Why, China, why?

With Iran flexing its military muscles and the recent publicization of Iran's second hidden nuclear facility, western powers are aiming at more sanctions on trade with Iran if this Thursday's meeting in Geneva prove fruitless. Current viable sanctions include sanctions on foreign investment in Iran's oil and gas and import-export sectors, blacklisting more Iranian banks and firms run by the Revolutionary Guards, divesting from firms that trade with Iran, and banning export credits.

Eastern powers have a different stance though. Russia currently provides Iran with nuclear technology and China imports crude oil from Iran to sell back the refined product. Any sort of sanctions that western powers might put in place would directly affect Russia and China's bottom-line.

Recent language from Russia's Medvedev sound promising saying that further sanctions, while "seldom productive, are sometimes inevitable." Foreign Minister Sergei Lavrov has been quoted as saying "I am convinced restraint is needed," whatever the hell that means. It should be noted that Russia is being seen as more open to santions on Iran recently.

The biggest roadblock to more sanctions on Iran is China. With China's increasing demand for energy and reliance on crude oil imports from Iran, any sanctions that might go through would be likely to be watered-down and less harsh than Western countries would like. It should be noted though, that China has already supported three rounds of sanctions on Iran and if the second nuke facility in Qom proves to be non-peaceful as Iran alleges, it is likey they will support tougher sanctions. If China is ultimately concerend with cash flow from the middle east, its goal should be long-term stabilization of the area. Nuclear proliferation in the area will only destabilize the area in the long-run and run up the price of crude oil.

We'll see what happens in Geneva this Thursday.