The Irish Times - Tuesday, February 9, 2010

China overtakes EU to become Tehran's largest trading ally

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NAJMEH BOZORGMEHR in Tehran and GEOFF DYER in Beijing

CHINA HAS overtaken the European Union to become Iran’s largest trading partner, according to analysis of the commercial ties between the two countries.

The growing business links between Beijing and Tehran underline China’s reluctance to agree to any further economic sanctions on Iran as western countries escalate their campaign to contain the country’s nuclear ambitions.

The announcement by Mahmoud Ahmadi-Nejad, the Iranian president, that Iran will start enriching uranium to 20 per cent purity – a step closer to the 90 per cent required to build nuclear weapons – has given renewed impetus to western calls for the United Nations Security Council to impose more sanctions.

The Iranian atomic energy authority announced that further enrichment would begin today.

The US yesterday sought to rally international support for sanctions against Iran in the wake of the announcement. Speaking in Paris, Robert Gates, US defence secretary, said that “the only path that is left” was to increase international pressure on Iran, but that it would require unity among the world’s big powers to do so.” While Russia has softened its opposition to placing more pressure on the Iranian economy, China has not done the same.

Official figures say the EU remains Tehran’s largest commercial partner, with trade totalling $35 billion in 2008, compared with $29 billion with China.

But this number disguises the fact that much of Iran’s trade with the United Arab Emirates consists of goods channelled to or from China. Majid-Reza Hariri, deputy head of the Iran-China Chamber of Commerce, said that transhipments to China accounted for more than half of Tehran’s $15 billion trade with the UAE.

When this is taken into account, China’s trade with Iran totals at least $36.5 billion, which could be more than with the entire EU bloc. No definite conclusion is possible because it is unclear how much of Iran’s trade with Europe is channelled via the UAE. Iran imports consumer goods and machinery from China and exports oil, gas, and petrochemicals. – (Copyright The Financial Times Limited 2010)