Commentary

Answering the call on Iran is a wise move for Taiwan

(CNA)

• Publication Date：04/07/2012
• Source： Taiwan Today
• By  Michael Gooch

Late last month, ROC Government-owned oil refiner CPC Corp. announced it would halt purchases of Iranian crude from July, falling into line with sanctions signed by U.S. President Barack Obama at the end of December 2011. This farsighted decision underscores Taipei’s willingness to support concerted international action and partner with Washington on issues of mutual concern.

CPC President Lin Mao-wen said there was never any question the company would join the growing number of refiners throughout Asia in halting purchases of Iranian oil. The alternative of requesting Taipei petition Washington for a waiver on the sanction was not an option, Lin added, stating that the company would simply buy crude from other countries in the Middle East such as Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.

Taiwan’s biggest oil firm buys 7 million to 8 million barrels of Iranian crude per year, about 4 percent of its total imports. By July, CPC will have obtained two-thirds of the oil it has contracted to purchase from Iran in 2012.

Despite being a small player in the Iran crude market, Taiwan was on a list of nations potentially subject to sanctions, according to the U.S. State Department. If the island had refused to play ball, its banks handling payments for such transactions could have been cut off from the U.S. financial system.

Asian economies are the biggest buyers of Iranian oil, accounting for about 65 percent of Tehran’s sales, but their reactions to U.S. sanctions have been mixed. India and mainland China have resisted, while Japan and South Korea have broadly committed to following the U.S. lead.

Pressure on India, South Korea and mainland China to pare down imports of Iranian crude intensified when Hillary Clinton, U.S. secretary of state, said Japan and 10 European countries had qualified for exemptions from penalties on institutions that deal with the Central Bank of the Islamic Republic of Iran. These 11 countries had markedly reduced the volume of oil they purchased from Iran, according to Clinton.

Although South Korea and mainland China were left off the exemption list, both economies are on track to qualify for exemptions in coming months.

Mainland China is Iran’s top buyer of oil, gobbling up 20 percent of the Middle Eastern country’s crude exports. But in February, purchases dropped to 290,000 barrels per day, a 40-percent drop year on year. South Korea’s imports of Iranian oil declined 16 percent in February from the previous month to 5.9 million barrels, slightly up from the year before but below 2011 monthly averages.

Japan’s total oil imports from Iran dropped 34 percent in February year on year. Crude comprises the vast majority of Japan’s purchases from Iran, but exact figures are difficult to verify as Tokyo does not specifically disclose details of these transactions.

(Photo: Chang Su-ching)

The U.S. sanctions represent a last-ditch effort to force Iran into abandoning its disputed nuclear program and persuade Israel to give this measure a chance to work before launching a pre-emptive strike on Iran’s nuclear facilities. While this strategy paid dividends for Tel Aviv in 1981 when it bombed a French-built nuclear plant near Baghdad in Iraq, there is no guarantee a similar operation could be staged without plunging the region into a broader conflict.

Obama knows that Israel’s patience is wearing thin but is confident that U.S. sanctions will work, as evidenced by his announcement March 30 that there is enough oil supply on the world market to allow countries to cut purchases from Iran. He further called on Tehran to re-enter international arms talks in good faith, warning that the window for solving this issue is rapidly closing.

For Taiwan, standing shoulder to shoulder with the U.S. and major Western countries on Iran is a no-brainer. ROC President Ma Ying-jeou is fully aware that sanctions may force oil prices to rise and stymie economic recovery on the island, but this risk is more than worth Washington’s crucial support for his long-term goals such as membership of integration schemes under the Asia-Pacific Economic Cooperation framework and the proposed Trans-Pacific Partnership.

APEC’s Free Trade Area of the Asia-Pacific has been on the cards for some time now, and what is needed is for the U.S. to get behind the initiative and see it transformed from an aspirational to more concrete vision. The TPP, however, is a different kettle of fish.

Previously negotiated between Brunei, Chile, New Zealand and Singapore, the TPP is being widened to include Australia, Malaysia, Peru, the U.S. and Vietnam. If all goes to plan, the trade pact will become a leading platform for driving economic integration throughout the Asia-Pacific region, and one that no country can afford to be excluded from.

If Ma is to achieve the goal of greater regional integration for Taiwan, as set out in his golden decade blueprint, then the Kuomintang administration must be viewed by the U.S. as a reliable partner it sees eye to eye with on key international issues. From this perspective, answering the call on Iran is a wise move certain to pay dividends for the island in the long run.

Michael Gooch is a freelance writer based in Lienchiang County. These views are the author’s and not necessarily those of Taiwan Today. Copyright © 2012 by Michael Gooch

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