TEHRAN - Speaking of business as unusual. A mere two months ago, the news of a China-Kazakhstan pipeline agreement, worth US$3.5 billion, raised some eyebrows in the world press, some hinting that China's economic foreign policy may be on the verge of a new leap forward. A clue to the fact that such anticipation may have totally understated the case was last week's signing of a mega-gas deal between Beijing and Tehran worth $100 billion. Billed as the "deal of century" by various commentators, this agreement is likely to increase by another $50 billion to $100 billion, bringing the total close to $200 billion, when a similar oil agreement, currently being negotiated, is inked not too far from now.
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It is perhaps too early to digest fully the various economic, political and even geostrategic implications of this stunning development, widely considered a major blow to the Bush administration's economic sanctions on Iran and particularly on Iran's energy sector, notwithstanding the Iran-Libya Sanctions Act (ILSA) penalizing foreign companies daring to invest more than $20 million in Iran's oil and gas industry.
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China is staking out its reserves knowing full well that, at the rate their economy is expanding, they will come into direct conflict with the U.S. sooner rather than later over energy availability. They also want a political say about what happens in the Mid-East, about protecting their share of the oil and gas that they need as desperately as we do. It would not surprise me if tensions between the U.S. and China escalated during the next four years of the Bush (p)residency. With the heads of U.S. energy corporations making policy here, how could it not? Should tensions arise, it would not take much (an incident between Taiwan and the mainland) to touch off hostilities on a grand scale. A best case would be another Cold War fought instead by proxies in oil-rich nations as opposed to Southeast Asia.
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