U.S. criticized on Iran sanctions

By John Pomfret and Colum Lynch
Washington Post Staff Writer
Friday, March 5, 2010

The Obama administration is pushing to carve out an exemption for China and other permanent members of the U.N. Security Council from legislation pending in the Senate and the House that would tighten sanctions on companies doing business in Iran, administration and congressional sources said.

China has balked at supporting a fourth round of U.N. sanctions on Iran. That has emboldened countries on the council, such as Brazil, Turkey and Lebanon, to also express opposition.

The administration's plan in effect would label China as a country cooperating in the U.S.-led drive to prevent Iran from obtaining nuclear weapons and appears to be part of a broader strategy to prod Beijing to vote for a new sanctions resolution. The three previous resolutions enjoyed broad support in the 15-member council, so any result that includes several abstentions or no votes would be viewed as a major diplomatic setback.

But the administration's lobbying for a Chinese exemption has raised eyebrows in Congress and angered several allies, most notably South Korea and Japan, which would not be exempted under the administration's plan.

"We're absolutely flabbergasted," said one senior official from a foreign country friendly to the United States. "Tell me what exactly have the Chinese done to deserve this?" Japan and South Korea, which are U.S. allies, have raised the issue with the Obama administration.

Among other things, the legislation tightens existing U.S. sanctions on Iran by targeting sales of refined petroleum products to the country and the administration would want it to include an exemption for the six countries seeking to negotiate with Iran on its nuclear program. The six are the five permanent members of the Security Council -- the United States, France, Russia, China and Britain -- and Germany. The most controversial, by far, would be China.

"Given the Chinese-Iranian relationship, it's hard to imagine a meaningful cooperating country exemption that China would fall into," said a Hill staff member involved in the issue.

One foreign official complained that the administration's efforts would encourage China to water down U.N. sanctions on Iran as much as possible and then push Chinese firms -- should the U.S. law pass -- to invest more in Iran's oil and gas sector.

Similar behavior has been seen in Chinese companies before. Over the course of the past decade, Japanese firms, under U.S. pressure, have divested significantly in Iran's oil and gas industry. As they have pulled out, China has moved in.

Today China has commitments of more than $80 billion in Iran's energy sector. Japan, which once had a 70 percent interest in the Azadegan oil field, has reduced it to 10 percent. Last August, a Chinese consortium led by the Chinese National Petroleum Company signed a memorandum of understanding to invest $3 billion in the field.

Several diplomats said that until now, China has refused to even engage in discussions about possible sanctions. On Thursday, China indicated a slight shift after Deputy Secretary of State James B. Steinberg held talks with officials in Beijing.

During a Security Council meeting, Chinese diplomat Liu Zhenmin underscored Beijing's desire to see the nuclear standoff resolve through diplomatic negotiations.

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