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The Iran-China agreement: Inconsequential or a game changer?

With the future of the JCPOA in flux, the Chinese appear to be stepping in to fill the void.

Analysis | Middle East

After a nearly two-year delay, on Saturday March 27 during the visit of Chinese Foreign Minister Wang Yi, Iran and China signed the 25-year Comprehensive Agreement on Economic, Political and Cultural Cooperation. This event generated a great deal of attention and controversy both inside Iran and globally.

Within Iran, the debate has centered on the costs and benefits of the agreement, which remains short on details. Those in favor of the agreement argue that, if implemented, it could advance Iran’s development by providing large-scale Chinese investments in infrastructure, especially road and rail, and energy, and by making Iran an integral part of China’s globe-spanning, trillion-dollar Belt and Road Initiative. The supporters of the deal also maintain that it could help reduce the impact of U.S. sanctions on Iran and enhance its regional and possibly even international bargaining power.

Indeed, while at this stage it is difficult to evaluate the deal’s economic impact, it appears that the agreement has already improved Iran’s regional position. For example, the signing of the deal prompted India to declare  its eagerness to increase economic and trade relations with Tehran. In the last several years, despite Iran’s own enthusiasm for upgrading its economic links with India, Delhi has moved slowly in this direction. Now, however, India, fearing China’s domination of Iran, may well be more forthcoming about increasing its investment in the Chabahar port and possibly in other projects.

Pakistan and Afghanistan have also taken notice. The Afghan government and its president,  Ashraf Ghani, have often gone out of their way to antagonize and even insult Iran. The latest incident came when Ghani, ignoring the 1972 agreement regarding the apportionment of Helmand waters originating in Afghanistan, said that Kabul was ready to exchange water for oil in defiance of the nearly 50-year-old accord. Should China develop a true strategic relationship with Iran, neighboring states would have to review their often-hostile attitude towards Tehran, not only because Iran would likely gain a stronger economic position, but also because they would have to take account of Beijing’s disapproval.

Internationally,  with tensions rising between China and the West, closer China-Iran relations may push European states, and possibly even Washington, to moderate their own policies towards Tehran, perhaps adding to pressure on the Biden administration to expedite a return to the JCPOA and lift sanctions imposed on Iran. Western nations must be concerned that a more strategic tilt by Iran, which the deal makes more likely, will reduce their own influence, at least in the short to medium term.

The deal’s opponents in Iran and the Iranian diaspora, citing the dearth of details about the deal, fear that the allegedly extensive concessions given by Tehran to Beijing might turn Iran into a Chinese colony. There has been speculation that Iran may have agreed to lease or even surrendered some islands to China — a charge that has been explicitly denied by the government — or that Chinese military forces  might be stationed in Iran.

In response to these concerns, the government’s spokesman, Ali Rabiei, stated that the reasons for keeping the details secret are twofold: one, because the agreement is not a treaty and could only take legal effect if parliament approves it. He described it rather as a roadmap for cooperation. Second, the Chinese have requested that the details remain confidential due to their concern over Washington’s possible reaction.

As long as the full details of the agreement remain under wraps, and, more important, as long as it remains merely aspirational, it will be difficult to determine whether it can serve as Iran’s savior or as a Trojan Horse for possible hegemonic  ambitions on Beijing’s part.

What is indisputable at this stage, however, is that Western policies towards both Iran and China have brought them closer together. In particular, the Biden administration’s hesitation in returning to the JCPOA and its hardline approach towards China, have prompted Beijing to risk angering Washington by publicly signing the agreement.

As long as Beijing hoped for improved relations with Washington, it was reticent about signing the agreement. It has perhaps now concluded that improvement in Sino-U.S. ties, at least in the near future, is not in the cards. Therefore, Beijing is trying to show the United States that it can cause difficulties for it in key strategic regions like the Persian Gulf.

China might also have concluded that Persian Gulf Arab states, four of which were included on the Chinese foreign minister’s tour through the region, will remain dependent on Washington and some European states for the foreseeable future. Turkey, which the Chinese foreign minister also visited, is likely to remain part of the Western alliance despite its ongoing tensions with its NATO partners. Moreover, Turkey lacks any land connection to key parts of the BRI project.

With its energy and other resources, large potential market, but, most important, its unique strategic position astride the Persian Gulf and the South Caucasus, as well as its borders with Afghanistan, Central Asia and the Indian sub-continent via Pakistan, Iran combines all that China needs. In fact, Iran could potentially become China’s single most important geostrategic partner in West Asia.

The risk for Iran, especially in the absence of improved relations with the West, is finding itself over-dependent on China. Many in Tehran are aware of this possibility. Thus, some have emphasized that relations with China must not come at the expense of ties with the West, especially Europe. Rather, as noted by the head of the association of Tehran’s Majles deputies, Hojat ul Islam Seyyed Reza Tagavi, the agreement with China should be used above all as leverage with the West. He cautioned that the agreement with Beijing should not be seen as a substitute for the JCPOA.

If the West, especially the United States, wants to balance China’s potential presence and influence in Iran without engaging in a zero-sum game, it should begin to look on Iran as a key part of a broader geographical context rather than merely through the prism of Middle East politics and the Persian Gulf. It should also realize that in a changed international environment Iran has some options beyond the West.

Image: Jay Yuan via
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