The news about China and Iran concluding a possible trade and military deal worth US $400 billion promises a much-needed economic relief to the latter. At the same time, it has raised some serious regional and extra regional concerns. Although, there is no set timeline as to when this “comprehensive strategic partnership” will actually materialize, the negotiations are underway between both the prospective partners. As per the 18-page draft of this proposed partnership, China will be able to invest in Iran for next 25 years. Around US $ 120 billion is to be used for the upgradation of its transport and infrastructure, and around US $ 280 billion will be dedicated for the Iranian petrochemical, gas, and oil sector development. Military cooperation is planned to be further enhanced with regular military exercise, intelligence sharing, training, and weapons development. It is interesting to note that Russia also figures in the military cooperation with Iran and China. As a result, it is very much expected that soon Russia and China will have unrestricted access to the Iranian air bases (at dual-use facilities in Hamedan, Bandar Abbas, Chabahar, and Abadan).
Transport and infrastructure projects include construction of roads and railways. A stretch of 2300 km will be laid down connecting Tehran with Urumqi in Xinjiang region of China. This will not only connect China with Iran but will be able to provide access to Central Asian States (Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan). It also plans to extend the other end of the road through Turkey to reach Europe. Hence three major regions will eventually be reaping benefits just with the construction of Tehran-Urumqi road. Along with the road construction, a network of intercity railway lines will also be laid down. The major one in this regard is 900 km railroad providing connectivity between Tehran and Mashhad in the north east. The completion, upgradation and extension of Tehran-Qom-Isfahan high speed train line towards Tabriz in north west is also part of this strategic partnership. This assumes even more importance in this whole setup owing to the fact that Tabriz is home to major reserves of oil, gas, and petrochemicals. Despite the US sanctions on Iran and its strong and explicit reservations, China will increase import of Iranian oil. Tabriz is also a connecting point between Iran and Turkey with the 2577 km long Tabriz-Ankara natural gas pipeline. In addition to these, a 628 km long Chabahar-Zahdan strategic railway line is yet another project which will eventually connect to Afghanistan. This project initially planned with India is facing controversies and delays at the moment and may probably be taken up by China. Other projects include development of ports, and investment in Iran’s banking, 5G network, and telecommunication sectors.
It is anybody’s guess that this partnership will have to face a number of challenges not just in terms of strong opposition from the US but also from the detractors who may not positively take China benefitting from Iran’s strategic location and natural resources, and may be intimidated by China’s growing influence in Iran with massive opportunity to exert influence in the Persian Gulf. Attempts will be made to sabotage the development projects. Keeping that in mind, China plans to position around 5000 Chinese security personnel for the protection of its planned projects in Iran.
As the groundwork for this partnership was initiated four years ago in 2016 when President Xi visited Iran, this shouldn’t really come as a surprise, neither to the regional states i.e. Israel, KSA and the UAE, nor to the extra regional stakeholders namely India and the US. The only surprise to look out for is when China and Iran would actually accomplish this feat, especially when the US strongly discourages any economic relief for Iran by the international community including China lest Iran consumes that for its Uranium enrichment activities.
China will have to face three major challenges: the finalization and implementation of deal will be in defiance of US’ opposition and sanctions on Iran, and hence will be under continuous castigation by the US; second challenge would be to mitigate apprehensions among the local Iranians as the leaked details were being kept secret from the Iranian Parliament and the people – hence, putting their doubts to rest and earning the local support by adding more transparency would be crucial in accomplishing the desired goals; and third and equally glaring challenge is to strike a balance between Iran and its other three (anti-Iranian) partners in the region. Even though China enjoys formal economic and military ties with KSA and UAE as part of “comprehensive strategic partnership” arrangement with them, this progression with Iran might provide them with enough rationale to severe ties with China. This will make China lose two major sources of its oil imports in the middle east and a substantial market for its arms. This may not happen abruptly, but the possibility cannot be ruled out. Israel is also observing the development with a great worry as any plan to prop up Iranian military and economy would be taken as strengthening Iran against Israel. China may not have this intension, but Iranian-Israel hostility may compel Israel to exercise all the possible political and diplomatic options to pressurize China, and if need be, explore asymmetrical tools to sabotage any development on the intended plan. Hence, a current low-level partnership between the two, wherein China is investing in Israel high-tech sector, may have to face some sort of friction. China will have to constantly walk a tight rope for its ambitious plans with Iran without jeopardizing its equation with the other three middle eastern partners. As China is already facing grievances in its neighborhood, troubles in the South China Sea and the Asia Pacific, it wouldn’t want the same pattern to be replicated in the Middle East.
However, this golden opportunity to expand influence, secure its access to resources in the Gulf and emerge as a real power at par with the US, are all too lucrative incentives for China to simply forego. The deal will allow China to build port at Jask (Hormozgan province of Iran) just outside the Strait of Hormuz, which is one of the world’s seven most important strategic choke points. 40 percent of its total 70 percent oil imports that comes from the gulf will be protected with China itself overlooking and maneuvering activities at Jask. Not only will this provide sufficient insulation against the US in the event of conflict/war, it will massively boost China’s geostrategic position in the region. For Iran also the opportunity to bring Caspian Sea oil and gas to the Southern Iranian ports through pipelines for export to Europe and Asia, makes this deal extremely worthwhile. Decades long economic suppression and the US sponsored isolation has made it desperate for a break. China has come with offering an economic lifeline which can just not be ignored by Iran.
One state which may immediately be impacted by the deal is India. The local Indian newspapers while flashing the prospective deal in all dailies reported that Iran may have dropped India from the Chabahar port project as well as the Chabahar-Zahdan railway line project. This is yet to be substantiated as no confirmed statements from either side have been issued. Nonetheless, Iran has voiced its agitation on the undue delays from Indian side for releasing the funds for railway project and completion of the port. US may have been the reason behind India’s tardiness, but both should keep in mind that Iran wouldn’t keep on waiting for ever for India especially when it has a ready option available to fund its projects. This would also be a huge loss for India, which could otherwise gain access to Afghanistan through Chabahar-Zahdan railway line bypassing Pakistan. This possible sidelining of India from the region should not be blamed on Iran or China but on its closest strategic partner; the US. It is the direct result of US economic stranglehold of Iran and immense pressure on India to stall developmental project with Iran. China having productive bond with Iran would also mean a conducive Iran along Pakistan’s border. This will further hurt India’s regional ambitions as it had been gradually increasing its foothold in Iran and Afghanistan with an aim to encircle Pakistan with hostile neighbors. However, in wake of increasing Indo-US economic and strategic partnership it doesn’t look likely that India will be resuming work on the stalled projects with Iran.
Also, the US is visibly worried about this evolving China-Iran axis. It had been intending to reduce its military presence in the region but may have to rethink its decision now to ensure its influences is not undermined with growing Chinese footprints. This will result in the US prolonging its engagement and exhausting its previous efforts. This also means, US dividing its resources at two fronts i.e. Asia Pacific and Persian Gulf. US also feels worried for the interests of its major Arab allies which perceive the deal will alter the regional status quo bringing Iran at par with them. China also plans to veto extension of US draft resolution of arms embargo against Iran which is set to expire in October. The military cooperation component of deal although claims to help Iran with fighting drugs, terrorism, and cross border crimes, it will enhance Iran’s capability to deal with its Arab neighbors and the US. Last but not the least it comes as a direct blow to the US prestige as a superpower as China and Iran would be able to undermine the US attempt to isolate Iran.
No doubt, with this massive investment, it is going to be the highest level of bilateral relations that China would have with any of its partners. However, this is not to suggest that it would undermine CPEC in anyway. Such notions quickly started doing rounds soon after the news broke as part of the negative propaganda against CPEC. But an objective analysis offers rather hopeful prospects. With China – a time tested and trusted partner of Pakistan – at the steering wheel for development projects in Iran, Pakistan can be more at peace. Instead of pitting Iran and Pakistan against each other, China instead will be safeguarding the interest of both. A prosperous and stable Pakistan with a peaceful and developed Iran would be highly conducive for its bigger BRI plan. Hence, any misleading claims about this partnership overshadowing or undermining CPEC are far from the truth. This may even allow the long-shelved Iran-Pakistan (IP) gas pipeline project to resume with China as the final destination. A formal trilateral partnership between China-Iran and Pakistan may not be ruled out.