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What China's New Deal with Iran Says About Its Ambitions in the Region
As long-simmering U.S.–China tensions come to the boil, a sweeping bilateral accord being negotiated between Beijing and Tehran is ringing alarms in Washington. It has the potential to dramatically deepen the relationship between America’s principal global rival and its long term antagonist in the Middle East, undermining White House attempts to isolate Iran on the world stage.
“Two ancient Asian cultures,” runs the opening line of a leaked 18-page Persian-language draft obtained by the New York Times earlier in July. “Two partners in the sectors of trade, economy, politics, culture and security with a similar outlook and many mutual bilateral and multilateral interests will consider one another strategic partners.”
The leaked document has come to light during a month that has seen tit-for-tat closures of a U.S. consulate in China and a Chinese consulate in the U.S.; meanwhile, Iran’s Supreme Leader Ayatollah Khameini renewed a vow to deal America a “reciprocal blow,” for the killing of Quds Forces Commander Qasem Soleimani in January and on July 27, satellite images showed that Iran had moved a dummy U.S. gunship into the Strait of Hormuz—apparently for target practice. But amid concern in Washington over a new China–Iran axis, there are several reasons to be skeptical of what the accord’s contents promise.
Here’s what to know about the state of China-Iran relations, what they portend for the future of the Middle East, and why the new accord might not live up to the hype:
What’s in the deal?
Iran’s Foreign Minister Mohammad Javad Zarif confirmed on July 5 that Iran was negotiating a 25-year deal with China. According to the leaked draft, it paves the way for billions of dollars worth of Chinese investments in energy, transportation, banking, and cybersecurity in Iran. The draft also dangles the possibility of Chinese–Iranian co-operation on weapons development and intelligence sharing, and joint military drills, according to the Times, which also reports the deal could boost Chinese investments in Iran to $400 billion. But the accord has yet to be greenlit by Iran’s parliament or publicly unveiled, and the authenticity of the leaked Persian-language document has not been officially confirmed.
Public debate over the deal continues to rage in Iran, but comment from China has been scarce. When asked about it by a reporter on July 13, China’s foreign ministry spokeswoman Hua Chunying said only: “China attaches importance to developing friendly cooperative relations with other countries. Iran is a friendly nation enjoying normal exchange and cooperation with China. I don’t have any information on your specific question [about the draft agreement].”
How did the deal come about?
In January 2016, China’s President Xi Jinping visited Tehran to open a “new chapter” in relations between the two countries. That visit took place a year after the U.S. and other world powers concluded a deal to curb Iran’s nuclear program known as the JCPOA; and two before President Trump unilaterally pulled the U.S. out of the agreement. Cased in ceremonial language, the partnership China and Iran announced set out a goal of developing trade relations worth $600 billion —a fanciful figure even before the U.S. reinstated sanctions on Iran in 2018.
Yet trade with Iran has not been a priority for China in recent years and, for the most part, it has abided by U.S. sanctions. Beijing invested less than $27 billion in Iran from 2005 to 2019 according to the American Enterprise Institute, and annual investment has dropped every year since 2016. Last year, China invested just $1.54 billion in Iran—a paltry sum compared to the $3.72 billion it invested in the UAE or the $5.36 billion it invested in Saudi Arabia. Although China continued to purchase some Iranian oil after the U.S. imposed secondary sanctions, it did so at “what appears to be a token level” says economist Esfandyar Batmanghelidj, founder of a think tank that promotes trade between Europe and Iran.
China’s oil imports from Iran plummeted 89% year-on-year this March, as Beijing tried to secure a trade deal with the U.S. In June—officially, at least—China imported zero crude from Iran, compared to an all-time high from the Islamic Republic’s archrival Saudi Arabia.
Why does Iran want a deal with China now?
It needs the business. President Trump has waged a campaign of “maximum pressure” on Iran’s economy since 2018, threatening to sanction countries in Europe and elsewhere who buy oil and other exports from the Islamic Republic. He promised that this would help to “eliminate the threat of Iran’s ballistic missile program; to stop its terrorist activities worldwide; and to block its menacing activity across the Middle East.” American sanctions are yet to achieve these objectives but they have pushed Iran deep into recession.
Tehran sees a new accord with China as a way to extract more from a relationship that has so far entailed only “lukewarm” commitment, says Batmanghelidj. Yet even if trade between the two nations undergoes the sort of boost outlined in the leaked draft, “China cannot fully compensate for the shortfall in European trade.”
On top of the sanctions, low oil prices, the worst COVID-19 outbreak in the Middle East, the accidental downing of a Ukrainian airliner, and waves of protests have heaped further strain on Tehran. “The Rouhaini government needs to show something for its seven years in office,” says Ariane Tabatabai, author of No Conquest, No Defeat: Iran’s National Security Strategy. “People are exhausted and they just want to know that something good is going to happen at some point. This might be a way for the government to say: just hang in there, things will get better.”
What’s in it for China?
Discounted Iranian oil would provide a useful extra source of energy for China, which surpassed the U.S. as the world’s largest crude importer in 2017 and has long sought to diversify in its supply. Meanwhile, Iran’s geography opens an additional terrestrial route for Beijing’s Belt and Road Initiative (BRI)—the sprawling global infrastructure development strategy adopted by the Chinese government in 2013. But Iran is neither a vital node for BRI nor a vital oil supplier for China. Beijing sees Iran as “a depressed asset” it can pick up at low cost, says Jon Alterman, Director of the Middle East Program at the Washington-based Center for Strategic and International Studies (CSIS). “China does not need Iran, but Iran is useful to China.”
Part of that usefulness comes from Tehran’s enmity with Washington, he adds. Rising tension between the U.S. and Iran potentially commits American military assets to the waters around the Persian Gulf, drawing resources away from the Western Pacific, where China seeks to establish naval dominance. Furthermore, disagreements over how to address Iran’s nuclear program drive a wedge between the U.S. and its allies—a boon for China, whose investment-centered foreign policy is based on bilateral partnerships rather than broader alliances.
By negotiating with Iran during a trade war, Beijing is signaling it is undaunted by the U.S. attempts to isolate Iran, and feels rising impunity over violating U.S. sanctions. But the vagueness of the deal leaves room to maneuver should Joe Biden win the American Presidential elections in November. A final draft of the Democratic Party’s platform advocates a “returning to mutual compliance” with the JCPOA.
....
....
https://time.com/5872771/china-iran-deal/
As long-simmering U.S.–China tensions come to the boil, a sweeping bilateral accord being negotiated between Beijing and Tehran is ringing alarms in Washington. It has the potential to dramatically deepen the relationship between America’s principal global rival and its long term antagonist in the Middle East, undermining White House attempts to isolate Iran on the world stage.
“Two ancient Asian cultures,” runs the opening line of a leaked 18-page Persian-language draft obtained by the New York Times earlier in July. “Two partners in the sectors of trade, economy, politics, culture and security with a similar outlook and many mutual bilateral and multilateral interests will consider one another strategic partners.”
The leaked document has come to light during a month that has seen tit-for-tat closures of a U.S. consulate in China and a Chinese consulate in the U.S.; meanwhile, Iran’s Supreme Leader Ayatollah Khameini renewed a vow to deal America a “reciprocal blow,” for the killing of Quds Forces Commander Qasem Soleimani in January and on July 27, satellite images showed that Iran had moved a dummy U.S. gunship into the Strait of Hormuz—apparently for target practice. But amid concern in Washington over a new China–Iran axis, there are several reasons to be skeptical of what the accord’s contents promise.
Here’s what to know about the state of China-Iran relations, what they portend for the future of the Middle East, and why the new accord might not live up to the hype:
What’s in the deal?
Iran’s Foreign Minister Mohammad Javad Zarif confirmed on July 5 that Iran was negotiating a 25-year deal with China. According to the leaked draft, it paves the way for billions of dollars worth of Chinese investments in energy, transportation, banking, and cybersecurity in Iran. The draft also dangles the possibility of Chinese–Iranian co-operation on weapons development and intelligence sharing, and joint military drills, according to the Times, which also reports the deal could boost Chinese investments in Iran to $400 billion. But the accord has yet to be greenlit by Iran’s parliament or publicly unveiled, and the authenticity of the leaked Persian-language document has not been officially confirmed.
Public debate over the deal continues to rage in Iran, but comment from China has been scarce. When asked about it by a reporter on July 13, China’s foreign ministry spokeswoman Hua Chunying said only: “China attaches importance to developing friendly cooperative relations with other countries. Iran is a friendly nation enjoying normal exchange and cooperation with China. I don’t have any information on your specific question [about the draft agreement].”
How did the deal come about?
In January 2016, China’s President Xi Jinping visited Tehran to open a “new chapter” in relations between the two countries. That visit took place a year after the U.S. and other world powers concluded a deal to curb Iran’s nuclear program known as the JCPOA; and two before President Trump unilaterally pulled the U.S. out of the agreement. Cased in ceremonial language, the partnership China and Iran announced set out a goal of developing trade relations worth $600 billion —a fanciful figure even before the U.S. reinstated sanctions on Iran in 2018.
Yet trade with Iran has not been a priority for China in recent years and, for the most part, it has abided by U.S. sanctions. Beijing invested less than $27 billion in Iran from 2005 to 2019 according to the American Enterprise Institute, and annual investment has dropped every year since 2016. Last year, China invested just $1.54 billion in Iran—a paltry sum compared to the $3.72 billion it invested in the UAE or the $5.36 billion it invested in Saudi Arabia. Although China continued to purchase some Iranian oil after the U.S. imposed secondary sanctions, it did so at “what appears to be a token level” says economist Esfandyar Batmanghelidj, founder of a think tank that promotes trade between Europe and Iran.
China’s oil imports from Iran plummeted 89% year-on-year this March, as Beijing tried to secure a trade deal with the U.S. In June—officially, at least—China imported zero crude from Iran, compared to an all-time high from the Islamic Republic’s archrival Saudi Arabia.
Why does Iran want a deal with China now?
It needs the business. President Trump has waged a campaign of “maximum pressure” on Iran’s economy since 2018, threatening to sanction countries in Europe and elsewhere who buy oil and other exports from the Islamic Republic. He promised that this would help to “eliminate the threat of Iran’s ballistic missile program; to stop its terrorist activities worldwide; and to block its menacing activity across the Middle East.” American sanctions are yet to achieve these objectives but they have pushed Iran deep into recession.
Tehran sees a new accord with China as a way to extract more from a relationship that has so far entailed only “lukewarm” commitment, says Batmanghelidj. Yet even if trade between the two nations undergoes the sort of boost outlined in the leaked draft, “China cannot fully compensate for the shortfall in European trade.”
On top of the sanctions, low oil prices, the worst COVID-19 outbreak in the Middle East, the accidental downing of a Ukrainian airliner, and waves of protests have heaped further strain on Tehran. “The Rouhaini government needs to show something for its seven years in office,” says Ariane Tabatabai, author of No Conquest, No Defeat: Iran’s National Security Strategy. “People are exhausted and they just want to know that something good is going to happen at some point. This might be a way for the government to say: just hang in there, things will get better.”
What’s in it for China?
Discounted Iranian oil would provide a useful extra source of energy for China, which surpassed the U.S. as the world’s largest crude importer in 2017 and has long sought to diversify in its supply. Meanwhile, Iran’s geography opens an additional terrestrial route for Beijing’s Belt and Road Initiative (BRI)—the sprawling global infrastructure development strategy adopted by the Chinese government in 2013. But Iran is neither a vital node for BRI nor a vital oil supplier for China. Beijing sees Iran as “a depressed asset” it can pick up at low cost, says Jon Alterman, Director of the Middle East Program at the Washington-based Center for Strategic and International Studies (CSIS). “China does not need Iran, but Iran is useful to China.”
Part of that usefulness comes from Tehran’s enmity with Washington, he adds. Rising tension between the U.S. and Iran potentially commits American military assets to the waters around the Persian Gulf, drawing resources away from the Western Pacific, where China seeks to establish naval dominance. Furthermore, disagreements over how to address Iran’s nuclear program drive a wedge between the U.S. and its allies—a boon for China, whose investment-centered foreign policy is based on bilateral partnerships rather than broader alliances.
By negotiating with Iran during a trade war, Beijing is signaling it is undaunted by the U.S. attempts to isolate Iran, and feels rising impunity over violating U.S. sanctions. But the vagueness of the deal leaves room to maneuver should Joe Biden win the American Presidential elections in November. A final draft of the Democratic Party’s platform advocates a “returning to mutual compliance” with the JCPOA.
....
....
https://time.com/5872771/china-iran-deal/
