Amidst talks of trade war with China and the cancelation of the waivers on oil trade with Iran initially granted by the Trump administration, lost is the process by which China benefits from its trade relationship with Iran. Is Iran to become just another tributary of Beijing, despite Tehran’s ambitious plans to export the Islamic Revolution and to expand Iranian presence and influence beyond the Middle East, resurrecting the Persian Empire? Increasingly, evidence shows that Iran’s dependency on China may soon place it in the same league as Pakistan, the infrastructure of which is increasingly a beneficiary of Chinese infusions. China, too, is vying for global influence. For the time being, however, the interests of the two countries coincide.
China remains Iran’s top oil trade partner, comfortably shifting into that role with the conclusion of the Joint Comprehensive Plan of Action, and eventually edging out Western countries such as Total, as the United States eventually moved away from the “nuclear deal” and reimposed the sanctions on business dealing with the Islamic Republic. Over time, China increased its presence in the oil rich province of Khuzestan, also known as Ahwaz, and largely populated by Arabs, whose semi-independent emirate was annexed in 1925. The investments of Chinse firms in the region, besides oil, included electricity, transport, water, and sewage.
Chinese and Iranian ventures also expanded the Abadan refinery to enhance the quality of the gas and other products. Chinese involvement contributed to substantial environmental damage from poorly planned and shoddily executed projects. Rivers were dammed up or diverted to make room for oil rigs & refineries, which ultimately resulted in the drying out of water sources essential for local date farmers, and increase in sand storms. Industrial waste and sewage killed thriving agriculture, as well as the once-vibrant shipping industry. Wetlands turned to wastelands due to illegal overfishing, and damage from the unregulated oil industry. The presence of Chinese workers, illegally hunting for soft-shelled turtles, exacerbated the environmental damage and distress.
The oil hub, leased to the Chinese, became an increasing site of controversy. Ahwazi militant groups periodically attack the rigs which have been once part of Ahwaz, and now are under complete control of the Iranian government. Ahwazi Arabs do not benefit from these agreements. What was once the symbol of Ahwazi wealth became a symbol of discrimination against non-Persian residents of peripheral regions. By December 2018, as the United States announced the reimposition of sanctions and pressured China and other Iran trade partners to wrap up their business, Chinese companies were under pressure to withdraw from Iran’s South Pars, and suspend investment. The South Pars gas field is the biggest one in the world.
Chinese withdrawal from that area was a big blow to the partnership between Beijing and Tehran. Any further divestment from Iran would jeopardize both countries’ long term goals. For that reason,unlike several other states which benefited from the 180-day waivers on oil trade with Iran issued by the United States in November 2018, China adhered only to the letter of Resolution 1929, which contains no explicit restrictions on energy investment or trade. The US rejection of renewing the waivers, announced in April, created further uncertainty for Chinese companies. $1 billion worth of crude oil now sits in China’s Dalian port, because no Chinese shipping or other reputable companies wish to jeopardize themselves by violating the sanctions without explicit orders from the Chinese government. That puts China (and Iran) in a bind.
China responded with signaling its intent not to comply with sanctions. This development threatens to increase Beijing’s tensions with Washington, and could be used as a bargaining chip in the tariff-related trade negotiations. US has increased its oil output, and the current situation may empower Saudi Arabia, Russia, and other OPEC members. China’s supply of oil is diversified; its dependency on Iran is more than about energy for its own sake. Why would China even potentially risk undermining its relations with the United States? Another factor that adds to the enigma is the recent flooding of Khuzestan/Ahwaz, which had placed up to 2 million people at risk, devastated floodlands, and was in part a result of a deliberate policy of ethnic cleansing of Ahwazis and replacement of the local population with the more compliant Fars from the center of the country, and in part mismanagement by Iranian authorities and local companies, which prioritized protecting the Chinese-controlled oil fields from the flooding over salvaging the livelihood of the Arabs, a heavily discriminated and dehumanized segment of the population.
At this juncture, the issue, including the violation of Ahwazi human rights, becomes critical to US national security interests and the interests of any country opposed to Iran’s gradual imposition of influence across the Middle East and beyond. Aaron Meyer, a counterterrorism law practitioner, explained the concerns: ” I’ll give you two reasons why Ahwazi human rights are absolutely critical to US interests. First is the fact that sanctions are like a blockade; the more ways there are around them, the less the blockade or sanctions work. China is Iran’s largest import and export partner – and in terms of imports, no other country is remotely close to the nearly $20 billion China imported last year before sanctions resumed. Second is something actually even more critical. Iran has given China more than merely cheap oil, LNG and minerals, it has progressively been giving China effective control over that region that includes free rein to build and maintain infrastructure. China has in turn provided nuclear (and militar) expertise along with other technologies that would be otherwise completely out of Iran’s ability to obtain. Even as China looks to develop facially non-military projects in Iran (like the port city of Chabahara), it is looking to ensure that it remains in a position to not only protect its assets within Iran (including its oil facilities), but to also keep Iran as a perceived bulwark against American Middle East ambitions. And let’s not forget for an instant that Chinese military strategy is considerably more developed and cohesive than the US’s mess of foreign policy (or lack thereof) has been.So China is looking at its three warfares strategy when it invests and protects Iran, While the US hems and haws about nonsense.”
The flooding in Khuzestan likewise served as an excuse for Iran to bring in foreign militias, including Hashd Al-Shaab and Hizbullah, with heavy armory into the area, under the pretense of humanitarian operations. In reality, the presence there is meant to protect the oil fields from attacks by Ahwazi militants, to suppress any riots against the regime’s handling of humanitarian issues, and likely to transport contraband, if not additional weapons. Furthermore, the gathering of militias in Ahwaz may serve a further strategic purpose of strengthening pro-Iran presence on the border with Iraq, and perhaps, allowing transportation of illegal natural resources shipments out of the country under the pretext of humanitarian aid distribution.
Just as China signaled its likely non-compliance with the sanctions, Iran made a threat of attacking US troops in Iran with Shi’a militias, which triggered an immediate response from the administration. But would Iran really attack US troops, given the vast inferiority of its own military? Or was this step merely a way to test US boundaries and to see what capabilities US is willing to reveal in response to such developments? More likely, this deliberate provocation was a distraction, which would ensure US focus on Iraq. US continues to ignore the growing presence of Shi’a militias within Iran itself. Iran’s pact with China is about military alignment just as much as it is about energy, and the concern over the security of oil rigs may also be an excuse for increasing coordination within the country and the slow introduction of the Shi’a militia contingent to the Chinese presence on the ground.
Will China be a facilitator of Iran’s continue expansion across the region? To some extent, it already is. Most recently, when Iran threatened to close the Strait of Hormuz in response to US designation of the Iran Revolutionary Guard Corps (IRGC), as a terrorist organization, most experts dismissed such threats given the impracticability of long term enforcement and US Navy’s stated dedication to keeping international trade routes and waterways free. According to Iran, however, US has taken few practical steps to enforce its designation, and in spite of the presence of acknowledged terrorists in the proximity of international waterways, did not change the actions of its naval forces towards the Iranian ships. Iranian navy is a poorly equipped force that could not challenge the US navy.
However, the IRGC contingent, though not battle ready for conventional confrontation, has been developed with asymmetrical warfare in mind, and as such, is perfectly equipped for smuggling weapons and contraband into Yemen, creating nuisance in the narrow Strait of Hormuz, harassing ships, and creating distractions. Where the IRGC may not on its own, succeed in securing the waterways against Western fleets with the goal of destabilizing Yemen, training the Houthi separatists to follow the Hizbullah model, and potentially building a naval base, China’s growing and increasingly modern navy may turn out to be a formidable ally. Already, it is a growing challenge to the US navy, which has suffered from various setbacks in recent years. It is still not on par, and suffers from accidents and poor execution.
But the US, too, has an aircraft carrier problem, among other challenges and has not necessarily prioritized maintaining naval superiority in recent years. And what of asymmetrical warfare response on the seas? That, too, remains to be tested. While Iran seeks to create a Shi’a triangle of influence through the land bridge and bases from Iran through Iraq to Syria and Lebanon and Jordanian border, with Yemen on the third side of the triangle, China views Iran as a central factor in its massive Belt and Road initiative, through which it hopes to exercise global influence by land, while increasing naval superiority starting with the South China Sea and deterring Western powers from its financially dependent “sphere of influence” in Asia. While takeover of Yemen may not be in China’s immediate interests, its base ambitions in Syria strengthen Iran’s hand. Beyond these obvious geopolitical ambitions, pro Iran militias can help China ensure the support for its own interests in the region. They can protect its workers from the local populations dissatisfied by China’s aggressive model that lives little opportunity for the local. They can also protect China’s trade interests, including illicit smuggling of contraband and oil, and engage in covert training with the Chinese military and intelligence. Chinese intelligence may soon begin to play a critical role in the Middle East – with an eye towards countering, constraining,and preventing any expansion of US influence. The flooding of Khuzestan and the accumulation of militias in the area may be serve as a cover for a test run of some sort. There is little doubt, however, that China is not interested in allowing US to order it about in terms of what it perceives as its vital partnerships and strategic interests. The refusal to abide by sanctions is just one sign of an impending battle of wills.