[MUSIC] Now that we've looked at the conceptual aspects or the broader issues of China's search for energy, let's look at some case studies and see to what extent the framework that I've established helps us understand these cases better. The first case I want to look at is Iran. And here we have the case of China needing to balance its energy needs and demonstrate support for non-proliferation. And for this reason in fact, Iran was considered to be a pariah. So in fact, what happens is following discovery in 2002, that Iran had not reported the true extent of their nuclear program to the International Atomic for Energy Agency. The Western powers decided to leave Iran and prepare to bring Iran's case from the IAEA to the United Nations Security Council where they could impose sanctions upon Iran to stop it from its nuclear program. Now initially, China moved very quickly and moved in. Filled the gap, as the title says, right? And they worked with Iran. It's also important that China's had a long historical relationship with Iran. And Iran has enormous oil and gas supplies, so China was very interested. China was offered excellent deals, but in the end, many of those deals wound up being memorandum of understanding and they were never finally signed. Still by 2007, China was importing 13% of it's oil from Iran. Now, here comes the United States, and the United States starts to put pressure on China to limit energy deals with Iran. But, in 2005, Iran elected a new president, Ahmadinejad, much more hardline. And he was much less willing to negotiate or yield on the nuclear program, and this created serious problems for China. Because the United States wanted to move the case of Iran from the IAEA to the UN Security Council, and China was a member of the UN Security Council. Also, Chinese oil firms were under pressure by new US laws against Iran to withhold business or not to work with Iran. Because if these oil companies did business with Iran, or if their subsidiaries did business with Iran, they could be fined. These companies, the subsidiaries, were listed on the New York stock exchanges. And so they were vulnerable to American law. The Chinese government also did not want to be seen as not supporting the non-proliferation regime. They wanted to be seen as a good citizen. And to add to that enticement though, the US offered China that if they would cutback on their deals with Iran, the United State would persuade the Saudi's and persuade the UAE to supply China with more energy. Now, China initially in general decided to work with the UN even though they try and balance their ties both with Tehran and the US. And so initially they allowed the sanctions, or the IAEA, to pass it's case to the UN Security Council. And in 2006, when President Hu Jintao visited the White House, he said, we are ready to continue to work with the US side on the Iranian nuclear issue through diplomatic negotiations. To uphold the international non-proliferation regime and safeguard global peace and security. And this quotation of Hu came from a chapter by John Garver of Georgia Tech University in a book that I edited. So he very much wanted to be seen that way. But, China really did try to balance things for themselves. They voted four times for resolutions but they also always dragged out the negotiations with the US and the UN and watered down the resolutions to help Iran. For example, it resisted referring the Iran nuclear issue from the IAEA to the UN Security Council for over two years, from November 2003 to January 2006. But it's important to remember after January 2006 with Ahmadinejad, the American pressure came on greater. But according to Garver, when continued obstruction risked identifying China with the IRI, the Iran, too closely, thereby endangering China's ties with Washington, Beijing eventually agreed to sanctions. But as Garver also argues, it helped Tehran by delaying action by many months, securing the deletion of tough rhetoric, weakening sanctions. And most importantly, ensuring that sanctions did not interfere with Iran's production and export of oil and gas. Because in fact, China continued to buy oil and gas from Iran. Now, they also helped Iran. China helped Iran to a certain extent within this period. In June 2005, China gave Iran observer status at the Shanghai Cooperation Organization. The SCO which allowed Hu Jintao and President Ahmadinejad to meet frequently. They also carried out many official exchanges with top officials and here I borrowed reading the text of Garver. I put together this table, which shows that a pretty important level exchange going on between these two countries. Chinese leaders, Chinese diplomats at the UN and top leaders always supported Iran's claim that it was carrying out a peaceful nuclear program. Throughout this whole period, China continued to supply weapons to Iran and was its second most important weapons supplier after the Russians. So, in many ways, China followed a successful strategy with the case of Iran. It was willing, first of all, it went into a pariah state, showing that it was not going to be intimidated by the US. But the US economic power and the legal system and the pressure that it could put on China forced China to cut back on it's activity in Iran and cut back its imports of oil, but it still continued to import oil. China also acted as a very important go-between for the US and Iran, the negotiations that were resolved in January or February of this year. And for China, that's very important that the sanctions on Iran have now been lifted. It's an excellent outcome for China. Now in terms of long-term investment and ties with Iran, China's position has been strengthened in Asia. And especially now that Iran is coming out of the cold. And we saw Xi Jinping in February of this year quickly traveled to Tehran, immediately after the nuclear agreement, again, taking advantage of China's excellent position in Iran.
