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EU Economic Advisor Discusses Iran, China, and Sanctions

March 23, 2010

Interview with Mehrdad Emadi, an economic advisor for the European Union

March 22, 2010

Interviewer – [What is your analysis] regarding the drop in Chinese oil imports from Iran?

Mehrdad Emadi – There are several reasons for the drop in Chinese oil imports from Iran. The first reason is that when Hillary Clinton travelled to the Persian Gulf region, she discussed diversifying China’s energy supplies to reduce China’s reliance on Iranian oil and gas; this would ensure the economic security of China. In response to China’s concerns, Clinton stated that if sanctions were to include Iran’s oil industry, then China’s economic interests would be jeopardized.

There is also an economic reason for this and it is not because we are in a worldwide economic recession. The recession in major economic sectors has either ended or is about to end. We are even witnessing blossoming in some economic sectors. The issue that came up, as we revealed a few months ago, is that if China was to ever join sanctions against Iran, it would have to be reminded that the oil and gas currently imported from Iran is used to build goods that are sold in western markets. The Chinese government was reminded of this both in Washington and by the British foreign minister who had recently travelled to China.

China was reminded that if the European Union and the U.S. markets are closed to Chinese goods, the cost to China

would be twenty times the savings they are making by importing cheap energy from Iran. These [figures] really alerted the Chinese to the fact that western markets, especially in the U.S., might become restricted on Chinese goods.

Even last week when the rate of exchange of the yuan and dollar was discussed, the issue was brought up again, which increased the thought that one of the reasons for the United State’s dissatisfaction to China has to do with China’s stance against sanctions on Iran.

Interviewer – Mr. Emadi, if the reduction of oil imports from Iran is stabilized in China and continues at the same rate, what effects will it have on Iran’s economy?

Mehrdad Emadi – The short answer is that we are going to witness a very deep crisis in the oil and gas export industry.

First, we are witnessing that the Iranian government is facing increasing problems in finding new markets for its energy exports. This is due to concerns over looming sanctions and current sanctions on Iran’s oil industry that the U.S. has imposed since over three years ago.

Second, if the drop of oil imports by China who is the biggest importer of our gas and oil continues, there will be a significant drop in government revenue; especially in lieu of the “Subsidies Elimination Program.” This is a major problem. This will eliminate any hope that the government will be able to provide subsidies to poorer people like they planned. There will not be any cash reserves to do this. We expect that the rial will lose its value by 50 to 60 percent.

Translation by: Tour Irani | Persian2English.com

گفت و گو با مهرداد عمادی از مشاوران اقتصادی اتحادیه اروپا در باره ریشه اختلافات چین و آمریکا

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