China’s new train line to Iran sends message to Trump: We’ll keep trading anyway

By Rick Noack

New freight train connections usually only have a limited potential to make global headlines, but a new service launched from China on Thursday could be different.

Its cargo —1,150 tons of sunflower seeds— may appear unremarkable, but its destination, however, is far more interesting: Tehran, the capital of Iran.

The launch of a new rail connection between Bayannur in China’s Inner Mongolia Autonomous Region and Iran was announced by the official news agency Xinhua on Thursday.

Its exact path was not described in the dispatch, but travel times will apparently be shortened by at least 20 days in comparison to cargo shipping. The sunflower seeds are now expected to arrive in Tehran in about two weeks.

While the United States is now urging foreign companies to wind down their operations in Iran, China appears to be doing the opposite. Thursday’s freight train connection launch was only the latest measure Beijing has taken to intensify trade relations with Iran and there seem to be no plans so far to give in to US demands.

During a press briefing on Wednesday, Chinese Foreign Ministry Spokesman Geng Shuang said that Iran and China would “maintain normal economic ties and trade.”

“We will continue with our normal and transparent practical cooperation with Iran on the basis of not violating our international obligations,” he said. China faces the same problem US allies in Europe are currently facing: Even if European governments are opposed to new sanctions on Iran, European companies would have to abide by those rules or risk severe fines by the United States.

When asked whether China would order its companies to withdraw from Iran to avoid US sanctions, the Chinese Foreign Ministry spokesman indicated that Beijing might defy the Trump administration. “I want to stress that the Chinese government is opposed to the imposition of unilateral sanctions and the so-called long-arm jurisdiction by any country in accordance with its domestic laws,” he said.

China has to some extent managed to circumvent US sanctions in the past and may be able to do the same again this time.

Some analysts have even suggested that Chinese entities could act as intermediaries for European companies that want to continue trading with Iran, but fear violating US sanctions. Such sanctions would be particularly damaging to European businesses operating in the United States, like as plane manufacturer Airbus.

Speaking to CNBC, former US diplomat Carlos Pascual said that oil sales from Iran via China or Russia to the rest of the world could circumvent US measures.

“It’s those types of leakages from Russia and China that are the most obvious ones where the Iranians could still find outlets to be able to export their product,” he said.

Iranian exports to the European Union increased by 375 percent from 2015 to 2016, and European companies have already invested a significant amount of money in Iran, raising the stakes of any decision that could result in the deal’s collapse.

China also has an interest in upholding its trade ties with Iran. Tehran sells more to China than to any other country and celebrated a 25-percent increase in exports there last year. The value of Chinese exports to Iran also increased by over 20 percent.

With Europe potentially turning to Chinese know-how to circumvent US sanctions, the United States might find that the country being isolated in this situation is not Iran after all, but itself.

This article originally appeared on washingtonpost.com.