China-Iran Deal: Implications for the US

“The deal shall organically serve the shared interests of China and Iran while at the same time posing implications for the US influence over Iran and the region as a whole”

West Asia as a whole and Iran, in particular, is an important country for China’s project of global infrastructure development and economic connectivity. Individual countries of West Asia have welcomed the Chinese offers under Belt and Road Initiative (BRI) to diversify and develop their economies. Recently, on March 27, 2021, Iran and China signed a 25-Year Comprehensive Strategic Partnership cooperation agreement which has sparked a significant debate after being leaked to the press in July 2020 at the draft stage. This deal is viewed as an extension of the Chinese BRI, and one which will not only serve the interests of Iran and China but also have implications for US foreign policy in the region.

China and Iran are inheritors of two great ancient civilizations and have sustained strong relations during the ancient and later periods. Both have remained centres of trade along the famous Silk Road. Isfahan was known to be an economic hub in the region. The strong relationship, which had developed over several decades, witnessed a significant decline as a result of the reduction in their power, and also the increased role of colonial powers played a key role in the 18th and 19th centuries. The drastic suffering at the hands of colonial powers resulted in a sense of victimization in China and Iran; therefore, they have been critics of Western powers.

China-Iran ties couldn’t develop as much during the Pahlavi dynasty and even after the revolution in Iran, but in the last two decades, both countries have developed strong bilateral relations. China’s Belt and Road Initiative (BRI) has further increased the importance of Iran for China. The geographical position of Iran makes it an important factor in the success of the Chinese vision of economic connectivity and integration across the Eurasian and African land mass. As a result, in 2016, China and Iran achieved another milestone in their bilateral relations in the form of a “Comprehensive Strategic Partnership”.

Moreover, China and Iran have signed seventeen agreements to enhance cooperation in trade, banking, science, industry, finance, and the environment. It was announced to increase trade up to $600 billion over the next decade. Iran’s economy has been witnessing growth after the sanctions ended in 2015. This period of progress was interrupted when The Trump Administration withdrew from the Iran Nuclear Deal and imposed unilateral sanctions on Iran in 2018. Since then, Iran has continued to witness a significant decline in its economic growth.

The change in the US administration in 2021 has brought significant change in the US foreign policy towards Iran as the Biden Administration is softening the US position on Iran. Nevertheless, the Iranian economy needed relief to survive owing to the US sanctions, and China-Iran economic deal can be proved as a huge source of relief for Iran.  From the Iranian perspective, China can play a key role to lessen the isolation of Iran in the international system and also for the sustenance of the Iran’s precarious economic position.

The terms and figures regarding the cooperation in the sectors mentioned have not been officially shared yet. It has been reported that China will invest $280 billion in Iran’s energy sector and $120 billion in its infrastructure development activities, totaling $400 billion. In return for these investments Iran, on the other hand, will be selling relatively low-priced oil to China. A section of the draft agreement shows that China and Iran will have exceptional and high-level military cooperation. This cooperation will include intelligence sharing and defense production.

Furthermore, the able Iranian Foreign Minister Javad Zarif , following the signing of the deal, said, “China is a friend for hard times. The history of cooperation between the two ancient cultures of Iran and China dates back centuries. Signing the cooperation agreement will further strengthen the ties of the two nations”. According to the Chinese Foreign Ministry, Foreign Minister Wang Yi said, “China firmly supports Iran in safeguarding its state sovereignty and national dignity”.

It is interesting to note that the Chinese Foreign Minister for future relations between China and the Middle East, set five principles, asking the countries; 1)to respect each other, 2) uphold equity and justice 3) achieve nuclear non-proliferation 4) jointly foster collective security, and 5) accelerate development cooperation. The strengthening China-Iran ties will not only fill the vacuum left by the former US administration but also enhance the Chinese influence in the Middle East.

The deal shall organically serve the shared interests of China and Iran while at the same time posing implications for the US influence over Iran and the region as a whole whose traditional interests in the region include; protection of sea trade routes, secure oil flows for its allies, dominance over the region, and protection of Israel. Although, the US does not import a large portion of its oil imports from the Middle East its allies have been and still are dependent on the oil supplies from the Middle East especially from the Persian Gulf.

Moreover, the region has strategic importance for the US as it has strategically important choke points. The US dominates the Persian Gulf and the fifth largest US fleet resides in the Gulf with headquarter in Bahrain. Protection of its allies especially Israel is one of the major interests in the Middle East. The US considers Iran’s policies and activities as a threat to its interests in the region. Therefore, it wants to contain the influence of Iran. The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) can thus be understood in the context of its policy to contain Iran in the region.

The US wanted to bring Iran to the table and renegotiate the deal with more tough conditions. As the Trump Administration was of the view that Iran Nuclear Deal could not stop Iran to continue its nuclear program, therefore it withdrew from the deal. JCPOA was a deal that ended the economic sanctions on Iran and aimed to ensure that Iran would not acquire nuclear arsenals. According to former US President Trump, the deal was bad as it did not include Iran’s non-nuclear and missile programs and also was a medium-term plan. The Israeli government had also opposed the deal from the very beginning.

It is pertinent to mention that International Atomic Energy Agency (IAEA) has consistently verified that Iran has been complying with the conditions. Even though Iran was complying with the agreement, the US decided to abandon the agreement. The other parties especially UK and France did not support the US decision. The European powers also promised Iran to find alternate solutions but they could not timely find any solution. This situation resulted in increasing domestic political pressure for the Iranian government and COVID-19 further aggravated the situation.

Thus, it would not be wrong to say that it is not only the US but also the vague response of the European powers that compelled Iran to look towards the East to solidify its strategic relations. Although, the US has been successful in weakening the economic conditions of Iran. But, this maximum pressure was unsuccessful for the US as Iran’s government did not come up with to condition that it would renegotiate the deal on the US terms and conditions. This new economic deal between China and Iran cab be proved to be the final nail in the bud in the US strategy to pressurize Iran.

To conclude, China’s BRI is expanding its scope and seen as a project of tremendous opportunities for the countries. Under BRI, recipient countries will be able to develop their infrastructure and diversify their economies. China-Iran’s economic deal can be seen as an extension of BRI. Such China-Iran relations will boost the Iranian economy and increase the Chinese sphere of influence in Iran and the Middle East as a whole. Consequently, it will have implications for both US foreign policies’ full spectre dominance in the region as well as clipping American influence over Iran and the region, as well.

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About Zeeshan Shoukat 14 Articles
The author is a Geopolitical and Strategic Analyst. He writes on Indo-Pak Ties, Geopolitics of Indian Ocean, Evolving Dynamics in the Middle East, and Global Power Politics. He tweets at @_IamZeeshan