Washington pushes China to get serious about sanctions

Chinese officials have been protesting US penalties against China's Bank of Kunlun for Iran-related activities.

According to the US Department of the Treasury, the bank has conducted significant financial transactions for sanctioned banks in Iran as well as making payments for an affiliate of Iran's Islamic Revolutionary Guard Corps.

The penalties, which affect the bank's ability to conduct business in the US, were imposed under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010.

The handwriting is on the wall. China is Iran's largest remaining trading partner. And China National Petroleum Corporation, which owns the bank, and other Chinese entities have invested billions of dollars in Iran's petroleum sector, now the focus of international pressure.

This latest round of penalties follows sanctions earlier this year against Zhuhai Zhenrong Company, China's largest importer of Iranian crude oil. The company allegedly exported gasoline to Iran in 2010 and 2011. Given Iran's heavy reliance on oil revenue, there is finally evidence of real economic pressure mounting.

Historically, the US has been reluctant to impose sanctions on third parties. There have been few good levers, such as government contracts or military or foreign assistance, all of which are controversial to use, and US allies have complained bitterly about extraterritoriality.

Yet since 1997, US law has required imposing penalties on foreign entities for related activities. Under the Iran-Libya Sanctions Act passed that year, the US president had the authority to bar foreign entities from US government contracts if they invested more than $20 million in the Iranian petroleum sector.

Neither former US president Bill Clinton nor his successor George W. Bush ever chose to impose such penalties.

What has changed? To begin with, the resistance of US allies with respect to Iran sanctions largely has faded after a decade of Iranian intransigence.

US President Barack Obama entered office with the clear intent to negotiate a solution with Iran if Iran seemed serious about finding a solution.

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