“Oil for Goods”: A Secret Chinese Mechanism to Circumvent Sanctions

Tehran – Agencies: Reuters reported yesterday, citing two senior Iranian sources and three other informed individuals, that Iran used a barter-like arrangement to circumvent sanctions on its oil sales and purchase billions of dollars’ worth of goods from China, including military equipment. The sources, who requested anonymity, said the secret trade mechanism, which allowed Iran to swap its oil for credits earmarked to finance Chinese imports, provided Tehran with a financial lifeline over the past few years, as the United States escalated its economic and military pressure on Iran over its nuclear program. The same sources added that the mechanism also helped China, the world’s largest crude importer, continue buying Iranian oil at discounted prices while shielding banks and companies exporting goods to Iran from international scrutiny or sanctions. All the sources said Iran used the arrangement to purchase medicines, vehicles, and communications equipment from China. The manufacturing companies did not deal directly with Iran, and there is no indication that they violated sanctions. The sources reported that the mechanism was used at least once last year in contracts to supply Iran with air defense equipment worth millions of dollars. The two Iranian sources, close to the country’s decision-making circles, confirmed the existence of this previously undisclosed special-purpose entity.