On July 30, an Israeli-owned commercial ship was attacked in the Gulf of Oman by an Iranian drone. A British citizen and a Romanian citizen were killed. The attack followed a series of attacks attributed to Israel and Iran in the maritime domain during the last year, in which Iran attacked a number of Israeli-owned commercial ships, and Israel, according to foreign sources, attacked Iranian oil tankers in the Mediterranean Sea and the Persian Gulf.

The goal: foreign currency

The latest attack, in which the two Europeans were killed, put the issue of Iran’s economy that bypasses sanctions, which I wrote a lot about during the last few months, on the European agenda, although only for a very short time. After the European Union sent a representative to the inauguration of the new Iranian president, known for his radical and hawkish views, it can be assumed that the Iranian oil smuggling issue has been quickly dropped from the agenda of the European Union, which is mostly focused on the struggle against COVID-19 and on the annual summer vacation season.

Ever since the Trump administration’s announcement of sanctions on Iran in 2018, Iran has been struggling to attract foreign currency and improve the country’s deteriorating economic situation. Trump’s administration banned the purchase of oil from Iran and took a series of other economic steps including banning of foreign investment in Iran.

Iran, whose main source of income was oil, understood during the final year of Trump’s term that it needed to secure a cash flow and to bring food to its hungry citizens. The Iranian regime started to take action to counter the American sanctions, and in 2019 it started to use its fleet of oil tankers for smuggling.

Iran has a fleet of about 143 tankers capable of transporting about 102 million barrels of crude oil and 11.8 million barrels of liquid natural gas, worth a total of more than $7.7 billion, at any time. Using its fleet of tankers, Iran started to secretly transport oil to China, North Korea, Russia, Syria, Lebanon and Venezuela.

Venezuela, incidentally, is a country rich in oil reserves that until the imposition of U.S. sanctions a number of years ago was one of the world’s largest oil exporters. The U.S. sanctions caused the shutdown of Venezuela’s oil production capabilities, and today it must import oil in order to meet its needs.

What is China’s role in the Iranian effort?

For a number of decades, China has seen Iran as a partner in implementation of its Belt and Road Initiative, a strategy that the general secretary of the Chinese communist party has been leading since September 2013. China has spent over $300 billion on the strategy since 2013, and is expected to spend hundreds of billions more during the coming decade.

In the beginning of the 2000s, Iran and China signed a strategic cooperation agreement under which China transferred to Iran technological knowledge, weapon production lines, aircraft and missiles, and in exchange Iran supplied oil, which China needs to realize its vision and economic goals. But Iran is not only the main supplier of oil to China. Iran’s geostrategic location, between the Caspian Sea and the Arabian Sea, makes Iran the only land bridge for China from Central Asia. In other words, the investment in Iran is also a means for China to become a global power, not just a regional one.

Furthermore, Iran’s approach to the U.S. and other western countries, and the hostility between the two sides, is an important tool for China. China, whose strategy is indirect warfare (also called warfare without contact), uses Iran as a front against the Americans, and uses the Persian Gulf to draw attention way from the South China Sea where China is conducting a naval campaign and seizing territories belonging to countries in the region.

For that reason, China renewed the strategic agreement between the two countries. The new agreement was signed in 2019, promising China a more significant foothold in Iran, with control over intelligence collection in the country as well as additional resources for China’s use, such as the Iranian electricity and computer systems that are being operated to mine cryptocurrency for China.

Stability of the regime

As part of the strategic support, China even helps Iran sell smuggled oil and use the Iranian tankers – the new shadow fleet – to transport the oil, bypassing sanctions. During the last year, China purchased more than 700,000 barrels of oil from Iran each day. This oil export, with China’s assistance, enables Iran to maintain the stability of its regime and to stream foreign currency into the country’s coffers.

China also helps Iran operate the shadow fleet in a manner so that it will not be discovered. For example, the tankers use their Automatic Identification Systems (AIS), which are required by international shipping laws, to broadcast fake locations. The tanker fleet is repainted, and the names of the ships, which appear on their hulls, are changed.

In addition, the tankers from the shadow fleet frequently change their flags and registrations to those of various countries. This process is supported by a global operational infrastructure established by Iran’s Qods Force, including a huge network of straw companies under whose ownership the tankers are registered.

The Iranian cat-and-mouse game, with the assistance and support of China, enables Iran to maintain its alternate economy and to ignore the American sanctions, especially under the weak administration of Joe Biden. Thus Iran has succeeded in streaming large amounts of money into its coffers, reviving its economy and continuing its race to build offensive capabilities and to complete its nuclear program, which it is so close to doing.

Source » israeldefense