Now that China has brokered a renewal of relations between Iran and Saudi Arabia, it must translate that achievement into real tangible benefits. After all, for Beijing, the Middle East represents a huge sunk cost. Although its overall Belt and Road Initiative (BRI) investments declined from $60.5 billion in 2020 to $59.5 billion in 2021, they increased in the Middle East, with Iraq securing the largest BRI share, at about $10.5 billion. In 2022, China had some 6,000 businesses in the United Arab Emirates, while the UAE, Israel, and Saudi Arabia were top targets of Chinese firms foreign investment and stock flows. During President Xi Jinping’s December 2022 visit to Saudi Arabia, China reportedly signed some $50 billion worth of new trade deals with Gulf states, $30 billion of which were with Riyadh. Forged in the context of a “comprehensive strategic partnership” between the two countries, these deals seemed to bode well for China’s role as a regional peacemaker.
The problem for China—and for the United States as well—is that the renewal of Iran-Saudi relations provides no obvious path to addressing Iran’s nuclear program and its security implications for the entire region. A March 23 drone attack by pro-Iranian forces on a US military installation in eastern Syria, which killed an American contractor and wounded five US troops, illustrated these high stakes. The US missile strike that was carried out the next day after a second drone attack wounded another US service member underscored President Joe Biden’s promise that the US would “act forcefully” to protect its forces. But it also provided a dramatic reminder of one imposing fact: absent effective measures to halt or reverse Iran’s expanding nuclear enrichment program, the simmering conflict pitting Israel and the United States against Iran and its regional non-state allies could boil over into a wider military conflict. Apart from its human consequences, this conflict could have untold economic costs, not only for China but for the entire global economy.
When such a conflict might explode is anybody’s guess. With Israel’s domestic political struggles likely diminishing its capacity to project military clout, Iran might be emboldened. Still, Iran and the United States have no interest in allowing a local shooting match to escalate into a wider war. On the contrary, with the Iran nuclear agreement, officially titled the Joint Comprehensive Plan of Action (JCPOA), all but dead, whatever diplomatic avenues that do emerge for preventing a regional conflagration must be explored. The question facing the United States and China is whether they can find common ground, or whether their core relations will instead drift toward a new cold war that inhibits any kind of effective cooperation on the nuclear issue. Iran is probably betting on the latter possibility.
Iranian Enrichment and IAEA Concerns
For the moment, the prospects for a sustained diplomatic process either within or outside the JCPOA framework look slim. One measure of this grim reality is that the Biden administration has embraced a policy of deterrence that seeks, first and foremost, to contain Iran’s regional clout rather than address its nuclear program. By design or default, this focus on Iran’s “malign behavior” has postponed a more fundamental strategic choice between negotiating with Iran and using military force. Indeed, as recent events in Syria show, the problem with this deterrence strategy is that it is vulnerable to a dynamic of military escalation sparked either by miscalculation or by the calculated sabotage of parties inside or outside Iran that are opposed to diplomacy.
This situation explains the growing urgency of the International Atomic Energy Agency (IAEA), whose officials are warning that Iran is very close to obtaining weapons-grade enriched uranium. While it may be a good two years or more away from weaponization, the level of enrichment that Iran may have already attained could eventually provide a diversified “second strike” capacity. This is the necessary if insufficient condition for creating a robust nuclear weapons program that would provide the kind of deterrence that other nuclear powers, such as North Korea, have already achieved. Knowing this, Israel and/or the United States will be forced to act.
It is precisely the dangers of drifting into a military confrontation—one that many military experts argue will not necessarily end Iran’s nuclear ambitions—that have recently prompted the IAEA to address a long-standing conflict with Tehran regarding the discovery in 2019 of traces of enriched uranium at undeclared sites. When the IAEA in June 2022 passed a resolution censoring Iran for its failure to provide information to the organization to safeguard the investigation, Iran disconnected many of the surveillance cameras the IAEA had been using to monitor its enrichment program. This was more than a year and a half after Iran had already suspended the “additional protocol” that, under the umbrella of the JCPOA, provided for what a November 2022 Arms Control Association report noted was the “most intrusive verification regime ever negotiated.” Not being subject to the JCPOA’s “sunset provisions,” the additional protocol would not expire so long as Iran allowed its enforcement. Perhaps paradoxically, Iran’s decision to limit surveillance gave Tehran more space to pursue enrichment, thus heightening international concerns about its nuclear program.
By the close of 2022 these worries had multiplied as Iran reached 60 percent enrichment and, according to the IAEA’s estimates, had apparently amassed enough material for several nuclear weapons. This development undercut the assumption (or the hope) of many experts that the purpose of Iran’s enrichment program was to increase its bargaining leverage in any bid to revive the JCPOA, rather than to create an offensive nuclear capacity. But by 2023, Iran’s push to nearly 84 percent purity—combined with existing concerns about its covert weaponization efforts—suggested that Tehran’s pressure tactics had gained a potentially unstoppable strategic momentum of their own. Against the backdrop of the now failed effort to revive the JCPOA, growing concerns about a wider military confrontation prompted discussions both within and outside the Biden administration about pursuing more modest confidence-building measures.
The IAEA and “Less for Less”
Elements of this “less for less” approach had already been set out in several policy papers. Its core proposal called for an initial stabilizing agreement that would allow for the resumption of the IAEA’s monitoring and verification measures, including cameras and inspections, in return for a limited suspension of sanctions on Iran’s oil sales to Europe. In a bid to test the waters, in early March 2023, IAEA Director General Rafael Grossi visited Tehran. His talks with Iranian leaders initially seemed to have made some progress. Iran, Grossi stated, had agreed to restore monitoring equipment and to increase inspections at the Fordow enrichment site. Moreover, in a joint statement with the IAEA, Iran promised to “provide further information” on the trace uranium question about which the agency had been asking since 2019.
But the guarded optimism generated by these small steps was soon mitigated by the concerns of US, Israeli, and IAEA officials that Iran was only stalling for time. After all, Tehran had made these promises only days before the meeting of the IAEA’s Board of Governors—and just a short time after IAEA inspectors reported that enrichment had reached 83.7 percent. This sequence of events strongly suggested that Iran’s seemingly forthcoming position in talks with Grossi did not represent a change in its position, but rather was calculated to induce the IAEA to retreat from proposing a new UN resolution that would censure Iran for not cooperating with its investigations. The subsequent decision of the board not to censure Iran seemed to justify these suspicions.
Israel, Iran, and China: A Dangerous State of Flux
Indeed, Israeli leaders and experts mocked the expectation that Iran would adhere to its commitments to Grossi, and lambasted the failure of the IAEA to censure Iran. Moreover, they firmly repudiated Grossi’s statement—made while he was visiting Iran—that “any military attack on nuclear facilities is outlawed.” Grossi, Prime Minister Benjamin Netanyahu said, “is a worthy person who made an unworthy remark.” Although predictable, Netanyahu’s remarks suggested that Israel might take matters into its own hands, unless the international community can compel Iran to stop, reverse, and eventually dismantle its nuclear enrichment program.
As international concerns about the ultimate purpose of this program grow, Iran’s own leaders and experts are apparently debating the security implications of pushing toward weaponization, the very pursuit of which could invite a military attack on the country. Reports on Iran’s enrichment activities, one former diplomat warned, might be the western countries’ attempt to “justify measures that they may want to take, similar to what happened in Iraq or Yugoslavia.” Such warnings have been sounded against the backdrop of a wider debate about Iran’s support of Russia’s invasion of Ukraine, an act that, in the words of one conservative Iranian newspaper, has “endangered global peace.” Echoing these views, Iran’s former ambassador to France argued that Iran should stay out of the Ukraine conflict.
Still, such concerns have not dissuaded Iran’s leaders from pursuing a diplomatic strategy designed to win as many friends as possible. Thus, while Iranian Supreme Leader Ali Khamenei has emphatically denied that Iran is supplying drones to Russia, in a major speech that he gave ten days after Iran’s China-brokered renewal of relations with Saudi Arabia, he boasted that US officials are “confused about whether or not they should stay in the region,” and celebrated what he called the “failure” of Iran’s “enemies” to isolate it. For Khamenei, China’s role in the Middle East shows that his “eastern” policy is succeeding.
China’s leaders have every reason to confirm this conviction. But the absence of any progress on the Iranian nuclear issue still represents a potential and even a growing threat for Beijing. During his February visit to Tehran, Xi promised that China would “participate constructively” in international efforts to revive the nuclear negotiations. But he also promised to support Iran in its “resisting unilateralism and bullying,” thus signaling China’s desire to lead a new alignment of states pushing to limit western, and especially US power.
Whether China can balance these two potentially conflicting global impulses is a key question it must confront in the Middle East, and far beyond as well. As Middle East nuclear diplomacy falters and the prospects for military confrontation grow, Beijing may have to revise some of its previous positions, such as demanding that the US lift sanctions as a prelude to any concessions from Iran, or opposing a new IAEA resolution on Iran’s nuclear program. Iran is betting that Beijing will support its battle against “US hegemony,” but probably underestimates China’s abiding and very concrete diplomatic and economic interest in assuring that the region does not drift into a costly war.
Can the US and China Get Along?
The US shares this interest in avoiding war and nuclear proliferation. But in the context of what appears to be a new cold war that has accelerated with Beijing’s diplomatic (and potentially military) support for Russia’s war in Ukraine, it is not easy to see how the Biden administration will be able to garner the support of China (much less Russia) for a diplomatic strategy that will move beyond the White House’s reliance on a policy of “deterrence” that has not yet succeeded in deterring Iran’s nuclear program. Having repeatedly identified China as the number one threat to the “global order,” the Biden administration may have boxed itself in in a manner that echoes the dilemmas and constraints that Xi’s hostility to the United States has created for his own country.
Whether there is a way out of these intersecting quandaries will partly depend on the trajectory of the war in Ukraine, not to mention rising tensions between the United States and China regarding Taiwan. On Ukraine, some China observers have reported growing—if behind the scenes—criticism within the country’s ruling elite of the ultimate costs that Beijing might have to pay for its support of Russia. For China, a sense of buyer’s remorse could increase, especially if Putin introduces tactical nuclear weapons into the equation. As for the Biden administration, despite its warnings about China, officials from the president on down insist that they want a constructive relationship with Beijing that includes cooperation on issues of common interest.
China’s central role in brokering the renewal of Saudi-Iran relations could give Beijing an opening to signal to Washington (and Israel) its readiness to expand its peacemaker role in the Middle East in ways that would speak to the shared interests of both countries. But China may be unwilling to risk taking the positions that such a role would demand, while its ideological impulses might ultimately outweigh its huge investments in a region where multiple and converging conflicts are still the order of the day.
This piece has been republished with permission from Arab Center Washington DC.
