Tuesday, August 29 2006 12:02 Hrs (IST) - World Time -

Beijing: A lot is on the table for China as the Aug 31 UN Security Council deadline looms for Iran to stop uranium enrichment or face sanctions. China has to balance its efforts to secure new sources for its rising energy demand with its new role as a "responsible stakeholder" in world politics. For Beijing, the dilemma is that while it wants to prevent Iran from acquiring a nuclear weapons arsenal, it does not want to jeopardise its economic ties with Iran. On the other hand, Tehran should not push its traditional friendship with China too far, as a stable political and economic relationship with the US remains a priority for Beijing. Although China's leadership in general rejects sanctions as a tool of international politics, it still might not veto such measures in the Security Council if they are seen as reasonable. The decision won't be an easy one for Beijing because the economic powerhouse is currently procuring 14 percent of its crude oil from Iran, the country's second largest supplier. Two years ago, the two countries signed an agreement for delivery of 110 million tonnes of liquid gas (LPG) to China over a period of 25 years, a deal worth $20 billion. Both countries currently cooperate in the development of oil fields, crude oil refinement and pipeline construction. China's state-owned oil company, Sinopec, secured a preliminary concession from Iran two years back to develop the Yadavaran oil field in exchange for delivery of 150,000 barrels daily over a period of 25 years. But the insecurities of the international tug-of-war with Iran's uranium enrichment programme have so far delayed the venture, estimated to be worth $70-100 billion. Analysts said Sinopec is not taking the risk of investing billions of dollars into an oil field development venture that is potentially threatened to falter through possible international military intervention against Iran. China's oil-refining conglomerates have already started to scout out other regions in order to become less dependent on Iranian oil. Mostly because of Iran's oil deliveries, trade between China and Iran has soared from $200 million in 1990 to an estimated $10 billion this year. Meanwhile, about 100 Chinese companies are working on Iranian infrastructure projects - Tehran's subway, power plants and hydroelectric dam projects. Iran is also awarding lucrative contracts to Chinese ship builders. In the 1990s, China had transferred weapons to Iran through two major agreements, although experts say the procurements were not so much of concern to the US as the sale of anti-ship missiles since 1987 and speedboats to carry them, because they pose a potential threat for the US fleet in the Persian Gulf. It was only under pressure from the US that China revoked its support of Iran's ballistic missile programme in the 1990s and since then has adhered to international control mechanisms like the Missile Technology Control Regime (MTCR). Although the government in Beijing now follows a clear line in this question, some concerns remain. Companies associated with large Chinese conglomerates like weapons manufacturers Norinco and the Great Wall Industries, with state background, have until recently been accused by the US of transferring sensitive technologies to Iran.