Here’s an interesting New York Times editorial by Flynt Leverett and Hillary Mann Leverett. I had dinner with Hillary in Washington earlier this month, and the topic of China’s relations with Iran was raised. I agree with the editorial that an Obama administration proposal for Saudi Arabia to replace China’s oil imports from Iran is unworkable. The proposal assumes that the Chinese would be more willing to impose sanctions on Iran if they didn’t have to worry about the fact that Iran accounts for more than 10% of the country’s oil imports. I met with a senior Chinese policy advisor on Iran during a trip to Beijing last week. His response was that any such plan would also spoil China’s status as a non-interventionist power, and would have ripple effects on the country’s interests in other parts of the world. It’s all about the global view.
Tag Archives: Iran
China, Iran, and Syria go head-to-head
Two foreign parties have designs on a Middle East country. One of the parties is Iranian and is already well entrenched in the country.
Sound familiar?
Maybe. But this story has a twist. China’s Geely and Iran’s Khodro are car companies. They both produce low-cost cars, and they both have ambitions to capture a share of the Syrian car market and use the country as an export base.
Khodro has a head start. It owns 45% of Siamco, a joint-venture with the Syrian government. Its first model, “Sham”, rolled of the factory line in 2008. The project was hailed by both sides as symbolizing the strength of the relationship between the two countries. But like many agreements, the devil is in the details. And, according to an Al Hayat article published last week, Syria has demanded that Iran reduce the price of the car’s Iranian-made component parts to make the car more affordable. (It’s priced at a not cheap $12,000).
So, I was interested to read that China’s Geely is in discussions to build a factory near Aleppo, according to an article published by Syria’s state news agency, Sana, last week. Geely wants to sell to the domestic market and for export. Now, this isn’t the first time I’ve heard of a Chinese car company wanting to build a factory in China. Indeed, Chinese car companies have been targeting Syria’s domestic market for at least five years now. But it’s certainly the first time I’ve found any hard evidence of their investment plans in the country.
Whether Geely will be successful is less certain. I was speaking with a senior executive at a Chinese car company last week. He wasn’t convinced that Chinese car companies have the experience yet to invest abroad. (The executive previously worked for an American car company). So, I’ll be watching developments closely.
The Flipside of Sanctions
Iran faces its greatest challenge since the revolution in 1979. It is unclear how events will play out. However, the chances of Ahmadinejad remaining in power are still high. And, as President Obama recently said, Mousavi may be no easier to deal with. The upshot is that the West is likely to leave sanctions in place.
Yet, there is good reason to doubt the effectiveness of sanctions. So far, sanctions have targeted Iran’s economy. The assumption is that Iran’s leadership will give way to foreign demands as the economy grinds to a halt. But while the economy is straining, it certainly isn’t buckling.
Why not? In part because Asia has stepped in to fill the gap. Asia’s exports to Iran have soared from $2 billion to $17 billion over the past decade. The region exports cars and clothes to Iran and imports oil and gas in return. Its share of Iran’s total trade has nearly doubled to 25 percent, grabbing market share from Europe.
