- Trump threatens sanctions against China if it buys Iranian oil…
- Could China pull a 21st century Pearl Harbor?…
- “We’re going to monetize the most valuable asset of the United States”…
Dear Reader,
President Trump, yesterday:
- Any Country or person who buys ANY AMOUNT of OIL or PETROCHEMICALS from Iran will be subject to, immediately, Secondary Sanctions.They will not be allowed to do business with the United States of America in any way, shape, or form.
Do you know which nation imports the greatest quantity of Iran’s oil?
The answer is China.
Some 90% of Iranian oil exports funnel into the energy-ravenous behemoth.
Officially, China takes in 1.8 million barrels the day of Iranian oil.
Unofficially, China likely takes in substantially more.
We must assume that China will continue to guzzle Iranian oil.
Will then China “be allowed to do business with the United States of America in any way, shape, or form?”
That Would Be a Lot of Lost Business
I assume doing business with the United States of America includes trading with the United States of America.
Last year the two nations conducted $583 billion worth of trade.
This year’s trade is diminished. And it will likely diminish further.
My spies report that Chinese shipments to the United States may plunge perhaps 35% next week alone.
Yet does the president propose to place China under complete ban should it continue taking in Iran’s petroleum?
I do not believe he does.
I am certain he grasps China’s vast reliance upon Iran’s oil. To choke China’s oil supply is to choke its oxygen supply.
China simply would not tolerate the choking… and would fight it off.
Thus I hazard any secondary sanctions against China would be riddled with loopholes through which Chairman Xi would easily wriggle.
China’s Already Beating Sanctions
China is already running its circles around Iranian-directed sanctions. How?
The New Atlanticist:
- China has developed a way to import Iranian oil while bypassing the Western financial system and shipping services. Iran ships oil to China using dark fleet tankers and receives payments in renminbi through small Chinese banks.
- The dark fleet tankers operate without transponders to avoid detection. Once oil shipments reach China, they are rebranded as Malaysian or Middle Eastern oil, and bought by “teapots” in China. “Teapots” are small independent refineries that have been absorbing 90 percent of Iran’s total oil exports since Chinese state-owned refiners stopped transacting with Iran due to the fear of sanctions.
- “Teapots” are believed to be paying Iran in renminbi using smaller US-sanctioned financial institutions like the Bank of Kunlun. This strategy allows China to avoid exposing its large international banks to the risk of US financial sanctions.
Mr. Scott Modell is the chief executive officer of Rapidan Energy.
He does not believe the proposed sanctions would kink the oil flows unless they lambasted China’s state-owned enterprises and energy infrastructure.
What are the sanctions’ true purpose?
- The strategy appears to target China as a means to pressure Iran — applying only minimal pressure for now while gradually increasing efforts to bring Iran to a nuclear deal.
I am with Mr. Modell. I believe it is the president’s strategy.
Yet does Chairman Xi believe it? Or does he believe the United States is out not only for Iran — yet also for China?
A Potentially Dangerous Situation
First Chairman Xi must confront the American tariffs. My abovesaid spies inform me that Chinese manufacturing has slackened in anticipation of them.
In all, China’s economy is enduring substantial wobbles.
Now the United States president threatens sanctions against China — even with their likely loopholes.
Might Chairman Xi conclude he must deliver a preemptive blow against the United States… as Japan delivered a preemptive blow against the United States in 1941?
In August 1941, the United States government embargoed all oil and gasoline exports to Japan.
Government officials understood they were backing Japan into a corner that was very, very tight.
This they did knowing well that Japan might take a desperate armed lunge in response.
If you push a man hard and repeatedly… should you be surprised when he clobbers you in the snout?
It Was About the Oil
Mr. Robert Higgs of the Independent Institute:
- Roosevelt and his subordinates knew they were putting Japan in an untenable position and that the Japanese government might well try to escape the stranglehold by going to war.
- Having broken the Japanese diplomatic code, the Americans knew, among many other things, what Foreign Minister Teijiro Toyoda had communicated to Ambassador Kichisaburo Nomura on July 31:
- “Commercial and economic relations between Japan and third countries, led by England and the United States, are gradually becoming so horribly strained that we cannot endure it much longer. Consequently, our Empire, to save its very life, must take measures to secure the raw materials of the South Seas.
Japan’s war declaration against the United States (and Great Britain) made very specific mention of the oil sanctions:
- Our adversaries, showing not the least spirit of conciliation… have intensified the economic and political pressure to compel… our Empire to submission. This trend of affairs would, if left unchecked… endanger the very existence of our nation. The situation being such as it is, our Empire, for its existence and self-defense, has no other recourse but to appeal to arms and to crush every obstacle in its path.
The United States Pacific Fleet — wallowing at anchor on the morning of Dec. 7 was — in its path, alas.
Improbable Possibilities
Here I hazard no prediction.
I do not argue that China will attempt a preemptive blow against the United States in the Japanese fashion.
I merely suggest a possibility. It may even be an improbable possibility.
Yet as old Aristotle noted long ago:
“Probable impossibilities are to be preferred to improbable possibilities.”
Brian Maher
for Freedom Financial News
