How Trump’s Iran Move Plays Into China’s Hands

U.S. President Donald J. Trump seems adamant to abandon the two-year-old agreement that curtails Iran’s ability to produce nuclear weapons. The effects that such a policy choice will have on North Korea’s regime and sparking a nuclear arms race in the Middle East are widely discussed.

But there is yet another dimension that Mr. Trump overlooks completely. His choice on the Iran deal could also tilt European-Chinese competition for domination of Eurasia’s future energy infrastructure decisively in China’s favor. That is a bewildering choice for a President who is presumably so interested in reining in China.

As Mr. Trump keeps the world in suspense by declining to disclose how he intends to correct what he calls an embarrassment, Iranian leaders are betting against the odds that European signatories of the nuclear agreement will persuade him to stop short of pulling out of the nuclear deal and avoid steps that would effectively undermine the accord.

In doing so, Iranian President Hassan Rouhani is relying on common interests with Europe: a desire to keep the deal in place, prevent Iranian hardliners from getting the upper hand in his country’s power struggles, avoid a nuclear arms race and ensure a European role in shaping the future architecture of Eurasian energy.

Trump likely to ignore Europe

However, if Mr. Trump’s record is anything to go by, he is unlikely to heed European calls for keeping the nuclear deal in place, much like he ignored pressure from Europe and others not to pull out of the Paris climate accord.

A more likely scenario is that Mr. Trump will refuse to certify Iranian compliance with the deal by October 15, a quarterly requirement mandated by Congress. That would open the door to Congress re-imposing secondary sanctions lifted as part of the nuclear deal.

Renewed secondary sanctions would put Europe in an impossible position. They would not only put European companies and banks at risk of running afoul of U.S. law if they continued to do business with Iran, but also unleash consequences that could significantly increase tension in the Middle East and ripple across Eurasia.

De facto European compliance would significantly weaken the agreement’s value to Iran and boost pro-Chinese Iranian hardliners opposed to the deal and eager to free Iran from restrictions on its nuclear program.

It would also risk a nuclear arms race in an environment in which the United States is losing out in the Middle East’s quest for nuclear energy that contains tacit building blocks for programs to develop nuclear weapons and potentially tilt Iran towards China in determining the flow of its natural gas – a key factor in the quest to shape the future architecture of Eurasian energy.

“If the United States leaves the treaty and Europe follows, then this deal will certainly collapse and Iran will go back to what it was before and, technically speaking, to a much higher level,” said Ali Akbar Salehi, the head of Iran’s Atomic Energy Organization.

The U.S. is unprepared

The United States may be unprepared for the fallout of Iran pursuing an unfettered nuclear program, beyond its ability to tighten the economic screws, wield military power and support potential efforts to destabilize Iran in a bid to achieve regime change.

A group of former senior U.S. government and military officials recently warned that the United States in the absence of a strategy to promote the peaceful use of nuclear energy was lagging behind China and Russia in helping Middle Eastern states develop programs of their own.

The officials cautioned that Mr. Trump’s failure to articulate a policy undermined “Washington’s ability to shape the highest standards of non-proliferation safeguards, safety, and security.”

Noting that “the Middle East is in the process of going nuclear,” the officials went on to say that “the big question is whether the nuclearization of the region will be dominated by Russia and China, or by the host countries in partnership with the United States and its allies under a proven program that ensures absolute safety, security and standardization throughout the nuclear fuel cycle.”

Nuclear Non-Proliferation Treaty

Most Middle Eastern states are signatories to the Non-Proliferation Treaty (NPT). They have disavowed the pursuit of nuclear weapons and called for a nuclear-free zone in the region in a bid to force Israel to declare its nuclear weapons and join the NPT and at the same time avert a nuclear arms race with Iran.

Saudi cooperation with nuclear power Pakistan has nonetheless long been a source of speculation about the kingdom’s ambition. Pakistan’s former ambassador to the United States, Husain Haqqani, asserted that Saudi Arabia’s close ties to the Pakistani military and intelligence during the anti-Soviet jihad in Afghanistan in the 1980s gave the kingdom arms’ length access to his country’s nuclear capabilities.

The Washington-based Institute for Science and International Security (ISIS) said earlier this year that it had uncovered evidence that future Pakistani “assistance would not involve Pakistan supplying Saudi Arabia with a full nuclear weapon or weapons; however, Pakistan may assist in other important ways, such as supplying sensitive equipment, materials, and know-how used in enrichment or reprocessing.”

The report said it was unclear whether “Pakistan and Saudi Arabia may be cooperating on sensitive nuclear technologies in Pakistan. In an extreme case, Saudi Arabia may be financing, or will finance, an unsafeguarded uranium enrichment facility in Pakistan for later use, either in a civil or military program,” the institute said.

Planning for the future

Rather than embarking on a covert program, the institute predicted that Saudi Arabia would, for now, focus on building up its civilian nuclear infrastructure as well as a robust nuclear engineering and scientific workforce.

This would allow the kingdom to take command of all aspects of the nuclear fuel cycle at some point in the future. That process could accelerate if U.S. actions undermine the nuclear agreement with Iran.

Saudi Arabia has in recent years significantly expanded graduate programs at its five nuclear research centres as part of a $100 billion program to build 16 nuclear reactors by 2030.

Saudi King Salman earlier this year signed an agreement with China on cooperation on nuclear energy. The agreement is for a feasibility study for the construction of high-temperature gas-cooled (HTGR) nuclear power plants in the kingdom as well as cooperation in intellectual property and the development of a domestic industrial supply chain for HTGRs built in Saudi Arabia.

The agreement was one of several nuclear-related understandings concluded with China in recent years. Saudi Arabia has signed similar agreements with France, the United States, Pakistan, Russia, South Korea and Argentina.

Eurasia’s energy architecture

Lurking in the background of the battle for the future of the Iranian nuclear agreement is an unrelated but no less important issue: the future of Eurasia’s energy architecture.

U.S. efforts to undermine the deal and de facto European compliance with U.S. sanctions could push Iran to favour China rather than Europe in allocating its estimated surplus over the next five years of 24.6 billion cubic metres of natural gas. Iran boasts the world’s second largest natural gas reserves and its fourth largest oil reserves. Energy scholar Micha’el Tanchum said:

Not enough to supply all major markets, Tehran will face a crucial geopolitical choice for the destination of its piped exports. Iran will be able to export piped gas to two of the following three markets: European Union (EU)/ Turkey via the Southern Gas Corridor centring on the Trans-Anatolian Natural Gas Pipeline (TANAP), India via an Iran-Oman-India pipeline, or China via either Turkmenistan or Pakistan. The degree to which the system of energy relationships in Eurasia will be more oriented toward the European Union or China will depend on the extent to which each secures Caspian piped gas exports through pipeline infrastructure directed to its respective markets.

The lifting of international sanctions as part of the nuclear agreement gave Iran a vested interest in deploying its energy wealth in ways that would allow it to balance its relations with China and Europe. A Europe incapable of developing economic ties with the Islamic republic, including the expansion of pipeline infrastructure, could undermine Iran’s calculus to China’s benefit.