Iran-China comprehensive strategic partnership from perspective of economic diplomacy

April 26, 2021 - 13:33

TEHRAN- On March 26, 2021, Iran and China signed an agreement expressing a desire to increase cooperation and trade relations over the next 25 years.

This agreement was signed during a two-day diplomatic visit of Mr. Wang, the Chinese minister of foreign affairs to Tehran. Although, both sides have admitted that the plan contains no “quantitative, specific contracts” and is a “non-binding document”, in long-term this strategic partnership can benefit both sides. The text of the agreement has not yet emerged, and likely will not be published, so all analysis must be tempered with caution. However, a draft of the agreement leaked last summer, and it is unlikely the text substantially changed in the intervening six months.

Under the agreement, the Chinese will invest heavily in Iran's oil industry, the National Iranian Gas Export Company and the National Iranian Petrochemical Company, as well as Iran's transportation infrastructure. On the other hand, the agreement will include military, armaments and intelligence cooperation between the two countries.

“China firmly supports Iran in safeguarding its state sovereignty and national dignity,” Mr. Wang said in his meeting with President Hassan Rouhani. The United States, Mr. Wang said, should immediately rescind its sanctions on Iran and “remove its long arm of jurisdictional measures that have been aimed at China, among others.”

“All the parties can consider an approach of synchronized reciprocity, creating a road map for restoring observance of the agreement,” Mr. Wang said in the talks with his Iranian counterpart, Mr. Zarif. “There can be efforts to achieve initial gains, creating the conditions for re-launching the whole agreement.”

Comprehensive strategic partnership from the perspective of economic diplomacy

With the collapse of the Soviet Union and the end of the bipolar system, the United States claimed the position of unrivaled power and the most powerful government in the international system to present itself as an actor capable of directing international rules and procedures alone. However, by challenging the United States, other major global and regional powers continued their efforts to change this situation with long-term and strategic planning at the regional and global levels. In recent decades, the United States has been pursuing sanctions, soft war, economic war, and proxy war strategies in West Asia especially against Iran to prevent it from playing a significant role in political and economic arenas in the region. Also, with the emergence of a multipolar structure, China was able to introduce itself as one of the main powers and actors of the international system, and in this regard, continuously and gradually increasing its capabilities in the economic, military, political and cultural fields, which can be considered as a threat to the U.S. hegemony in the region.

From regional perspective, the Shanghai Cooperation Organization (SCO) and the 25-year program with Iran are part of the Belt and Road Initiative (BRI), so it is likely that in the near future Iran's request for permanent membership will be repeated and will be accepted by all its members. The program will ease and facilitate it. The program also will unite the interests of SCO member states in many areas.

It is undeniable that without the active presence of Iran and its role as the link between East and West in China's plan, achieving the intended goals in reviving the Silk Road will be difficult and unattainable, and China has understood this well. Because in both land and sea routes, Iran's geopolitical position on the Silk Road is vital. Iran's role in economic relations, because of the geopolitical situation of the region, the transportation route of Central Asia, facilities and infrastructure such as Sarakhs-Tajan-Mashhad-Bandar Abbas and the ports of Chabahar and Bandar Abbas, can be very effective.

Many countries in Central Asia are land-locked countries, so based on Belt and Road Initiative, Iran inevitably is considered one of the access routes to High Seas. Therefore, Iran can provide better transportation, better and more access to the Persian Gulf by strengthening and developing communication infrastructure. In other words, Iran is their connection point to High Seas. The importance of the Central Asian countries in Iran's international trade discourse and also the strategic importance of Iran in China’s economic plan has paved the way for Iran's permanent accession to the Shanghai Cooperation Organization (SCO).

The Islamic Republic of Iran presents a serious challenge to U.S. interests in West Asia. The most important concern for U.S. policymakers, however, is Iran’s suspected pursuit of a nuclear weapons capability. The United States and its allies have sought to dissuade Iran from developing a nuclear weapons capability through a combination of sanctions and engagement.

Reportedly, Iran and China have done some $20 billion in trade annually in recent years. That’s down from nearly $52 billion in 2014, however, because of a decline in oil prices and U.S. sanctions imposed in 2018 after then-President Donald Trump pulled the U.S. unilaterally out of a nuclear deal between Iran and world powers, saying it needed to be renegotiated.

The documents claimed China was prepared to invest $400 million in Iran over the deal’s 25-year term. According to the document, China will be a regular importer of oil from Iran, although for the time being, despite the U.S. sanctions and pressure, Beijing continues to buy Iranian oil. Another advantage of the 25-year agreement with China for Iran is that it will ultimately increase Iran's oil and gas production in the country's three key fields. China has agreed to accelerate the development of phase 11 of the South Pars gas field. China National Petroleum Corporation (CNPC) boosted its stake in the South Pars development project to 50.1 percent from 30 percent when France left Iran due to sanctions.

Indeed from Beijing’s perspective, Iran serves as an important strategic partner and point of leverage against the United States. Iran possesses vast reserves of oil and natural gas that could help fuel China’s development, and Iran is also a growing market for Chinese goods. This means the necessity of strong bilateral political and economic interdependence for both sides.

Benefits of comprehensive strategic partnership for Iran:

* Improving and developing the export situations;

* Development of domestic industries;

* Neutralization of the U.S. unilateral sanctions;

* Increase the efficiency of oil and gas resources;

* Utilizing China's influential presence in economic organizations and institutions;

* Improving the economic situation;

* Repelling security threats;

* Buying and selling military and defense weapons; and

* Expansion of economic diplomacy.

Benefits of comprehensive strategic partnership for China

* Maximizing China’s economic interests in West Asia;

* Expansion of its political and economic presence in the region;

* Continuous economic development;

* Utilizing Iran’s energy resources in order to decrease its dependence to other energy markets especially Arabic countries (which are mostly in western bloc);

* Iran’s undeniable geopolitical position for Chia to have access to Europe;

Finally, considering in mind the goals and benefits of this strategic program, it can be concluded that, both sides will enjoy it, as well as, they will be able to fulfill their regional and international objectives. Now, Iran’s successful experience of cooperation with Russian Federation in Syrian crisis by introducing parallel and common interests, can happen in the form of strategic partnership with China. It can be said that, this program in long-term will promote Iran’s regional and international level.

By Peyman Hassani & Amir Hossein Arabpour

Researchers of the Institute for Economic Diplomacy Studies, Imam Sadiq University

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