Voices from Russia

Wednesday, 4 July 2012

US Sanctions No Hurdle to Beneficial Ties

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The USA welcomed the EU embargo on Iran that came into effect on 1 July. Two days before, the Americans slapped economic sanctions on banks and companies that engaged in trade with Iran. However, they exempted nearly 20 countries, including China, from them. Beijing said that it does not intend to scale down oil imports from Iran. The USA postponed the imposition of sanctions against China and exempted another 18 countries, including Japan, South Korea, Britain, and a number of EU countries. In explanation, US Secretary of State Hillary Clinton said that the countries in question have substantially cut down oil shipments from Iran, thereby demonstrating what breaches of international nuclear commitments could lead to. According to Chinese foreign ministry spokesperson Hong Lei, Beijing imports Iranian oil in accordance with the law and is strongly against unilateral restrictions against any other countries.

Andrei Volodin, the head of the Oriental Research Centre of the Russian Foreign Ministry’s Diplomatic Academy, said, “Early this year, we saw a slight drop in oil supplies, but Washington had nothing to do with it. China saw a reduction in oil imports from Iran because the two sides were at odds over the price of oil at the beginning of the year. They settled the dispute by spring and Iranian oil shipments to China increased between April and June. If Beijing chooses to cut Iranian oil imports, it will do so because of economic slowdown, but nothing of the sort is observed at the moment”.

Whilst announcing sanctions against Iran’s trade partners, the USA can’t afford any drastic moves against China. Beijing and Washington boast close economic ties. China is the world’s number two economy capable of consistently upholding its interests. A VOR correspondent met with Oriental Studies expert Andrei Ostrovsky, who said, “The USA and China depend on one another. Naturally, the USA opted to extend the time frame for the introduction of sanctions. It has no other levers to resort to. China’s strong enough to take its own decisions and possesses sufficient potential to ignore threats”.

India and South Korea have exemption from the sanctions as well. Analyst Dmitri Abzalov said, “Apparently, Washington is powerless to exert concerted pressure on Tehran. China’s position is strong indeed. China holds the bulk of US debt, and no one wants to spoil relations with the world’s largest producer and creditor. Iran accounts for a considerable part of Chinese imports, and Beijing wishes to expand exports to Iran. This proves that Washington will find it more than challenging to mount overall resistance to Iran, particularly in the east. Looking to China, Iran switched to non-cash payments, and was able to adapt to a ban on transit operations. Without China, Washington’s efforts will be useless. Naturally, the USA opted for a transitional solution to save face”.

Washington might find it particularly troublesome to bicker with Beijing ahead of the election. By putting off the imposition of sanctions, President Obama has de facto postponed a solution to the issue for the next presidential term. The Republicans were quick to jump on this, accusing the current administration of betraying national interests. Mitt Romney’s supporters will surely exploit this over the next few months. Experts say, however, that even if the Republicans win the vote, they’ll have to take a pragmatic approach, and their vociferous statements will remain nothing more than words.

2 July 2012

Polina Chernitsa

Aleksandra Dibizheva

Voice of Russia World Service

http://english.ruvr.ru/2012_07_02/79986365/

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Friday, 29 June 2012

Iran: Myths and Consequences

The real Iran… it’s not mad mullahs and Revolutionary Guards… it’s the people… just like the USA

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The West is stepping up its efforts to tighten a grip on Iran in connection with its nuclear programme. The USA slapped sanctions on foreign state-run banks that clinched oil deals with Tehran and imposed restrictions on the operations of private financial institutions cooperating with the Islamic Republic. On 1 July, the EU’s launching an oil embargo against Iran. Such an abundance of “economic reprisals” against a major player on the world oil market could have lasting consequences. No more new oil from Iran will be available in Europe after 1 July. Countries will have to rely on the Iranian oil that they purchased under previous contracts. The EU has even banned crisis-struck Greece from importing Iranian oil on preferential terms. Washington’s restrictions on the banks that were “spotted” in partnership with Tehran pursue the same agenda… to slash Iranian oil sales.

The restrictions in question have already had a negative effect on the social and economic situation in Iran, which has seen a rise in food prices and a devaluation of the national currency. However, the embargo on Iranian oil led to an increase in oil prices throughout the EU this spring, to the disappointment of millions of European consumers. Oil prices might spike again after 1 July. The EU accounts for 20 percent of Iranian oil exports, this amounts to about 30 million tons (195 million bbl). Europe expects Saudi Arabia to fill the gap. Nevertheless, Iran has the resources to block the Strait of Hormuz, through which oil from Saudi Arabia and LNG from Qatar reaches world markets.

Yevgeni Satanovsky, of the Institute of the Middle East, said, “As for Iran, it could offset its losses by supplying oil to other countries. This means that the embargo might not prove as effective as planned. Some countries, including South Africa, have sharply increased Iranian oil imports. Consumption of Iranian oil hasn’t dropped in Turkey. South Korea cut Iranian oil supplies, but only slightly. Indian companies reduced the consumption of Iranian oil in the country’s state sector, but it’s increased in the private sector. China, even though it cut Iranian oil supplies, has exerted pressure on Iran to get it to slash oil prices so that Beijing could boost the consumption of Iranian oil for the same prices”.

Because of the embargo, Iran will lose 20 percent of the 100 billion USD (3.25 trillion Roubles. 79 billion Euros. 64 billion UK Pounds) it earns from oil exports annually. The loss is far from disastrous. In addition, sanctions will help to spur Iran’s efforts in other areas. Vitaly Bushuyev, General Director of the Institute of Energy Strategy, observed, “The role of Iran in the formation of world oil prices has been exaggerated. No radical fluctuations on the oil market have been predicted for the near future. Oil prices will range between 85 and 110 USD (2,760-3,570 Roubles. 67-87 Euros. 54-70 UK Pounds). Iran may affect that, but its influence won’t go further than causing one-time price volatility within a maximum variation of 3-5 dollars (97-162 Roubles. 2.50-4 Euros. 2-3.25 UK Pounds)”.

In other words, the western sanctions against Iran won’t trigger any upheavals on the world market or an economic collapse in Iran. Instead, they could hit the wallets of ordinary people in Europe. US Secretary of State Hillary Clinton said that unless Iran takes specific steps to dispel the international community’s concerns regarding its nuclear programme, pressure on it will increase, and it’ll become more and more isolated. As an alternative to economic pressure, Washington might carry out air strikes against Iran’s military facilities. In this respect, attempts to exert pressure on Tehran through economic sanctions aren’t the worst option.

29 June 2012

Ilya Kharlamov

Voice of Russia World Service

http://english.ruvr.ru/2012_06_29/79695943

Thursday, 2 February 2012

Russia Denounced EU Sanctions Against Iran

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Earlier today, Vladimir Chizhov, the Russian Ambassador to the EU, said in an interview with Interfax that Russia condemned the EU sanctions against Iran. He felt that the sanctions imposed on Tehran have exhausted their potential. According to Chizhov, Russia believes that continuing to use sanctions to exert pressure on Iran’s wrong, since they’re bleeding the Iranian economy dry and are affecting the living standards of its population. Besides, the sanctions were untimely, as they were imposed at a time when efforts to settle the Iranian nuclear issue had already begun… Tehran’s cooperating with the IAEA delegation as well as being in contact with the Big Six group of negotiators. Chizhov said that he’s certain that the oil embargo’s also harming EU interests, as Europe’s biggest consumers of Iranian oil, Greece, Spain, and Italy, were hit hardest by the current Euro Zone crisis.

2 February 2012

Voice of Russia World Service

http://english.ruvr.ru/2012/02/01/65068768.html

Monday, 30 January 2012

The Outcome of This Week’s Posturing: Asia Refuses to Back the USA and Europe Against Iran

THIS is the world of Newt Gingrich, Rick Santorum, and Mitt Romney… and what they want to do with Iran. It’s why many countries won’t join the US/EU embargo of Iran… any questions?

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Asian countries threw down a challenge to the USA and the EU. China, India, and Turkey refused to support a ban on Iranian oil imports, and they’ll not allow the USA to block the export of Iranian oil. Japan and South Korea are planning to follow suit. This week, the EU banned the import of Iranian oil imports, but it remains an isolated unilateral action. On Monday, EU foreign ministers approved a new package of sanctions against Tehran that provides for a gradual ban on the import of Iranian crude oil and petroleum products. The EU plans to stop purchasing oil from Iran by 1 July. Until recently, the main buyers of Iranian oil in Europe were Greece, Italy, and Spain, who bought 600,000 barrels a day. Yevgeni Satanovsky of the Institute of the Middle East said, “Europe decided to buy itself some time so that it could find alternatives to Iranian oil imports. Europe will have no problems replacing Iranian oil with oil from Saudi Arabia, the United Arab Emirates, or Kuwait. The Gulf Cooperation Council has already made it clear that it will recoup the losses”.

Meanwhile, some oil refineries in Europe might face quite a headache, for they’re not only set up to refine Iranian crude oil, they refine a particular sort of it. Experts have speculated on whether an embargo will hit the buyer or the seller harder. The IMF predicts a 20 to 30 percent increase in the cost of oil. Sergei Druzhilovsky of the Moscow Institute for International Relations said, “That means an increase of 20 to 30 dollars per barrel at current prices. Europe accounts for 18 to 20 percent of Iranian crude oil exports. A ban on these exports will not collapse or cause any serious problems for the Iranian economy. It might affect oil prices set for China and India, which could create a bit of a problem. It looks like “dumping” is inevitable, as Iran will definitely have crude oil stockpiles available for sale. Iran’s now switching to payments in currencies other than the dollar, the Japanese Yen, the Indian Rupee, and the Chinese Yuan”.

This week, China and India reiterated their determination not to support the embargo. Japan‘s gradually changing its position, having initially yielded to pressure from the USA. It has now asked, as an exception, not to cut its imports from Iran. South Korea dragged its feet over the decision, forced to choose between political solidarity with its pushy overseas ally, and the country’s energy security. Analyst Stanislav Tarasov commented, “Unlike Tokyo and Seoul, Ankara unhesitatingly rejected pressure from the USA without hesitation. Turkey’s position is purely pragmatic. It’s well aware that Europe’s going through a depression and that cutting Iranian oil imports would only make things worse. Iran is Turkey’s main trading partner, accounting for half of its oil imports. Ankara won’t find any alternatives to Iranian supplies amongst the Arab countries, from which it’s trying to distance itself in any case. Besides, Iranian oil offers it freedom to act as it pleases. Turkey is simply being sensible about the issue. A crude political game is underway, aimed at pressuring Iran, which simply testifies to the deteriorating quality of Western diplomacy. The West is trying to make Iran begin talks with the ‘six’ (the five permanent members of the UN Security Council and Germany) on its nuclear programme. The problem is, after Turkey played a crucial role in mediating Iran’s consent to a meeting with the six-party representatives in Istanbul, the West started ‘torpedoing’ the talks”.

Yevgeni Satanovsky commented on Ankara’s position, saying, “Turkey wishes to demonstrate that it’s an independent player, a regional superpower, and sets its foreign policy towards its neighbours as it will. On the one hand, it agreed to station an American radar base on its territory, certainly an anti-Iran move. Yet, on the other, it’ll continue to buy oil from Iran, as Ankara’s interested in energy cooperation with Tehran”.

On Friday, the Pakistani Foreign Ministry reiterated that Pakistan would take part in a project to build a gas pipeline from Iran to Pakistan despite the threat of an imposition of international sanctions, even though the USA is strongly against the project. In commenting on their stance, the Pakistani Foreign Ministry emphasised that international sanctions should be limited to Iran’s nuclear programme and should not affect Pakistan’s participation in a gas project with Iran.

28 January 2012

Konstantin Garibov

Voice of Russia World Service

http://rus.ruvr.ru/2012/01/28/64826214.html

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