politically sensitive commodities over the years. And now Asia's four largest economies are finding out how difficult it is to balance political will with economic reality.

As the US and European Union move to cut Iran's oil exports, China, Japan, India and South Korea are having to tread the fine line between international relations and national needs.

China, Asia's largest and the world's second-largest economy, is yet to give any hint if it will reduce its imports from Iran, despite a visit by the US Treasury Secretary Timothy Geithner to Beijing to discuss the issue.

The signals coming out of India indicate it is keen to continue its relationship with Tehran.

On the other hand, Japan says it will take steps to reduce its reliance on Iranian oil. While South Korea, Asia's fourth-largest economy, is likely to follow suit, despite not having committed to anything as yet.

The difference in their approaches and their respective stands, are likely to have a bearing not just on the oil market but also on the success of the embargoes and their impact on Asia.

"It will really depend on individual countries and how they embrace the European and and the US sanctions," Amrita Sen of Barclays Capital tells the BBC.

'Complex situation'

The main focus is likely to be the stand that China takes on the issue.[b] Beijing is the largest importer of Iranian oil in Asia, accounting for almost 20% of all shipments from Tehran.


Any reduction in that amount is likely to hurt Iran. However, analysts say there is little chance of China making any such move.

"It is a complex situation as there is politics and economics involved," says Stephen Joske of the Economist Intelligence Unit.

"As far as politics is concerned, it was clear during the Arab Spring that China maintains a status quo against the governments in the region," he adds.

"On the economic front, China is far more reliant on imported oil than it has ever been in the past."

China's rapid growth in recent years has seen a surge in demand for oil in the country. Goldman Sachs has forecast that it will become the world's largest importer of oil within the next one-and-a-half years.

It currently imports almost 11% of its oil from Iran and analysts say given the huge domestic demand, it is unlikely that China will reduce the amount.

At the same time, China's political equation with the US may also play a part. Analysts say that Beijing is becoming increasingly wary of being told by the US on how to shape its policies.

"We are getting to a point where China is saying enough is enough, we are not going to be a part of this," says Tony Regan of business consultancy firm Tri-Zen.

'Securing future supplies'

India is also a major importer of Iranian oil in Asia and unlike China, it has far more cordial and closer political relations with the US.

The US has been trying to curb Iran's oil exports which are big source of its national income However, Indian authorities are more likely to follow Beijing rather than Washington on this issue.

"They are both rising superpowers and both are huge consumers of oil," says Ms Sen of Barclays Capital. "For them price matters and since volumes are huge they don't want to get involved in any such plans."

Ms Sen adds that historically India and Iran have enjoyed good relations and they are likely to continue to do business together.

"This is about securing future supplies," she explains.

Any doubts of which way India may go have been laid to rest after the Indian government said it will send a delegation to Tehran this week to discuss oil supplies and ways in which it can settle payments with the Iranian Central Bank.

Toeing the line?

“They will do just enough to show that they have made attempts to reduce these imports and replace them with other sources”
Victor Shum Purvin & Gertz

The US has found some support from its long standing ally Japan. The Japanese finance minister Jun Azumi, assured Mr Geithner during his visit to Tokyo last week, that it will reduce oil imports from Iran.

At the same time, South Korea's knowledge economy minister Hong Suk-woo has been quoted by the Reuters news agency as saying that though it was too early to say if it would cut imports, Seoul's "basic stance is to co-operate with the US".

Together Japan and South Korea account for more than 20% of Iranian exports and a big reduction from them will have a significant impact.

However, analyst say that despite the rhetoric from both sides, they are unlikely to make drastic changes.

"I don't think they will cut all imports. They will do just enough to show that they have made attempts to reduce these imports and replace them with other sources," Victor Shum of Purvin & Gertz tells the BBC.

"They want to get waivers from the US so that Japanese and Korean companies can keep doing business with Iranian Central Bank," he adds.

Japan's decision will also be influenced by an increased demand for oil after the earthquake and tsunami last year.

The twin disasters resulted in various nuclear power plants being shutdown. As a result utility providers have had to turn to thermal power stations which require oil to operate, resulting in a rise in demand.

The Japanese Prime Minister Yoshihiko Noda has said he will consult the business community before making a final decision on cutting any oil imports from Iran.

So even with the political will to stand by the US and European Union, Tokyo will have to first address the economic realities at home.

Washington proposes....Beijing and New Delhi disposes.....?

Nice non sequitur Alsacien, studiously applied....

Meanwhile, back at the Demonisation of Persia 101 workshop , I came across this apostasy - and being all heart, thought I would share for those whose worldview is entirely dependent on FoxNews:
Robert Fisk: We've been here before

Turning round a story is one of the most difficult tasks in journalism – and rarely more so than in the case of Iran. Iran, the dark revolutionary Islamist menace. Shia Iran, protector and manipulator of World Terror, of Syria and Lebanon and Hamas and Hezbollah. Ahmadinejad, the Mad Caliph. And, of course, Nuclear Iran, preparing to destroy Israel in a mushroom cloud of anti-Semitic hatred, ready to close the Strait of Hormuz – the moment the West's (or Israel's) forces attack.

Given the nature of the theocratic regime, the repulsive suppression of its post-election opponents in 2009, not to mention its massive pools of oil, every attempt to inject common sense into the story also has to carry a medical health warning: no, of course Iran is not a nice place. But ...

Let's take the Israeli version which, despite constant proof that Israel's intelligence services are about as efficient as Syria's, goes on being trumpeted by its friends in the West, none more subservient than Western journalists. The Israeli President warns us now that Iran is on the cusp of producing a nuclear weapon. Heaven preserve us. Yet we reporters do not mention that Shimon Peres, as Israeli Prime Minister, said exactly the same thing in 1996. That was 16 years ago. And we do not recall that the current Israeli PM, Benjamin Netanyahu, said in 1992 that Iran would have a nuclear bomb by 1999. That would be 13 years ago. Same old story.

In fact, we don't know that Iran really is building a nuclear weapon. And after Iraq, it's amazing that the old weapons of mass destruction details are popping with the same frequency as all the poppycock about Saddam's titanic arsenal. Not to mention the date problem. When did all this start? The Shah. The old boy wanted nuclear power. He even said he wanted a bomb because "the US and the Soviet Union had nuclear bombs" and no one objected. Europeans rushed to supply the dictator's wish. Siemens – not Russia – built the Bushehr nuclear facility.

And when Ayatollah Khomeini, Scourge of the West, Apostle of Shia Revolution, etc, took over Iran in 1979, he ordered the entire nuclear project to be closed down because it was "the work of the Devil". Only when Saddam invaded Iran – with our Western encouragement – and started using poison gas against the Iranians (chemical components arriving from the West, of course) was Khomeini persuaded to reopen it.

All this has been deleted from the historical record; it was the black-turbaned mullahs who started the nuclear project, along with the crackpot Ahmadinejad. And Israel might have to destroy this terror-weapon to secure its own survival, to ensure the West's survival, for democracy, etc, etc.

For Palestinians in the West Bank, Israel is the brutal, colonising, occupying power. But the moment Iran is mentioned, this colonial power turns into a tiny, vulnerable, peaceful state under imminent threat of extinction. Ahmadinejad – here again, I quote Netanyahu – is more dangerous than Hitler. Israel's own nuclear warheads – all too real and now numbering almost 300 – disappear from the story. Iran's Revolutionary Guards are helping the Syrian regime destroy its opponents; they might like to – but there is no proof of this.

The trouble is that Iran has won almost all its recent wars without firing a shot. George W and Tony destroyed Iran's nemesis in Iraq. They killed thousands of the Sunni army whom Iran itself always referred to as "the black Taliban". And the Gulf Arabs, our "moderate" friends, shiver in their golden mosques as we in the West outline their fate in the event of an Iranian Shia revolution.

No wonder Cameron goes on selling weapons to these preposterous people whose armies, in many cases, could scarcely operate soup kitchens, let alone the billions of dollars of sophisticated kit we flog them under the fearful shadow of Tehran.

Bring on the sanctions. Send in the clowns.

Caveat - Fisky has, I'm reliably informed by a co-defendant ( who writes for The Observer and lectures at Shrivenham) ' lost the plot '....notwithstanding, a controversialist and non-pc view from somebody who has lived and breathed the Middle East in all its complexities for the last 30 years...