After US Withdrawal, Iran Embraces China

Posted on 06/5/18
By Simon Theobald | Via East Asia Forum
Iranian and Chinese foreign ministers at a recent meeting in Beijing. (Photo via video stream)

On 8 May 2018, US President Donald Trump withdrew his country from the Joint Comprehensive Plan of Action (JCPOA) that had provided Iran with relief from economic sanctions in return for a freeze on its program of uranium enrichment. Although there is a grace period for US companies presently operating in the Islamic Republic to wind down their operations, economic sanctions will follow, putting pressure once again on the Iranian economy.

 

Not less than a week later, Iran’s charismatic Foreign Minister and one of the chief architects of the nuclear deal, Javad Zarif, was in Beijing meeting with China’s Foreign Minister Wang Yi. As Zarif does a global lap shoring up support for the wavering deal, it should surprise no one that China is at the center of Iran’s economic horizons.

 

How these relations hold up in the light of the US withdrawal from the JCPOA remains a pressing question. Commentators who deride Mike Pompeo’s threat to take the ‘strongest sanctions in history’ against Iran as ‘pure fantasy’ need to take seriously the Trump administration’s policy of ‘act first, think later’ with regards to the Middle East — after all, the United States has just upturned years of diplomatic orthodoxy by moving its embassy to Jerusalem. It should be taken for granted then that the United States will put pressure on the other signatories to the JCPOA — Europe, China and Russia — to limit, if not wholly cut, their ties to Iran.

 

Yet US leverage over China is limited when it comes to Iran. Certainly, the most compelling reason for China to retain links with Iran in spite of future US pressure is the critical role that Beijing envisages Iran playing in the Belt and Road Initiative. An ability to rapidly traverse the Iranian plateau lies at the heart of Beijing’s geostrategic and economic ambitions in the 21st century. Running goods through Iran allows Beijing faster and more reliable access to the growing markets of the Middle East and North Africa, and circumvents the need to run shipping through the potentially unstable Straits of Malacca.

 

Even as China develops the China–Pakistan Economic Corridor linking the port of Gwadar with Tashkurgan and beyond, precisely in order to avoid the longer and more problematic Indian Ocean route, the flow of oil and gas out of the Persian Gulf will remain contingent on Iran’s control of the narrow Strait of Hormuz. So China still has strong incentives to keep Iran onside, even with the threat of secondary sanctions by the United States.

 

To evidence its commitment, China has already provided Tehran with a loan of US$1.5 billion to finance the electrification of the Tehran–Mashhad rail corridor, while investing in the exploration and development of new fields at Azadegan and Yadavaran, which came online in 2016. Countless smaller direct and private Chinese investment projects now also dot the Islamic Republic, accounting for everything from building public transport infrastructure to paper recycling.

 

Tehran is in many respects the ideal regional partner for Chinese economic and political ambitions. An authoritarian regime with a tenacious capacity to stare down dissent, Iran is beset with none of the problems of violence and instability that afflict other regional allies like Pakistan, where Chinese business figures continue to be the victims of targeted killings and terrorism. Relations between China and Iran are free from the concerns around human rights that continue to dog Western powers’ sometimes troubled interactions with Beijing.

 

In turn, relations with China are an easier sell in Iran compared with other signatories to the JCPOA. Memories run deep both on the street and in the halls of power of the unequal relationship with Britain, the United States and Russia during the rapacious 19th and 20th-century era of colonialism.

 

For Iran, China will continue to be indispensable as it attempts to circumvent the potential future damages of a new round of US sanctions, and top Iranian diplomats will likely be desperate to maintain economic links with China, whether outside or inside the parameters of the JCPOA. Beijing was a stalwart ally during the bad years of sanctions under outspoken conservative president Mahmoud Ahmadinejad, and today provides a critical market for Iranian oil, accounting for purchases of over 600,000 barrels per day in 2017–18.

 

As the destination for nearly 40 percent of Iran’s non-oil export, China is also by far Iran’s largest single trading partner. Gripes from Iranian consumers about the quality of Chinese wares aside, as the value of the rial slides to record low figures and Iran’s large middle class finds its purchasing power increasingly capped, Tehran’s insiders are no doubt calculating that China’s seemingly inexhaustible ability to stock the country’s bazaars with low-cost goods will be essential in keeping Iranian consumers satisfied, if not preferred. And as a nation that was itself colonized, China presents both as a sympathetically subject to the same ravages of Western greed and as a model to be emulated in its ability to throw off poverty and become a 21st-century powerhouse.

 

Despite Beijing’s expressed ‘regret’ at the US withdrawal from the JCPOA, the result is then in many ways a win-win scenario for China.

 

If over the next month the remaining members are unable to reach an accord and the deal fragments, ‘going it alone’ with Iran, even in the face of US threats, makes good sense strategically and economically for China and leaves an increasingly isolated Iran in a far weaker bargaining position.

 

Alternatively, if a deal can be struck with the other five signatories, it will simply become another case of the US President savaging his own negotiating position to the benefit of the network of states increasingly willing to push back against American excess.

 

Simon Theobald is a PhD Candidate at the School of Archaeology and Anthropology, The Australian National University

 

This article first appeared in East Asia Forum. Click here to go to the original.

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