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US pullout of nuclear deal with Iran adds to Chinese influence

The US pullback from a previous deal only adds to the likely hood of China's influence growing in the oil rich nation

Summary

In early May of this year, United States President Donald Trump’s announced that the U.S. would be withdrawing from the denuclearization deal with Iran and re-imposing sanctions, sending shock waves through the world. Amidst the ensuing confusion, China has made it clear they intend to increase trade with the Middle Eastern country in spite of US sanctions. One of Iran’s biggest recipients of Iranian crude oil, China has already made major investments into the economy including major infrastructure projects. As competition for Iranian exports shrink, oil prices may fall making it all the more attractive for Chinese purchase. This isn’t the first time Chinese interests have been affected by U.S. policy. Earlier this year, amidst a major trade dispute between China and the United States, U.S. lawmakers banned American firms from doing business with Chinese telecommunications manufacturer ZTE who allegedly violated sanctions by doing business with Iran. The company is also accused of rewarding employees responsible for selling products to Iran.

FAO Global Assessment

China has been working hard to promote their massive economic investment initiative, the One Belt One Road, all over the world, and Iran, should it become further isolated with renewed sanctions, is likely to become more integral for the program. The future economic and political consequences of this cannot be overstated. The elimination of Iranian oil from the market may cause American gas prices to increase. This creates a much more hospitable environment for clean energy producers to obtain financial support from the government and motivates more consumers to consider alternative sources of energy, possibility opening a door for new energy firms to enter the market or expand.

Related Links

  1. CNN — Trump withdraws from Iran nuclear deal, isolating him further from world
  2. International Policy Digest — The Battle for the Iranian Nuclear Deal: China Approaches a Watershed
  3. New Strait Times — China stands to gain in Iran
  4. MEHR News Agency — US withdrawal from N-deal; unsettling implications
  5. South China Morning Post — Iran’s top envoy to China calls on Beijing to help safeguard nuclear deal
  6. Business Insider — Trump has decided to pull out of the Iran nuclear deal – here are the winners and losers

Analyst Bio

Adriana Ray - Asia Policy Analyst

Adriana Ray is an Asia Policy Analyst at FAO Global where she researches and writes on Economic, Security, and Political issues in the region. Adriana speaks Mandarin Chinese and is very active in policy research and analysis. Adriana is currently a graduate student at Georgetown University’s School of Foreign Service where she is pursuing a Masters in International Security. She is also an alum of Tsinghua University and Furman University.

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