Sanctions levied against Iran’s Islamic Revolutionary Guard Corps (IRGC) are undermining China economic support for Tehran significantly, observers say.
Iran has been economically reliant on China for years, and last year’s signing of a 25-year strategic deal between the two countries further cemented Beijing’s dominance in the Islamic Republic.
While that deal has been described as a “win-win” by both regimes, observers say it would be wise for Iran not to pin any hopes of economic salvation on such agreements that fall under Beijing’s Belt and Road Initiative (BRI), especially when IRGC sanctions risk exposing China to international sanctions.
For many years, the IRGC has been using the income from Iran’s oil sales to pursue its expansionist agenda in the region.
As a result, the US government, among other moves, designated the National Iranian Oil Company, Iran’s petroleum ministry and the National Iranian Tanker Company in October 2020.
The Treasury Department issued the sanctions against the three entities for their financial support to the IRGC’s external operations arm, the Quds Force.
In June 2020, the United States also imposed sanctions on five Iranian ship captains who delivered oil to Venezuela. China economic support
Bottom line is top priority for Beijing
While the benefits of the 25-year deal to both countries are presented as plentiful, China is taking a huge risk investing in Iran, which has been the target of US sanctions in a number of industries, observers say.
Already, two units of China’s largest transportation network, COSCO, were sanctioned by the United States in September 2019 as a result of their complicity in circumventing sanctions on Iran.
COSCO owns about 4% of all existing super oil-tankers globally.
The embargo on COSCO immediately drove up the price of oil shipments in Asia and increased overall costs by about 30%.
It reached the point where Chinese government officials demanded sanctions be lifted from the company during trade negotiations with the United States in January 2020.