MIDDLE EAST SCHOLAR DISCUSSES CHINA'S CONCERNS

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 007353

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/18/2031
TAGS: PREL PARM ENRG IR CH
SUBJECT: MIDDLE EAST SCHOLAR DISCUSSES CHINA'S CONCERNS
OVER IRAN AND RELUCTANCE TO ENGAGE HAMAS

REF: A. FBIS 20060407455001


B. BEIJING 5077

Classified By: Political Section Deputy Robert
Griffiths. Reasons 1.4 (b/d).

Summary
--------------


1. (C) Beijing believes that military conflict
involving Iran would severely threaten China's oil
imports from the region, according to prominent Middle
East scholar Yin Gang. Chinese Government officials
are frustrated with President Ahmadinejad because he
fails to accept the possibility of an attack on Iran
if Iran does not comply with the international
community?s demands to halt its nuclear program.
China sees that in a war involving Iran it would be a
loser, and Russia a winner, because of the inevitable
rise in oil prices. The Iranian populace is slowly
beginning to cast doubt on the value of the country's
pursuit of a nuclear program, which some clerics fear
could spark a popular backlash against the regime.
China is treading carefully with regards to engagement
with the Hamas-led Palestinian Authority and will
likely follow the lead of other countries in
developing relations with the new Palestinian
leadership. End Summary.

War with Iran could Severely Damage PRC Economy
-------------- --


2. (C) Beijing understands that with an attack on
Iran over the nuclear issue China would be a "loser"
because of the likely damage to China's economic
development, Chinese Academy of Social Sciences (CASS)
Institute of West Asian and African Studies scholar
Yin Gang told poloff on April 10. (Note: Yin is a
leading academic voice on Mid-east issues and has
published several essays on the Iran issue in the MFA-
affiliated World Affairs magazine, including ref A.
End Note.) Although China would not participate in
any military action, a war involving Iran would
disrupt China's energy imports from the Middle East
and the Gulf region, resulting in high oil prices and
a stagnation or even decline in Chinese economy, which
cannot sustain growth with oil prices over USD
100/barrel. Although Beijing and Moscow are currently
taking similar positions on the Iranian nuclear issue,
energy abundant Russia would be the ?winner? in the
case of a limited war, benefiting from a rise in
global oil prices, Yin asserted. China, Japan and
South Korea are major consumers of Gulf oil, but none
of Russia?s oil exports pass through the Straits of
Hormuz, which would very likely be blocked during a
conflict with Iran.

China Offers Suggestions, but Iran Not Listening
-------------- ---


3. (C) China is extremely concerned over the
potential for the Iranian nuclear issue to spark a
military conflict but has so far only concentrated on
tactics that could delay, not prevent, an attack, Yin
said. In meetings with Iranian representatives,
Chinese officials have suggested that Tehran take into
account the long-term interests of its country, people
and government. The Iranian leadership, however,
seems not to accept the possibility that the
international community would support an attack on
Iran if it does not comply with demands to halt its
nuclear program. Iranian officials presume the United
States is reluctant to launch a war because it needs
Tehran?s assistance in stabilizing Iraq, according to
Yin. It is also his understanding that Tehran will
not accept Moscow?s proposal for Iran's nuclear
program.


4. (C) Many Chinese Government officials privately
refer to President Ahmadinejad as ?crazy? and much
preferred former President Khatami, Yin said. Yin met
Iranian Presidential Envoy Mohammad Larijani at a
function at the MFA-affiliated China Institute of
International Studies (CIIS) during Larijani?s March

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14-16 visit to Beijing, and was aware that Larijani
carried a letter from Ahmadinejad intended for
President Hu Jintao. According to an Iranian Embassy
official, the letter did not contain any new messages,
Yin stated, remarking that Larijani's visit was
"useless." Note: According to MFA officials involved
in Larijani's visit, Larijani did not deliver a letter
for Hu Jintao (Ref B).

Iranian People Slowly Turning against Nuclear Plan
-------------- --------------


5. (C) Yin believes that the Iranian populace is
gradually beginning to cast doubt on the value of
President Ahmadinejad's stubborn pursuit of a nuclear
program. While the Iranian Government had initially
rallied popular backing for the development of a
domestic nuclear energy program by eliciting
nationalist sentiment, the Iranian people generally do
not support the development of nuclear weapons.
Ahmadinejad has so far failed to promote desired
economic reforms, and Iran's citizens are slowly
realizing that the president's nuclear plan will not
serve the people's economic and other interests. Many
Iranian people dislike the current Islamic theocracy,
Yin remarked, citing observations by Chinese
businessmen operating in Iran. Some Iranian clerics,
therefore, fear that Ahmadinejad's insistence on
pursuing nuclear development to the detriment of
national interests could bolster dissatisfaction with
the regime and ultimately threaten the Islamic
clerics? monopoly on power. Therefore, certain voices
within the religious leadership are calling on
Ahmadinejad to take a softer line on the nuclear
issue, Yin maintained, adding that he believes
Ahmadinejad is now facing an internal struggle.

China Treads Carefully with Hamas
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6. (C) Turning to the recent Hamas electoral victory,
Yin said that Hamas Foreign Minister Zahar requested a
visit to China but Beijing declined his request.
China is taking an extremely careful approach toward
its interaction with Hamas. China does not want to
appear taking the lead in engaging Hamas out of
concern over offending the international community as
well as Arab nations, many of which distrust Hamas due
to its links to the Muslim Brotherhood. Moreover,
China has a special relationship with the Fatah Party,
and Chinese foreign affairs officials and scholars are
uncertain whether the Hamas-led Palestinian Authority
will last more than one year. Beijing is therefore
taking a "wait and see" approach and will likely
follow the lead of other countries in developing ties
with the Hamas-dominated government. Yin remarked
that while China wishes to become more involved in the
Middle East Peace Process, such involvement is not
likely to be welcomed due to the Quartet's reluctance
to allow China to expand its influence in the region
and because Beijing is unwilling to make any
significant financial contribution. China provides
only approximately half a million dollars per year in
aid to Palestine.
SEDNEY