On the Trade and Military Agreement between Iran and China

On the Trade and Military Agreement between Iran and China Author: Vladimir Terehov for Journal NEO

In the last two or three months, leading media around the world have been paying attention to the “imminent” signing of a bilateral document, described as a Trade and Military Partnership, between China and Iran.

The New York Times claims to obtain “an 18-page proposed agreement”. This may well be the case, as the subject-matter of the partnership has been discussed in several recent meetings between the Foreign Ministers of China and Iran, both in person and via video conference.

The website of the Chinese Foreign Ministry describes the main content of one of those video conferences between the two foreign ministers, Mohammad Javad Zarif and Wang Yi, held on June 24. Their conversation appears to have focused on the harmonization of various elements of the future document. In early July, Zarif said that its development is “nearing completion.”

It should be noted that this process was initiated during the talks held in January 2016 between Chinese President Xi Jinping and his Iranian counterpart in Tehran, Hassan Rouhani. The full text of the “Joint Statement” which was adopted during those talks can be found here.

We need to stress the great importance of the (potential) signing of the Trade and Military Partnership between China and Iran, especially in the Greater Middle East region. After all, everything that happens in the GME is part of a broader political puzzle which is being put together in the Indian and Pacific Oceans (and in the global arena was a whole) before our eyes. NEO has focused on this process before in connection with the discussion of the motives for the murder of General Kassem Suleimani in January this year.

This central element of this process is the relations between the United States and China, taken as a whole, which are becoming increasingly confrontational.

The presence of other major global players, especially Russia, India, Japan, and the EU, is also very noticeable in the GME. Of course, the situation in this region is also influenced by important local powers such as Israel, Iran, Saudi Arabia, Pakistan, and Turkey.

For a relatively casual observer of events in the GME, the overall picture of what is happening here looks like complete chaos. One thing is certain: it is inevitable that, gradually, order will come to the region, primarily as a result of the growing importance of the factor mentioned above- namely the worsening relations between the two leading world powers.

The tensions caused by that confrontation are already transforming the situation in the GME, which is moving away from chaos and towards order. That said, the local people (and they are “fully independent members of the global community”) have had their freedom of travel considerably restricted. They will have to go where they are sent. One reason for this is the evident decline in the importance of the role of various international bodies representing native populations. This trend, incidentally, is already evident in recent developments relating to the Kashmir conflict.

It is against that background that the ongoing development of the Trade and Military Partnership between China and Iran, which began several years ago, needs to be considered.

Although Iran, as a regional power, retains a certain amount of freedom to maneuver, this freedom has sharply reduced as a result of both the factor mentioned above and Washington’s extremely hostile behavior towards Tehran.

It should be noted that although Tehran is moving rapidly closer to Beijing, Washington’s main competitor, it clearly has no intention of distancing itself from Moscow, its most powerful supporter in the international community. That is entirely consistent with the logic of the strategic partnership between Russia and China and Washington’s designation of that same trio – Beijing, Moscow, and Tehran – as its primary opponents (or even enemies). In fact, commentators tend to see the main principles in a proposed Trade and Military Partnership between China and Iran in the context of the political relations between China, Iran, USA and Russia.

According to the New York Times article cited above (which itself cites “two people who have been briefed on the deal”) “the Chinese investments in Iran would total $400 billion over 25 years.” The investments will be made primarily in Iran’s transport and communication infrastructure (seaports, airports, railways and modern communications lines) and the energy sector. China’s presence in Iran’s financial and banking system will also increase dramatically.

If that information is correct, it will mean that Iran is intended to be a central element in China’s global Belt and Road Initiative. So far, this role has been claimed by Pakistan, which is now de facto a critical military and political ally of China in the region. Readers may remember that during the Chinese leader’s visit to Pakistan in April 2015, an agreement was reached to set up a so-called China-Pakistan Economic Corridor (CPEC). About 3 thousand km long, this corridor link western China’s provinces with the Arabian seaports of Karachi and Gwadar. China is “modernizing” the latter port, (in reality, the port is being totally rebuilt) – a project that has been under way since the late 1990s.

At the time of the Pakistan visit, the total amount of Chinese investment in all CPEC projects was estimated at $46 billion. You only have to look at the figures in the New York Times article for the document that Iran and China are said to be negotiating in order to “taste the difference” as they say.

Regarding the document’s “military” component, the same newspaper restricts itself to vague statements. Among other things, it says that Iran (allegedly) agreed to allow China to build “dual-use” seaports, which will become an essential model for several similar structures in other countries, such as Pakistan and the Republic of Sri Lanka… Together, these facilities are designed to provide the Chinese Navy with the capability to safely operate a crucial trade route between the Persian Gulf and the east coast of Africa.

At first, India reacted rather nervously to the New York Times report on the upcoming agreement between China and Iran. Several aspects of the document gave India cause for concern that its (“historically close”) relations with Iran might be damaged. Of these, its main fear is associated with the prospect of the two countries ending in “different camps” that may form in the GME.

One specific result of that development would be the termination of India’s participation in the comprehensive modernization of the Iranian port of Chabahar, a project which is very important for India (from all points of view, including for military reasons) and the construction of a railway that will link it to Afghanistan. That in its turn will dramatically reduce India’s capacities in the upcoming confrontation with Pakistan for the Afghanistan’s future after the (Inevitable) US withdrawal.

But shortly afterwards, there were reports of a meeting in Tehran between the Indian Ambassador and the Head of the Islamic Republic of Iran Railways. At the end of the meeting, the participants expressed satisfaction regarding India’s participation in the construction of Iranian railways “from West to East and from South to North.”

On the subject of Iran and India, it should be noted that, even more than Iran, India retains (some) freedom of maneuver within the “force field” of the tensions between the two leading world powers. But it is unable to avoid the US’s influence altogether, as is clear from the unmistakable “pro-American” trend in its recent foreign policy.

In strategic terms, the significance of the “information leaks” about the proposed agreement between Iran and China remains rather unclear. It is possible that certain factors which were overlooked during the Iran-China summit of 2016 but which became evident during the implementation of the summit’s main achievement have delayed the entire negotiation process.

The statements made by Iranian Ambassador to Pakistan about the possibility of building “the Golden ring”, including China, Iran, Pakistan, Russia, and Turkey – but with no mention of India – but with no mention of India – therefore seem premature.

Commentators also note the presence of certain elements within Iran that disagree with the format and scope of the agreement that Iran is discussing with China. Those elements include the former President, Mahmoud Ahmadinejad, and, supporting him, the son of the former Shah of Iran, now living in the United States. The latter’s stance caused considerable surprise, since the heir to the Iranian throne does not recognize the ruling “clerical regime.” In the present case, these two “antagonists” were united by their rejection of the potential agreement that would (they claim) cause significant damage to Iran’s autonomy.

It should be added that similar concerns are – no doubt – also felt in the country where the son of the former Iranian monarch now resides.

All we can do is wait and watch the development of the diplomatic imbroglio sparked off by a far-from-typical American newspaper’s report claiming that China and Iran have negotiated the terms of the agreement on “Trade and Military Partnership”.

Vladimir Terehov, expert on the issues of the Asia-Pacific region, exclusively for the online magazine “New Eastern Outlook”.

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