In the three months since President Biden took office, Iran has been testing U.S. resolve by escalating its uranium enrichment activities, directing terrorist proxies to attack U.S. forces, and taking another American hostage. It has also improved its ability to move its crude oil to China, which is welcoming “record amounts” of Iranian crude into its ports in spite of U.S. sanctions, and has pledged to invest $400 billion in Iran over the next 25 years. As the clerics and the communists grow closer to one another, American credibility is on the line.
China is one of the few countries willing to engage with the Iranian regime in a complex shell game of tanker ships moving across the world’s oceans as Iran moves its oil, gas and petrochemical products on its fleet — the second-largest state-owned fleet in the world — and on various rogue vessels. Some leave Iran and go directly to China. Around one-half move their cargo to other vessels in what’s known as a ship-to-ship (STS) transfer.
Using sophisticated and inventive means of avoiding detection, tankers cloak their movements by switching off their ship transponders, “spoofing” their GPS coordinates, or both. This endangers other ships and violates international law. Then, while “hidden” on the open seas, the Iranian tankers pair up with ships flagged by maritime authorities in Asia, Africa, South America and Oceana, to transfer the Iranian cargo. From there, the ships head for China and switch on their transponders.
In many cases, however, United Against Nuclear Iran has managed to thwart illicit STS transfers in real time using proprietary tracking technologies used to determine the contours of these operations, while working with tanker operators like Maersk to prevent the transfer from completing. This is helpful, of course, but inadequate. The full weight of the White House is required to stop the flow of Iranian oil into Chinese ports. The Biden administration ought to explicitly raise Beijing’s provocative actions and link compliance to other elements of U.S.-China policy.
China, of course, will deny any wrongdoing. Its effort to create plausible deniability, however, can be generously described as ham-handed. For the first time since August, for example, Beijing reported zero imports of Iranian crude in January or February, but sharp increases from other nations, including Malaysia.
By tracking vessels from point-to-point, however, it has become clear that “Malaysian” oil being offloaded in Chinese ports is actually Iranian in origin. Likewise, just as China has gamed the system, the same data reveals discrepancies in Malaysia’s maritime reports, which are often falsified to maintain the secrecy of the source country.
Any and all vessels carrying this cloaked cargo ought to be individually sanctioned by the Biden administration as a first step, to be followed by a clear signal to President Xi Jinping that he is further imperiling his most critical trading relationship for the small, short-term gain from importing Iranian crude. Hundreds of billions of dollars in U.S. tariffs against China aren’t going away any time soon, but if China persists in its sanctions-busting schemes, they could become a permanent fixture. Other punitive actions should also be explored.
In 2017, for example, U.S. federal prosecutors indicted Mehmet Zafer Çağlayan, a former Turkish economy minister who was, at the time, a member of the Turkish parliament for his role in the infamous “gas for gold” sanctions-busting scheme. The president might also consider that China sending billions of dollars to the world’s largest state-sponsor of terrorism, one which targets U.S. military personnel with regularity and is under sanctions, is an “unusual and extraordinary threat” to “the national security, foreign policy, or economy of the United States” under the International Emergency Economic Powers Act.
The goal of such pressure is not to turn the rift between the U.S. and China into a chasm. It is to force Mr. Xi to recognize that the U.S. and its consumer market — not Iran — is fundamental to China, increase economic pressure against the Iranian regime, and protect the validity of U.S. secondary sanctions. South Korea, India, Italy and many others that have halted Iranian oil imports are surely paying close attention.
Should China comply with U.S. sanctions against Iranian energy imports, Iran would face true “maximum economic pressure,” to borrow a phrase from the previous administration — and the U.S. could ultimately prevail upon the kind of deal that the majority of Americans want: comprehensive, verifiable and permanent.
As Secretary of State Antony Blinken recently pointed out, the U.S. must be prepared to approach China from a position of strength if Beijing continues to act aggressively beyond its borders. In its ongoing bilateral dialogue, the Biden administration should do just that — raise these issues with Mr. Xi and demand action if China hopes to improve its most critical but fractured relationship.
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