China and Iran Strategic Partnership

A deal struck in March 2021 between Iran and China concluding a strategic pact and binding both parties for a quarter of a century might be alarming for the West. This pact includes not only oil and gas but also military, intelligence and connectivity to China Belt and Road Initiative (Saleh, 2020). The value of cooperation bound by the agreement is worth more than 400 billion USD containing all the mentioned areas of cooperation (Fassihi, 2021).

Iran’s change of direction to the East creates a challenge for the world community. It represents a strategic shift finding a way to be more competitive with the West (Tanchum, 2020). The basics of this shift can be found in the Memorandum of Understanding from June 2020 signed between Iran and China. Based on these events we can deduce a new policy trajectory for Iran, making it more unrealistic to return to a Joint Comprehensive Plan of Action from 2015. The feeling is that Iran and China have a common strategic interest in containing U. S. military influence (Esfandiary, 2018). Within this worldview, the U. S. has the only option with a policy of isolating Iran and seeking a new agreement (Cook, 2020). However, based on these events it might be challenging to build new U.S.-Iran relationships.

What does Iran mean for China?

For China, this is a chance to partly overcome Russian influence in the region. Russia is the key power in the region maintaining relationships with countries like Egypt, Syria, Iraq and Libya, each a former Soviet client (Salem, 2020). Russia sees itself as getting through a potential third way in the world leader paradigm between China and USA. Russia is engaged in a balancing act pursuing cooperation with countries like Japan, Korea and India, which actually represent China’s regional rivals (Ickes, 2009), (Brown, 2018). By keeping this in mind China is steadily moving through Central Asia. Its pact with Pakistan has been a tremendous success to take this country from the orbit of Russian influence by providing Chinese technology to launch Pakistani satellites and new fighter jets (Lons, 2019). But Pakistan is not the endgame here. Without Iran, there can be no long-term successful infiltration of the Middle East. From this perspective, it becomes logical what Iran means to China. It is a way of fighting Russian influence in Central Asia and creating a way for Eurasian BRI. From the perspective of the BRI agenda, Iran provides easy access to further countries like Iraq and Syria (Calabrese, 2019), cementing the permanent presence of companies in the postwar reconstruction by Chinese firms. Moreover, Iran provides a perspective of building a Caspian sea – Persian gulf connection (Mukhtarov, 2020). Iran is also a critical player in Iraq, Lebanon and Yemen and it also has a cultural connection with Afghanistan (Rubin, 2020). Iran presents a significant political and economical leverage. More than 50% of goods consumed in Iraq are being imported from Iran (Eqbali, 2019).

Cooperation in the eyes of Iranians

Not the whole investment perspective is shining bright in the minds of Iranians. The 400 billion USD worth investment deal struck in March 2021 looks to be invested in five stages over a twenty-five-year period (Fasihi, 2021), however, it also has its disadvantages. Firstly, the conservative political representatives in Iran worry that the encroachment from China could threaten Iran’s sovereignty. Secondly, China is not considered a reliable partner by some Iranians. Moreover, China has made double deals with Iran on numerous occasions in the last four decades. Here falls the cancellation of a commitment to build an enrichment facility (NTI, 2021). The strategic reason for this behaviour may be that China has so much at stake in a functional relationship with the United States that they will not hesitate to tear up an agreement with Iran to cement their relationship with the U. S. Thirdly, after double-dealing problems comes to an issue of not sticking to a signed contract. This case has happened in China’s BRI investments in Sri Lanka (Abi-Habib, 2018) and Djibouti in Africa (Bearak, 2019). In both above-mentioned cases, countries have accumulated huge amounts of Chinese debt and as a way of payment have been used key pieces of national infrastructure and territory as repayment in Chinese debt-trap diplomacy (Kemenade, 2009).

Iran will have to be wary of any possible efforts from China to control key strategic facilities in Iran. From the Iranian perspective, however, no deal is not an option based on macroeconomic indicators such as high inflation, unemployment and poverty problems. If diplomacy with U. S. fails, China will suffice. Despite the mentioned major worrying signs, a strategic partnership with China will provide concrete investments to give a boost to the Iranian economy crumbling under current sanctions.

Author: Pavel Matusak


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