Thursday, May 10, 2018

The Iran Deal. About Nukes? Or Energy for China and Europe?

The geopolitical situation with Iran has little to do with nukes, right? The Iran Nuclear deal was more about opening up Iran to provide energy to China and Europe than trying to control their nuclear aspirations, right? Isn't the alliance between Communist China and Iran the one Trump really needs to keep at bay to protect the United States? Communist China is the real threat. Its goal to be the world's military and economic superpower by needs Iran to make that happen, right? It always comes down to energy and resources, doesn't it? Here's an old article about the dynamic between Iran, Saudi Arabia, Europe, China and Syria. Food for thought. I don't pretend to know much about this - but would love to hear from those who do.
Right now, China has a very close relationship with Iran. The Saudis have tried for years to supplant that - to no avail. Why? Because Iran has brought assets to the table that Saudi Arabia lacks: a large population, an industrial base, resources, a battle-hardened military, a deep-rooted culture, a history of empire and a geography that makes it a crossroads.
Saudi Arabia’s traditional assets – including custodianship of the Muslim holy cities, Mecca and Medina, and money, lots and lots of money, may still not be enough to compete.
Iran’s strategic advantage is critical to Eurasia’s energy. Iran is pivotal to the success of China’s trans-continental, infrastructure-focused One Belt, One Road (OBOR) initiative in ways that Saudi Arabia is not.
Gas supplies from Iran and Turkmenistan, two Caspian Sea states, rather than Saudi oil, will determine which way the future Eurasian energy architecture tilts: Will it be in the direction of China, the world’s third-largest LNG importer, or in that of Europe? In that context, it matters greatly to China that Iran has the world’s second-largest natural gas reserves and its fourth-largest oil reserves. These were significantly enhanced with the lifting in 2015 of international sanctions by the Iran Nuclear deal.
“Iran, within five years, will likely have 24.6 billion cubic meters of natural gas available for annual piped gas exports beyond its current supply commitments. Not enough to supply all major markets, Tehran will face a crucial geopolitical choice for the destination of its piped exports.”
Further, Iran will be able to export piped gas to two of the following three markets:
1. European Union (EU)/ Turkey via the Southern Gas Corridor centering on the Trans-Anatolian Natural Gas Pipeline (TANAP)
2. India via an Iran-Oman-India pipeline, or
3. China via either Turkmenistan or Pakistan.
“The degree to which the system of energy relationships in Eurasia will be more oriented toward the European Union or China will depend on the extent to which each secures Caspian piped gas exports through pipeline infrastructure directed to its respective markets.”
In other words, to determine the balance of power in Eurasian energy and establish One Belt, One Road as the key determinant of Eurasia’s energy architecture, China would need to position itself as the main recipient of Iranian and Turkmen gas.
That, in turn, would enhance China’s growing economic influence in Central Asia, and further extend it to the Caucasus and the eastern Mediterranean. China has already many of the building blocks needed to make that a reality:
1) close and long-standing relations with Iran
2) significant investment in Turkmen gas production and pipeline infrastructure
3) the construction of Pakistan’s section of the Iran-Pakistan pipeline.
4) Hooking the pipeline to One Belt, One Road would allow China to receive Iranian gas not only by sea on its eastern seaboard, but also in its land-locked, troubled north-western province Xinjiang.
However, Iran’s geo-political strengths are however not wholly dependent on aligning the Islamic republic with China.
With the development of Iran’s Indian-built Chabahar port and the undersea Iran-Oman-India pipeline that would potentially create an alternative Asia-to-Europe energy corridor, Iran is, well-positioned to play both ends against the middle.
In addition, it can adopt a key role in the trans-Atlantic community’s effort to strengthen relations with India as an antidote to the rise of China.
Contrary to some assumptions, Iranian cooperation with Russia in Syria and elsewhere is opportunistic and unlikely to prove sustainable, rather than a sure thing Russia can count on for preferential economic treatment:
– Iranian-Russian competition is already visible in the Caucasus and Central Asia, which ironically mitigates in Europe’s rather than China’s favor.
– Iran is likely to deepen energy cooperation with Turkey. The intent here is two-fold: First, it is a bid to enhance its influence in that country. Second, it would help curtail Russian inroads in the Islamic republic’s northern neighbors – Azerbaijan; Turkmenistan, which is China’s principle gas supplier as well as Armenia (where Russia’s state-owned Gazprom has invested in an Iran-Armenia gas pipeline).
All of this positions Iran to be a very choosy supplier and negotiator. In Beijing and beyond, Iran still holds far more of the good cards. For now. Until somebody puts sanctions back in place and takes Iran off the table. Who might that be? President Trump.

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