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### HEADLINE: CHINA’S ENERGY DEPENDENCE AND THE REBUILDING OF IRAN SUMMARY:Max Meizlish discusses China's reliance on Iranian oil and proposes a U.S. "economic strike force" to stabilize Iran while excluding Chinese interests from reconstruction. GUEST: Max Meizlish NUMBER: 14 (14)
1793
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I'm John Batchler.
I welcome my good colleague Max Meislich
of the Foundation for Defensive Democracies,
asking questions that are impossible to answer,
but there it is, China in the Iran War,
where in the Iran War, what advantage
or otherwise does China find?
People's Republic of China has an agenda
to take over the whole world, remember?
This is a hegemon that looks to be the global hegemon.
Is it learning from the war?
And especially, what is it learning about?
It's apparent dependence upon the Islamic Republic
of Iran for energy.
Max, a very good evening to you.
To your colleague, you Jack Burnham
and yourself have written a piece that is extremely helpful.
I want to imagine first, what is the dependence now
that the people's Republic of China has on Islamic Republic
of Iran?
I'm told, and this could be a random number,
that 25% of the oil coming out of the Gulf is headed to China.
What dependence do they have now?
And what did they anticipate in the event of warfare?
Good evening to you, Max.
Good evening, John.
It's true that China is heavily dependent
on access to energy coming out of the Gulf.
In particular, with respect to the flows from Iran,
China has been pretty much the sole buyer,
about 90% of Iran's exported oil does go to China,
largely the teapot refineries,
the so-called independent, small teapot refineries
that are privately held, and they do the bulk of this refining.
But beyond just the flow of Iran from Iran,
China is receiving significant amounts of energy from the Gulf.
And so it's heavily exposed in the current crisis,
which is why we see outreach from China to Iran
and to other Gulf partners trying to stabilize the situation
such that their access to energy is uninhibited.
I'm told anecdotally that there is reporting
that PLA officers are in Iran or have been in Iran
as technical advisors, anything to that, Max.
John, I'm not quite sure at this point.
I know there are some reports going around online.
I think some unconfirmed reports.
You know, the interesting thing that we do know
is that there's Chinese firms
that are providing commercially available satellite imagery
and putting it up online,
noting where the United States and Israel have assets
that are actually doing the bulk work
of the targeting of Iranian assets.
And so it's really an interesting observation
that Chinese firms might be leveraging Western satellite,
commercial satellite providers
and putting it out onto the internet.
Also leveraging Chinese satellite imagery
but putting this out so that the Iranians might be able
to actually have an advantage in understanding
where it is that U.S. and Israeli assets are
and when they might be striking.
Then setting that aside, because this is fog of war,
I just mentioned these erratic totes.
Nobody's shown anything that looks like proof.
I go to the day after.
That's the most compelling part of this story
that you and Jack are watching.
In the event that the Islamic Republic of Iran
surrenders, in the event that there needs to be attention,
there's no food security, there's no medical security,
there's no security whatsoever
in a country of 90 million people.
In that event, they need help for everything,
not just gunmen, but they need accountants,
they need programming, they need assistance
to guide their economy after decades of corruption.
How do you imagine that will work, Max?
Where's the story of rebuilding Iran right now?
Well, John, for a little while now,
my colleague at a FDD Center on Economic and Financial Power,
the Deputy Director, Josh Barabaman,
I have been writing on this concept
of an economic strike force
and how the United States needs to bolster its capacity
to actually support countries, maybe in the midst of
and then immediately after times of crisis.
So if the government of Iran at the regime falls,
if there's something that can come and stabilize
and maybe be more welcome to the United States
and pushing out Chinese interests,
we should be able to offer conditional access to goods,
to lines of credit, to some sort of measure
of financial stability and providing the resources
that Iran will actually need to rebuild
and create a prosperous economic environment for the people.
So this is something that we're thinking about
in the context of Iran, we're thinking about
in the context of Venezuela.
And John, I think it's important for everyone listening
to think about not just how vulnerable China is
to the Iranian energy disruptions,
but think about it in the context
of other sanctioned factors, right?
So we have Iran, we have Venezuela, we have Russia.
Combine, that's about a third of what China imports
on a yearly basis in terms of crude oil.
And so we see the Trump administration taking this action
against Venezuela.
We see what's happening now with Iran.
And then the question is if the president might actually
take even more action against Russia's shadow fleet
and the sanctioned oil coming out of Russia
in a way that taken together,
it would be removing all the legs of the storm
which China is actually benefiting from sanctioned oil.
We watch the tangle of trade talks in Europe
and puzzle about whether our allies understand
the adversary, China, as a predator state,
that also would be a great immediate concern in Iran.
Do we allow China in the door?
And how do we keep them out if they come with cash and gifts?
You know, this is one of the recommendations
that Jack and I have in our piece for the foundation
for defensive democracies.
We are outlining the fact that the United States
is going to need to put pressure on whatever government
comes out of this conflict in Iran
to prevent China from coming in
and benefiting from critical infrastructure reconstruction,
access to material and goods, energy flows from Iran.
We have to recognize that Iran has been the primary sanctions
of aid or in chief, the primary backer
of Iranian sanctions evasion for years.
It's provided the Iranian Revolutionary Guard Corps
with surveillance systems for domestic repression.
It's provided them with weapons technology
and training for the military.
We can't just allow China to benefit from all of this,
backing one of the chief adversaries
of the United States in Iran
and then come in after the crisis
and actually reap the financial rewards of whatever's to come.
I noted that part of your concern
because look at Afghanistan,
massive, an example of the US spending treasure
and blood for 20 years.
And then the operation is abandoned.
Exactly, and there's actually something smart
that we can model off of what's happening in Venezuela.
The United States is using its sanctions authorities
in a really interesting creative way
where the United States is saying that
Venezuela and oil can enter the market
but any participant isn't going to involve a Chinese entity
or a Chinese joint venture.
Now that doesn't mean that China can't buy Venezuela and oil
but what it does mean is that it's going to have to go through
companies that are registered under the laws of the United States
and they're going to have to pay the full fare
just as everyone else is.
So the age of China accessing discounted oil
is coming to an end.
At this point, do you hear these conversations in Washington?
Your recommendations are very common senseical.
Are they echoed?
I think there's a lot of people in Washington
who want to move forward with some sort of sensible policies.
But the question is really how Congress is going to take action.
I mean, we see that there's been a slow roll approach
to increasing the economic pressure on Russia.
So Congress is waiting for the administration to take charge here
and I think it'd be recruited for the Trump administration
to lead from the position of strength
that it currently finds itself in
and actually making a meaningful dent
in limiting China's ability to come in
and reap the rewards of all the instability
that it's actually created in the first place.
And will this create security enough
for private investment?
I think we're a far ways away.
I mean, we have to figure out what kind of government
is actually going to come in
and restore some sense of order,
some legitimate rule of law.
We have to ensure that assets won't be nationalized
by Western firms coming in.
We have to create a safe environment for companies
to come in and operate.
So let's just put a pause on unseeing,
whether there's going to be an appetite in the immediate future.
But I can tell you over the long term,
Iran has the fourth largest proven reserves of oil
in the world.
There's going to be an appetite for investment
over the long term.
Max Meisler, foundation for the defensive democracies,
I'm John Batchler.
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The John Batchelor Show
