China has condemned sanctions imposed by the US on its state firm for doing business with Iran.
Washington insists Zhuhai Zhenrong Company is the largest supplier of refined petroleum products to Iran and deserves curbs. “The sanctions are ‘an important step’ in maintaining pressure on Iran to ‘comply with its international nuclear obligations’,” US State Department said in a statement.
The strong worded statement came from the Chinese foreign ministry which said imposing of unilateral sanctions on its company based on US law is totally “unreasonable”.
The Chinese company also rejected the sanctions. “The accusation that we export refined oil to Iran is complete fiction. We have never done that. The sanctions are truly puzzling,” Zheng Mei, a spokesperson from the company, told reporters.
Meanwhile, US Secretary of State Hillary Clinton also imposed sanctions on Singapore’s Kuo Oil Pte Ltd and FAL Oil Company Ltd, an independent energy trader based in the United Arab Emirates, a State Department notice said.
“The sanctions announced today are an important step toward that goal, as they target the individual companies that help Iran evade these efforts,” the statement added.
Zhuhai Zhenrong, along with China National Petroleum Corp (CNPC), China Petroleum and Chemical Corp (Sinopec Corp) and China National Offshore Oil Corporation, is a state-run oil giant that has invested billions of dollars in energy sectors around the world. While Zhenrong is unlikely to have much impact on its business due to its non-exposure to the American economy, the other three state oil companies have invested billions in the US and stay at risk of getting targeted by further sanctions.
“It’s a good shot across the bow and signals the US is serious about vigorous sanctions enforcement. This could be the beginning of a cascade of more sanctions on Chinese companies if China doesn’t curtail its Iranian trade,” Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a neo-con Washington pressure group that favours stronger sanctions on Iran, said in a statement.
Another think tank expert also said the imposition of sanctions should be seen as a veiled threat to other Chinese state oil majors.
“We don’t want to be taking action against Sinopec, CNPC and CNOOC. They are huge, and politically powerful. But Zhenrong is close enough to them, and won’t really do that much harm beyond sending the signal,” Derek Scissors, an expert in the Chinese economy at the Heritage Foundation think tank, said.
The Americans moved to impose the latest sanctions after US Treasury Secretary Timothy Geithner visited Beijing last week and failed to garner support from the Chinese leadership.
“Imposing sanctions on a Chinese company based on a domestic (US) law is totally unreasonable and does not conform to the spirit or content of the UN Security Council resolutions about the Iran nuclear issue,” Foreign Ministry spokesman Liu Weimin said in an statement.
Beijing-based Zhuhai Zhenrong Company insisted the move was “groundless”, while the Iranian embassy in China condemned the move as “irresponsible.”
The state-run company underlined that sanctions would not have any impact on its business with Iran as they have never had any business dealings with the US, Chinese state-run Global Times reported.
The US sanctions bar the Chinese oil firm from receiving US export licenses, US Export Import Bank financing, or loans of over USD 10 million from US financial institutions.
Beijing insists the US cannot impose unilateral sanctions against Iran without the official UN backing to it.
Iran is currently China’s third largest supplier of oil, followed by Angola and Saudi Arabia.
(By Moign Khawaja with inputs from Reuters, Economic Times)