Analysis | China makes deep forays into Iran

The two countries disagree with the United States. One is a huge energy market with a lot of excess cash and the other is a sanctions-strapped and cash-strapped energy exporter. At a time when the United States is aiming at once through a multitude of economic measures, China and Iran are taking their partnership to a new level with a long-term, $ 400 billion deal.

According to a New york times report, countries are at an advanced stage of finalizing the deal that would allow China to expand its presence in banks, telecommunications, ports, railways and several other sectors in the Islamic Republic in exchange for oil greatly reduced for 25 years. While for Iran, whose oil sales dropped after President Donald Trump unilaterally withdrew the United States from the Iranian nuclear deal in May 2018 and re-imposed sanctions on the country, that deal could be an economic lifeline, China could strengthen its strategic influence in a region where the United States has built a strong presence since the Second World War.

The partnership was first proposed by Chinese President Xi Jinping during a visit to Iran in 2016. The Iranian government authorized it last month, according to Foreign Minister Javad Zarif. This means that Xi made the proposal after the conclusion of the nuclear deal in 2015, which resulted in the lifting of most international sanctions against Iran. Now, when Iran is struggling with a troubled economy hit by sanctions following the settlement, its leadership has approved the Chinese proposal.

Strategic value

Iran has a very crucial place in the Belt and Road initiative of China. China has always wanted to involve Iran. While the Americans continued the policy of maximum pressure against Iran and left Iran in extraordinary deprivation and privation, it is now open to Chinese initiative. It is a meeting of two countries that have been very unfairly abused by the Americans, said Ambassador Talmiz Ahmad, who was India’s ambassador to several Gulf countries.

The Sino-Iranian partnership agreement must obtain final approval from the Iranian parliament. Foreign Minister Zarif said the agreement was supported by the supreme leader, Ayatollah Ali Khamenei. According to NOW, which reviewed an 18-page draft agreement, China and Iran would launch joint training exercises, joint research and the development of weapons and information sharing. China will also offer its GPS to Iran, build an infrastructure for the deployment of 5G and develop free trade areas.

It is a long-term strategic partnership agreement with energy, economic, logistics and military aspects. Iran and China will be entangled in two countries under extraordinary and sustained American pressure that has comforted each other, said Ahmad.

What are the implications of this agreement? It could offer an immediate reprieve to the Iranian economy which is in shock from the policy of maximum pressure from the United States. The International Monetary Fund has forecast that the Iranian economy, hit by the triple blow of US sanctions, the fall in oil prices and the coronavirus epidemic, will contract by 6% this year. Iran is isolated. And its infrastructure is in ruins. Over a period of time, this will receive an upgrade. From a Chinese perspective, Iran would present a very important energy, economic, geopolitical and logistical partner and a key player in the BIS, said Ambassador Ahmad.

According to him, the current world order centered on the United States is in decline and a new multipolar order is emerging in which China plays a crucial role. China has already cemented ties with Russia in this emerging world order. Iran has joined this block. In terms of the evolution of the new world order, this agreement is a game-changer.

The deal, if concluded, could lead to punitive measures by the United States against China. The US State Department has already said it will target Chinese companies if they make investments in Iran defying US sanctions. But China, which is already in a trade and technological war with the United States, seems determined to continue its partnership. China has continued to buy Iranian oil for the past year, even after US sanctions waivers expired in May 2019, albeit in lower volumes. India, on the other hand, stopped buying Iranian oil last year after the end of the US waivers. In 2019-2020, Indian crude oil imports from Iran amounted to 1.7 million tonnes, compared to 23.9 million tonnes in the previous year.

Indians retreat under influence

Coincidentally, at a time when Iran and China are finalizing this long-term partnership agreement, Iran abandoned India from a plan to build a rail line from Chabahar port to Zahedan, along from the border with Afghanistan, The Hindu reported Tuesday. The project, signed in 2016 during Prime Minister Narendra Modi’s visit to Iran, has been hailed as a major trilateral project that would allow India to access Afghanistan without bypassing Pakistan. But Iranian officials cited the delay in India’s $ 400 million funding as the reason for India’s withdrawal from the project.

Under their partnership agreement, China is expected to play a role in the Chabahar free zone and the port.

The original Chabahar agreement between India and Iran was signed in 2003 between Iranian President Mohammad Khatami and Prime Minister AB Vajpayee. In one year, we abandoned it. We started engaging with the Americans, so we stopped continuing. And again, we raised it. Prime Minister Modi went to Tehran and we agreed on a trilateral path with Iran and Afghanistan that we would develop Chabahar and then we would go ahead with the construction of a rail network and road. This is crucial for the strategic interest of India. It has a crucial geopolitical value for the diffusion in Afghanistan, in Central Asia and up to Moscow. The strategic plan was to make India a potential player in the Eurasian scenario, said Ahmad.

None of this happened because under the second Modi government, India pursued the American line. I think this is a very, very serious mistake. Iran cannot afford to wait for India forever. They waited 17 years. And look at the value they have reached. Now they don’t need you anymore. I think India lost very badly, added the ambassador.

Benefits of the subscription include

Today’s paper

Find a mobile version of daily newspaper articles in an easy-to-read list.

Faster pages

Switch between articles smoothly while our pages load instantly.

Unlimited access

Enjoy reading as many articles as you want without any limitations.

Dashboard

A one stop shop to see the latest updates and manage your preferences.

Personalized recommendations

A selection of articles that match your interests and tastes.

Report

We update you on the most recent and important developments three times a day.

* Our digital subscription plans do not currently include electronic paper, crossword puzzles, iPhone and iPad mobile apps and printing. Our plans enhance your reading experience.