May 18, 2021

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China will stay in Iran for 25 Years and invest $400 Billion

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Iran and China signed a 25-year agreement on cooperation for various areas. Reportedly, China will invest $400 billion
in Iran during this long period.

The deal was seriously criticized by the US. On the other hand, some Iranians are against
this deal which has a meaning of allowing China to be a decision-maker over all sectors in Iran. China and Iran, both subject to U.S. sanctions,
signed a 25-year cooperation agreement to strengthen their long-standing economic and political alliance.

Beijing has pledged to invest $400 billion
in Iran over 25 years in a deal that could see China’s economic, political, and military influence there and across the Middle East expand.

The accord brings Iran into China’s Belt and Road Initiative, a multi-trillion-dollar infrastructure scheme intended to stretch from East Asia to Europe.

The project aims to significantly expand China’s economic and political influence and has raised concerns in the United States.

Iran, China, and Russia have strained relations with Washington after President Joe Biden’s new administration vowed to remain firm in its dealings, despite a renewed emphasis on diplomacy.

Currently, Iran and China do about $20 billion in trade annually. That’s down from $52 billion in 2014 before
global oil prices declined and sanctions were imposed on Iran in 2018 by Donald Trump, who
pulled the United States out of a six-nation deal to restrain Iran’s nuclear ambitions during his time as president.

China became a lifeline for Iran’s economy, and ties between Beijing and Iranian political leaders have warmed in recent years, as both have grappled with intensified diplomatic and economic confrontations with the West. While the Chinese deal with Iran is about furthering Beijing’s regional and global ambitions as a leading power, they also undercut Washington’s efforts to keep Iran isolated and better position Beijing ahead of any future nuclear negotiations regarding Iran.

Neither the Iranian nor the Chinese government gave specifics about the agreement during the signing, but a leaked draft obtained by Western newspapers pointed to large investments in Iranian infrastructure. Shannon Tiezzi analyses this issue on the Diplomat website.

The agreement, dubbed the Comprehensive Strategic partnership, covers a variety of economic activity from oil and mining to promoting industrial activity in Iran, as well as transportation and agricultural collaborations, according to the report.

The deal also supports tourism and cultural exchanges. It comes on the 50th anniversary of the establishment of diplomatic relations between China and Iran. No additional details of the agreement were
revealed as Iran’s Foreign Minister Mohammad

Javad Zarif and Chinese counterpart Wang Yi took part in a ceremony marking the event. Wang was in Iran as part of a broader six-country tour of the Middle East, which also included stops in Saudi Arabia, Turkey, the United
Arab Emirates, Bahrain, and Oman. The deal marked the first time Iran has signed such a lengthy agreement with a major world power.

In 2001, Iran and Russia signed a 10-year cooperation agreement, mainly in the nuclear field, that was lengthened to 20 years through
two five-year extensions.

Before the ceremony of the deal, Wang met Iranian President Hassan Rouhani and a special Iranian envoy in charge of the deal Ali Larijani.

“No matter how the world situation changes, China’s willingness to develop China-Iran relations will not change,” Wang told Rouhani,
according to a summary from China’s Foreign Ministry.

He added,

“… The comprehensive cooperation
plan signed today will make an overall plan for promoting the China-Iran comprehensive
strategic partnership.”

Wang also made pointed comments about “unreasonable
unilateral sanctions imposed on Iran” and “the evil consequences of external interference on the regional situation,” clear references to the United States’ policy toward Iran.

Saeed Khatibzadeh, the spokesman for Iran’s
Foreign Ministry, called the agreement “deep, multi-layered, and full-fledged” the day before the signing.

The deal was first discussed during Chinese President Xi Jinping’s visit to Tehran in 2016 when he met with Iran’s Supreme Leader Ali Khamenei. But the planned agreement came under intense scrutiny last summer when a supposed draft of the deal leaked.

The documents claimed China was prepared to invest $400 million in Iran over the deal’s 25-year term, in exchange for unprecedented access to Iranian ports and islands That, in turn, sparked fears of lost sovereignty
among Iranians, where Chinese investment is a sensitive issue.

Importantly, the reported $400 million figure was not actually featured in the official announcements of the deal, though it appeared in several foreign media reports.

In fact, when Chinese Foreign Ministry spokesperson Zhao Lijian was pressed on the total amount of Chines investment he refused to answer. “The plan focuses on tapping the potentials in economic and cultural cooperation and charting course for long-term cooperation,” Zhao said.

“It neither includes any quantitative, specific
contracts and goals nor targets any third party, and will provide a general framework for China-Iran cooperation going forward.”

In other words, there may be less than meets
the eye in the agreement, at least in its current form. Bill Figueroa, a researcher specializing in China-Iran relations argued in a Twitter thread that the agreement was “not a big deal.”

Instead, it’s “an aspirational document” that “provides no methods for enforcement, measurable goals, or specific programs.” On the defense side, in particular, the specific areas for cooperation “are all things that already exist,” he noted, and are well inside
the norm of China’s engagement with other regional powers. China’s investment in Iran tells a similar story.

According to the China Global Investment Tracker, China’s investment in Iran from 2010 to 2020 amounted to $18.2 billion. During the same period, China invested $30.6 billion in Saudi Arabia and $29.5 billion in the United Arab Emirates.

While Beijing and Tehran find political benefits in touting their relationship, the actual results lag behind Chinese engagement with Iran’s Gulf rivals. “In short, this agreement represents an attempt to bring Sino-Iranian relations back in line with the rest of the Middle East,
rather than expansion beyond the norm for China’s engagement with the region,” Figueroa concluded.

The devil, as always, is in the details, and those apparently remained to be ironed out, in the form of specific contracts and plans for cooperation. Despite the fanfare surrounding the agreement, something is still holding China-Iran relations back – whether that’s Chinese reluctance to tangle with Iran’s sanctions-ridden economy, Iranian fears of lost sovereignty, the complex geopolitics of the Middle East, or a combination of all three.

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.

Iran has pulled away from restrictions imposed under the deal under those sanctions to put pressure on the other signatories — Germany, France, Britain, Russia, and China — to provide new economic incentives to offset U.S. sanctions.

It seems China will try to shape the regional politics in the Middle East and confront the US policies in the short and middle-term.


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