BEIJING — China on Wednesday urged the U.S. to revoke its sanctions against
Bank of Kunlun Co., a unit of state-owned China National Petroleum Corp., and
warned that the move would damage China’s interests and Sino-U.S. relations.
U.S. sanctions against Chinese financial institutions “badly violate rules
governing international relations and hurt China’s interests,” Chinese Foreign
Ministry spokesman Qin Gang said in a statement on the ministry’s website.
“China is strongly dissatisfied, is firmly opposed to it and will raise solemn
representations to the U.S. from both Beijing and Washington.”
Mr. Qin’s comments came after the White House imposed sanctions against
Kunlun and Elaf Islamic Bank in Iraq for their involvement in Iran’s energy
sector, saying both “facilitated transactions worth millions of dollars on
behalf of Iranian banks.”
The sanctions against Kunlun are the latest attempt by the U.S. to ratchet up
pressure on Iran to prevent it from acquiring nuclear weapons.
Earlier this year, the U.S. sanctioned Zhuhai Zhenrong Co., China’s largest
importer of Iranian crude oil, alleging that it exported gasoline to Iran in
2010 and 2011—an allegation that Zhuhai denied.
Although the U.S. exempted China on June 29 from legislation passed earlier
this year aimed at sanctioning financial institutions that did business with
Iran’s energy sector, it invoked a 2010 law to sanction Kunlun.
Kunlun provided “significant financial services” to more than six Iranian
banks that were on the U.S. sanctions list for helping foster Iran’s nuclear
activities and international terrorism, the U.S. Treasury Department said
“Bank of Kunlun has provided hundreds of millions of dollars worth of
financial services to these designated banks, including holding accounts, making
transfers and paying their letters of credit,” it said. “In early 2012, Bank of
Kunlun transferred hundreds of payments totaling roughly $100 million from
accounts it holds for…Bank Tejarat,” after the U.S. and the European Union
“designated” the latter bank on their sanctions lists.
“In addition to these transfers, in early 2012, Bank of Kunlun made at least
one payment for an affiliate of Iran’s Islamic Revolutionary Guard Corps
pursuant to a letter of credit opened by Bank Tejarat,” it said.CNPC, China’s
largest energy producer, which bought a majority stake in Kunlun in 2009, didn’t
immediately respond to requests to comment. The company owned 82% of the bank’s
shares as of April 2011, according to Kunlun’s annual report. From July 2009 to
July 2012, the chairman of Kunlun also held the title of chief accountant at
CNPC, both company websites show. In addition to providing commercial banking
services in China, Kunlun provides overseas financing to large Chinese
state-owned companies and Chinese energy companies.
“The [Kunlun] sanctions are largely symbolic…they are very much parallel to
the sanctions on Zhuhai–aimed to placate critics but unlikely to significantly
impact investments by CNPC,” said Michal Meidan, an analyst at political risk
consultancy Eurasia Group. “This shouldn’t negatively impact U.S.-China
relations,” she added.
Although CNPC’s domestic peer China Petrochemical Corp., known as Sinopec
Group, has made great efforts to shield itself from U.S. sanctions to clear the
way for investments in the U.S., CNPC is still strongly focused on the Middle
East, Ms. Meidan said.
CNPC officials said an Iranian news agency on Sunday was mistaken in
reporting that CNPC had pulled out of Iran’s offshore South Pars gas field after
delays in the project, according to a person within CNPC. CNPC officials said
they remain committed to projects in Iran, the person added.
Mr. Qin said Wednesday that China and Iran have normal, fair and transparent
business relations in the areas of energy and trade, which “have nothing to do
with Iran’s nuclear plans” and are “not in violation of U.N. Security Council
China’s position on nuclear nonproliferation is “firm and consistent,” and
the country is committed to finding an appropriate solution regarding the
Iranian nuclear issue together with the U.S., Mr. Qin said.
By WAYNE MA