The United States has declared the launch of a tough campaign of economic pressure on Iran. But behind the aggressive rhetoric and dozens of new sanctions, a huge void remains: China, the most important buyer of Iranian oil and Tehran's main economic "lung".
The new operation, dubbed "Operation Economic Exclusion," targets about 60 individuals, companies and vessels linked to Iran's oil exports, nuclear and missile programs, cyberattacks and military technology supply networks.
The list includes companies in mainland China and Hong Kong. However, it does not include major Chinese banks and powerful state-owned groups, whose targeting could cause a real economic shock. This choice reveals the limits of American strategy. The Trump administration seeks to completely isolate Tehran without opening an uncontrolled front with Beijing at the same time.
The scale of the problem is reflected in the numbers. According to various estimates by international media and analysts, China absorbs more than 80% and possibly as much as 90% of Iran's oil exports by sea. This means that any campaign to economically strangle Iran that does not effectively restrict trade with China risks leaving open Tehran's most important source of revenue.
Iranian oil typically doesn't end up in China's largest state-owned energy groups. Most of it is bought by small, independent refiners, known as "teapots," which have limited exposure to the U.S. financial system and therefore have less fear of sanctions.
At the same time, intermediary companies are used, ship ownership changes and flags are changed, cargo is transshipped at sea, and different declarations of origin are made. This is a multi-layered network that makes it difficult to trace the true routes of the oil.
The weapon of secondary sanctions
Washington's real threat lies in so-called secondary sanctions. The US is not just banning transactions between American and Iranian companies. It is threatening to exclude from the US dollar and the American market any foreign company or bank that continues to cooperate with Tehran.
The power of this mechanism is based on the central role of the dollar and US banks in the international financial system. For a large Chinese bank with global operations, losing access to this system would be extremely costly.
However, for a small refinery operating primarily within China, the threat is much less effective. This is precisely the gap that Iranian oil trading networks are exploiting.
Why is Washington hesitant?
Sanctioning major Chinese banks could theoretically deprive Iran of its most important funding channel. But it could also ignite a broader confrontation between the world's two largest economies.
Beijing has its own tools for economic pressure. Among them is control of most of the world's production and processing of rare earth metals, which are essential to the American automotive, technology and defense industries.
At the same time, Washington does not want to jeopardize the overall effort to manage relations with China. Economic pressure on Iran, therefore, conflicts with other American priorities.
For its part, China characterizes the US sanctions as unilateral and without international legitimacy. It maintains that its trade relations with Iran are legal and warns that it will take "all necessary measures" to protect its businesses and interests.
The wording is intentionally vague. This allows Beijing to keep the possibility of retaliation open without committing to its goal at this time. At the same time, China has every reason to avoid further destabilizing the Middle East. It is heavily dependent on energy imports from the region and is directly affected by restrictions on navigation through the Strait of Hormuz.
The US strategy could make Iran's exports more expensive, more complicated and less profitable. It could force Tehran to offer deeper discounts, use more intermediaries and take on greater risk on each shipment.
But it is not certain that it can completely cut off the revenue stream while the Chinese market remains available. And it is even less certain that economic pressure will quickly push the mullahs' regime into political retreat.
The Trump administration thus faces a difficult dilemma. If it limits sanctions to smaller companies and so-called shadow trading, Iran is likely to continue exporting some of its oil. If it targets large Chinese financial institutions, it risks turning the campaign against Tehran into an open economic conflict with Beijing.
Therefore, the new sanctions may be less a final assault on the Iranian economy and more a warning shot to China. The real test will come if Beijing refuses to restrict its trade and the American leadership is called upon to decide whether it is truly prepared to punish Iran's most important economic partner... ©Prepared by LAPSI.al
