A key tenet of the prior Trump administration’s crackdown on China and Iran was to punish those Chinese companies caught transferring sanctioned Iranian oil, which was often done through ‘ghosting’ or at other times offshore ship-to-ship transfers in order avoid detection.
Since President Biden took office there’s been wide reports that China’s ‘illicit’ imports of Iranian oil have soared, resulting in critics and Iran hawks charging the White House with “turning a blind eye” in terms of sanctions enforcement based on existing laws on the books, also as Biden is seeking a path back to engagement with Iran on the US rejoining the JCPOA nuclear deal.
This week a senior Biden admin official has admitted in comments to FT that such banned Iranian oil exports to China have been increasing “for some time now” as Beijing continues to be Tehran’s lifeline for circumventing oil sanctions, which has been ongoing for years now. China has also played a major part in keeping Venezuela’s oil exports afloat.
But now, as FT reports Wednesday “The Biden administration has told Beijing it will enforce Trump-era sanctions against Iranian oil as shipments from the Islamic regime to China have soared, a senior US official said.”
Despite the White House still saying it’s “prioritizing” re-entry into the nuclear deal, efforts which have been stalled thus far as Tehran is demanding the easing of sanctions as a first step, the senior official revealed to FT: “We’ve told the Chinese that we will continue to enforce our sanctions.”
“There will be no tacit green light,” the official added, but enforcement might take the form of what’s dubbed these “secondary sanctions” targeting Chinese companies caught transferring Iranian oil. However, it remains the possibility that these too could ease assuming Washington and Tehran re-enter talks.
The senior official described to FT further that this could theoretically come as “either as part of a mutual set of steps or as part of a full return into compliance” with the JCPOA. “Ultimately, our goal is not to enforce the sanctions; it is to get to the point where we lift sanctions and Iran reverses its nuclear steps.”
Recall that in January Indonesia seized two supertankers — the Iranian-flagged MT Horse and the MT Freya, which is under a Shanghai-based company — that were engaged in an unregistered transfer of Iranian oil at sea.
It’s believed that such sanctions-busting happens on a weekly basis through various means, which also includes operating ships under shell companies. This latest White House ‘threat’ to get serious on “secondary” sanctions enforcement (pertaining to Chinese transfers) appears ultimately about building more leverage as the US “indirectly” negotiates with the Iranians via European officials.
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