China Sticks It to the U.S. on Iran - You go Girl!

After having a wardrobe malfunction in her rush to embrace the french "hunk" Sarkozy, Hillary Clinton is now proceeding to throw a hissy fit - albeit over a different issue: China's decision to not tow the U.S. line of imposing tougher U.N. sanctions on Iran. The New York Times reports that:

Secretary of State Hillary Rodham Clinton warned China on Friday that it would face economic insecurity and diplomatic isolation if it did not sign on to tough new sanctions against Iran for its nuclear program, seeking to raise the pressure on Beijing to fall in line with an American-led campaign.

As a way of background, recently the U.S. Senate and the House have both passed bills imposing tougher sanctions on Iran's gasoline suppliers. While Iran is an exporter of crude oil, it does not have refining capacity, and is forced to import much of its gasoline from other nations such as India and China. The U.S. sanctions would prohibit U.S. firms as well as foreign firms with business interests in the U.S., from exporting gasoline to Iran. Additionally the sanctions would also prevent firms from providing goods or services that enhance Iran’s ability to maintain or expand its domestic production of refined petroleum. In other words Indian and Chinese energy companies that do business with Iran will be barred from doing business in the U.S. In fact Chevron which has a tie up with India's Reliance Petrochemicals has opposed U.S. sanctions, mainly because Reliance sells gasoline to Iran.

Now the U.S. sanctions on Iran while restrictive do not do the full job of a 100% gasoline embargo, for the simple reason that China/India/any other nation for that matter, could use a smaller domestic refiner with no business interest in the U.S., to ship gasoline to Iran. To close this loophole Hillary Clinton is taking U.S. sanctions on Iran global, by attempting to get them passed at the U.N. This way they will be binding on all nations.

This is the move China is staunchly opposing. China a permanent member of the security council has the right to veto any such sanctions at the U.N. And China has good reasons to be thoroughly pissed off with U.S. bullying:

1. The US is evaluating a weapons sale to Taiwan worth $6.4bn, which includes patriot missiles and black hawk helicopters. The Chinese Vice-Foreign Minister He Yafei has labeled the move as having a "serious negative impact" on co-operation between the US and China.
2. The Google fracas together with Obama and Hillary's "freedom of Internet" speeches, have only made matters worse.
3. Worse still, China is having to hold trillions of dollars that the U.S. Fed is hell-bent on sending to the shredder.
4. And perhaps most damning: according to Hank Paulson's soon to be released memoirs: in 2008 Russia had urged China to dump Fannie, Freddie bonds. According to Paulson "The report was deeply troubling -- heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets. I waited till I was back home and in a secure environment to inform the president." Luckily for the U.S. economy, China declined Russia's proposal.

We may not be so lucky next time. The nation is economically bankrupt and existing on the good graces of foreign creditors especially China that together hold 50% of our debt. But Hillary et. al. seem not to have got the "don't piss off your creditor" memo. In fact she seems to be taking a page from Hank Paulson's rule book, and threatening Armageddon if China does not comply:

“We understand that right now, that is something that seems counterproductive to you, sanction a country (Iran) from which you get so much of the natural resources your growing economy needs,” Mrs. Clinton said, referring to the Chinese, in comments after a speech on European security. “But think about the longer-term implications.”

In case Beijing missed the urgency of her appeal, Mrs. Clinton remarked that a nuclear-armed Iran would risk setting off an arms race in the Persian Gulf, and that it could provoke a military strike from Israel, which she said would regard a nuclear Iran as an “existential threat.”

Now we do not support Iran's mullah led regime, but just as we saw in the lead-up to the Iraq war, sanctions are the first step to war. As Ron Paul explains " This policy of sanctions is pure isolationism. It is designed to foment war by cutting off trade and diplomacy. Too many forget that the quagmire in Iraq began with an embargo. Sanctions are not diplomacy. They are a precursor to war and an embarrassment to a country that pays lip service to free trade".

And what happens if even after imposing sanctions, the Iranian government does not topple? Israel will definitely strike Iran then. (In fact as we will show in our upcoming post, Israel is ALREADY preparing for a strike that will most likely come in the second-half of 2010). There is a very high probability that the Iranian people will band together in the face of a perceived foreign threat of sanctions, and actually support their government.

Also Iran is nowhere close to having a nuclear bomb, and even if it did have a bomb it cannot be an existential threat to Israel which is already armed to the teeth with way many more nukes than Iran. In addition, because of the implicit backing of the U.S., Israel has far superior military capabilities than Iran. All talks of existential threat by Israel are pure bogus, just like the WMD threat that caused us to bomb Iraq and kill millions of innocent Iraqi's.

Now there are many policies of China we do not support, but on the issue of Iran, China is taking the right stance and we support their decision to stand up to the West's bullying. We need to step back from this dangerous game with immensely catastrophic consequences. It is time to stop all the war mongering on behalf of Israel.

For more read Ron Paul's: Anti-Iran Sanctions Punish Civilians, Are an Act of War