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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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Loophole in US Sanctions Allows China to Trade Gold for Iranian Oil

Loophole in US Sanctions Allows China to Trade Gold for Iranian Oil

As we all know by now, at the end of 2011 President Obama signed an act to impose trade sanctions on Iran in an effort to force economic pressure on the Persian nation with the hope that they will halt their nuclear enrichment program. The sanctions will punish any foreign financial institution which conducts transactions with Iran for its crude oil by cutting off that institution from the US financial system. The sanctions officially take effect on the 28th of June this year.

China is Tehran’s largest customer, investor, and trading partner, and will find it impossible to significantly reduce that position enough to earn a waiver from the US sanctions. Geopolitically it backs Iran, but its economy is also heavily reliant upon the US economy; it cannot afford to halt all trade with Iran, nor be banned from the US financial system.

China is very much stuck between a rock and a hard place … but maybe they have a chance at escape.

They could avoid the US sanctions completely by bartering oil from Iran. In fact they have already started by trading some Chinese products for Iranian oil. Iran has been accepting, Chinese washing machines, refrigerators, toys, clothes, cosmetics, and toiletries; but Iran needs cash as well. Unable to financially trade with Iran that is impossible, but gold offers the next best thing, and that is why in February Tehran announced that they would start to accept gold as payment for its oil.

Last year, China imported $21.7 billion in Iranian oil and exported $14.8 billion in goods and services, and as the sanctions start to take effect Beijing will likely use gold to make up the difference.

By. James Burgess of Oilprice.com

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  • fischxicht on June 02 2012 said:
    The difference of 7 Billion $ equals 140 metric tons of gold. This might be part of the reason of Chinas surging demand.
  • Kevh on May 08 2012 said:
    US is punishing Iran because they want a puppet government installed.The CIA and 15 other "agencies" have no evidence of building a nuclear weapon.All these false wars are about oil.Libya,Iraq and Afghanistan are destroyed.Israel wants the other countries destroyed.Look at Palestine and the tyranny they are facing,houses bulldozed,children shot in front of their parents.The Jews are 80% against war.The Zionists are everywhere in the world causing wars and economic collapse,the ordinary Jews want no part of it.Iranians also don`t want war,the last one involved the Spartans.Political leaders are NWO puppets who do not represent the people who put them in power,usually on lies and empty promises.If these well meaning governments stopped creating bogey men like Saddam Hussein,Bin Laden ect the world would be better for it.Mercenaries are in Syria trying to destabilise for another illegal occupancy,never ending elite wars.Ron Paul is the last hope for the US economy and peace,I think it is already too late.The US government elites put sanctions in place knowing it would end the dollar as reserve currency of the world,and ensured US downfall.India and China trading in gold for oil.
  • Philip Andrews on May 05 2012 said:
    The whole tenor of this article is misbegotten. Loophole ALLOWS? China. Since when has China been either the 51state of the Union, or a colony or protectorate of the US, or in any way beholden to the US so that it has to rely on 'loopholes' in US laws and regulations to do as it wishes...?!

    China and India will do as they will regardless of US wishjes, sanctions, invasions and occupations. About time the US realised it doesn't run the show any longer.

    The best way for Iran to demonstrate this to the world will be if it responds to a US aircampaign (should the US/WEst be unwise enough to start one) not by blocking the Straits as everyone expects, but simply by 'carrying on business as usual'.

    If Iran's facilities are buried deep enough and protected well enough then they will suffer minimal damage from an aircampaign. And it would have to be an air CAMPAIGN, not just a single strike. So the US not just Israel would have to carry it out.

    Such a campaign might disrupt/degrade Iran's conventinoal capabilities and her infrastructure, for a while. But Iran is simply too big and too geographically difficult/complex to 'invade just like that'. even with 125,000 pairs of US boots on the ground. (Iraq 25 million, Iran 70+million...!). Even if the US just occupied the coastal areas/Khuzestan they'd be on a hiding to nothing... Haven't they had enough of occupying and of unwinnable counter-insurgencies?

    If Iran were to carry on as normaql, she would be acting responsibly to her Indian and Chinese customers and allies, despite the West's best efforts to prevent her. No Straits blockage just defying Washington much as Britain defied Berlin during the blitz. That would make Iran lots of friends in Asia and leave the West in a quandry. By far the best outcome in fact.

    And what of her nuclear programme? Well she could reply to critics; 'when the AEA is allowed to inspect Dimona in Israel (and pigs may fly...) and report on this, then Iran may see fit to come to terms. Until then...' Sanctions and airstrikes will not prevent Iran doing what she has a right to do. Or her clients for that matter.

    Washington and the West, wake up and smell the coffee its your brand new future shining through the window...
  • sabba on May 04 2012 said:
    I my opinion the west's half hearted attempts and inadequoate and very sparse and sporadic sanctions will not be able to hurt Iran drastically purely becasuse of alternatives avaialable to Iran. Iran will never relinquish its right to abandon its nuclear porojects as it sees this as a very good excuse to present to Iranians for all its failutes. In my opinion Iran will only submit to the west's demand at the first wave of bombardments. The bombardment/s will provide a platform for the clergies to 'justify' their change of stance amongst their own followers and affiliates. Can you just imagine what would happen in the clergy support camps if Iran decides to pull back and submitt? How are the clergies meant to justify their change of strateges to their supporters? Iran will therefore continue to be a 'thorn' in the eyes of all oncerned and Iranian public also must blame this on those counties (France, UK) and other organsations who provided a platform for the Iran's revouionery leader Khomeini!

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