China and Iran: 25-year Strategic Partnership

In January 2016, just as sanctions were eased, Chinese President Xi Jinping visited Tehran and proposed a long-term comprehensive, strategic partnership programme that would involve Chinese investment in Iranian infrastructure and assured supplies of Iranian oil and gas at concessional rates. Reluctant to be tied into too close a Chinese embrace, Iran kept the negotiations going for years.

The partnership — first proposed by China’s leader, Xi Jinping, during a visit to Iran in 2016 — was approved by President Hassan Rouhani’s cabinet in June, Iran’s foreign minister, Mohammad Javad Zarif, said.

This reported a 25-year deal – which has political, economic, and security dimensions – and the negotiations around it have important economic and geopolitical implications.

Under the terms of the deal, details of which have been published in the New York Times, Iran could receive as much as $400 billion in Chinese investment over the next quarter of a century.

The agreement, which a senior aide to Iranian President Hassan Rouhani said should be signed by March next year.

Iran and China have quietly drafted a sweeping economic and security partnership that would clear the way for billions of dollars of Chinese investments in energy and other sectors, undercutting the Trump administration’s efforts to isolate the Iranian government because of its nuclear and military ambitions.

The partnership, detailed in an 18-page proposed agreement obtained by The New York Times, would vastly expand Chinese presence in banking, telecommunications, ports, railways, and dozens of other projects. In exchange, China would receive a regular — and, according to an Iranian official and an oil trader, heavily discounted — supply of Iranian oil over the next 25 years.

The document also describes deepening military cooperation, potentially giving China a foothold in a region that has been a strategic preoccupation of the United States for decades. It calls for joint training and exercises, joint research, and weapons development, and intelligence sharing — all to fight “the lopsided battle with terrorism, drug and human trafficking, and cross-border crimes.”

“Two ancient Asian cultures, two partners in the sectors of trade, economy, politics, culture and security with a similar outlook and many mutual bilateral and multilateral interests will consider one another strategic partners,” the document says in its opening sentence.

“Iran and China both view this deal as a strategic partnership is not just expanding their own interests but confronting the U.S.,” said Ali Gholizadeh, an Iranian energy researcher at the University of Science and Technology of China in Beijing. “It is the first of its kind for Iran keen on having a world power as an ally.”

Ultimately, however, the final call on Iran’s participation in the deal will be made by the supreme leader.

The expansion of military assistance, training, and intelligence-sharing will also be viewed with alarm in Washington. American warships already tangle regularly with Iranian forces in the crowded waters of the Persian Gulf and challenge China’s internationally disputed claim to much of the South China Sea, and the Pentagon’s national security strategy has declared China an adversary.

“China and Iran enjoy traditional friendship, and the two sides have been in communication on the development of bilateral relations,” he said. “We stand ready to work with Iran to steadily advance practical cooperation.”

The projects — nearly 100 are cited in the draft agreement — are very much in keeping with Mr. Xi’s ambitions to extend its economic and strategic influence across Eurasia through the “Belt and Road Initiative,” a vast aid and investment program.

The projects, including airports, high-speed railways, and subways, would touch the lives of millions of Iranians. China would develop free-trade zones in Maku, in northwestern Iran; in Abadan, where the Shatt al-Arab river flows into the Persian Gulf, and on the gulf island Qeshm.

The agreement also includes proposals for China to build the infrastructure for a 5G telecommunications network, to offer the new Chinese Global Positioning System, Beidou, and to help Iranian authorities assert greater control over what circulates in cyberspace, presumably as China’s Great Firewall does.

A particular western concern has been the proposed port facilities in Iran, including two along the coast of the Sea of Oman.

One at Jask, just outside of the Strait of Hormuz, the entrance to the Persian Gulf, would give the Chinese a strategic vantage point on the waters through which much of the world’s oil transits. The passage is of critical strategic importance to the United States, whose Navy’s Fifth Fleet is headquartered in Bahrain, in the Gulf.

Ayatollah Khamenei’s top economic adviser, Ali Agha Mohammadi, appeared on state television to discuss the need for an economic lifeline. He said Iran needs to increase its oil production to at least 8.5 million barrels a day in order to remain a player in the energy market, and for that, it needs China.

Iranian supporters of the strategic partnership say that given the country’s limited economic options, the free-falling currency and the dim prospect of U.S. sanctions being lifted, the deal with China could provide a lifeline.

Ali Aqa-Mohammadi said a pending roadmap for the strategic partnership between Iran and China is to help ditch the dollar in bilateral trade and bypass illegal and unilateral US sanctions.

The official said the partnership roadmap solidifies the two countries’ economic and defensive cooperation by protecting their dealings from “third-party intervention.” It would “close up and eliminate the key spots,” where sanctions, including those targeting defense cooperation between the two countries, could be implemented, he noted.

“The US doesn’t want the sanctions to be relieved,” Aqa-Mohammadi said. “This document upsets the sanctions and the Iran-China roadmap disarranges many of the US plans.”

“Every road is closed to Iran,” said Fereydoun Majlesi, a former diplomat and a columnist for several Iranian newspapers on diplomacy. “The only path open is China. Whatever it is, until sanctions are lifted, this deal is the best option.”

On July 21, Iran’s ambassador and permanent representative to the United Nations says the long-term deal that awaits finalization between the Islamic Republic and its Asian ally, China, is nothing out of the ordinary and stems from age-old relations between the two countries. Majid Takht Ravanchi said relations between Iran and China “go back centuries,” adding, “So, it is natural for these two countries to get together, to discuss different issues, [and] collaborate on many issues of interest to both sides, including in the field of economy.”

“So the agreement between Iran and China is not something unusual. We are in the process of finalizing the deal, which affects both countries,” as it “deals with many issues of interest for both sides and I think it is natural for … two countries to sign such an agreement provided that this is something necessary for two sides,” Iran’s envoy said.

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In May, the U.S. announced that it wanted the UN Security Council (UNSC) to continue the ban on Iranian acquisition of conventional weapons. UNSC Resolution 2231 was adopted in July 2015 by consensus to endorse the JCPOA and contains a five-year restriction on Iran’s importing conventional weapons that end on October 18. Even though the U.S. unilaterally quit the JCPOA, it is threatening to invoke the automatic snapback of sanctions provisions of JCPOA. The United Kingdom and France have criticized the U.S.’s duplicity but are unlikely to exercise a veto. At the same time, Iran hopes that November may bring about a change in the White House that opens options for dialogue.

“Such agreements are fully in the line with Iran’s publicly declared ‘Look East Policy’ and suggest that Iran is determined to expand its relations with all Asian partners and in particular China and India as two friendly countries.

As part of the deal negotiated with Beijing, China is to be allowed access to a number of Iranian ports, including Chabahar, with the Chinese reported to be planning to build a new military base in the vicinity of the port.

This article was edited using the data from the aljazeera.com, presstv.com, and https://www.nytimes.com.