Follow us on:   

Iran not likely to back away from China, but …
January 24, 2016, 8:14 pm

Chinese President Xi Jinping’s visit to Iran this week after the implementation of the Joint Comprehensive Plan of Action (JCPOA) – also known as the Iran nuclear deal signed in Vienna last July – paid off big time.

Not only was Xi the first foreign leader to stop by since the Iran Deal went into full effect with the lifting of sanctions last week, but he left Tehran with 17 signed accords under his belt and agreements to increase bilateral trade to $600 billion during the next decade.

China appears to be taking a cue from Russia: President Vladimir Putin also visited Iran in November to attend the Gas Exporting Countries Forum and while on the sidelines, cemented some economic opportunities pre-sanctions removal.

With Western companies scrambling to hit the biggest economic gold mine in decades, it comes as no surprise why Xi added Iran to his Middle East tour, especially since the last time a Chinese president stopped in Tehran was in 2002.

Iran is not ready to forget how China and Russia helped Tehran in a time of need and will continue to rely on both nations [Xinhua]

Iran is not ready to forget how China and Russia helped Tehran in a time of need and will continue to rely on both nations [Xinhua]

Russia and China were major players in the Iran Deal as party to the P5+1 negotiations – the five permanent members of the United Nations Security Council plus Germany.

Even US President Barack Obama admitted Moscow’s importance in the nuclear talks: “we would have not achieved this agreement had it not been for Russia’s willingness to stick with us.”

For years, both China and Russia were trade partners with Iran, cooperated with energy development, and even shared geopolitical interests in the region. With the Iran Deal, some wondered if opening Iran to the west would cast aside these two long-term allies.

The truth is the Iran Deal will prove to be a double-edge sword for Moscow and Beijing.

Imperial tussle

Contrary to what some believe, there is a contentious Russian-Iranian relationship. This dates back to as early as the 19th century when Iran – then known as Persia – lost territory to Imperial Russia.

Problems particularly came about with the rise of the Soviet Union; these included supporting Iranian Azerbaijan and the occupation of northern Iran during World War II. After the 1979 revolution, the Soviet Union backed Iraq’s Saddam Hussein during the 1980-1988 Iran-Iraq War. It wasn’t until after the fall of communism that Tehran and Moscow’s relationship finally began to thaw, although quietly there continues to be some distrust.

Russia’s state nuclear energy company Rosatom helped build Iran’s Bushehr nuclear power plant – albeit with much delay.

Moscow also intends to build more nuclear power plants in the future, in addition to exporting nuclear technology to Tehran.

In April 2015, Russia removed its self-imposed ban on selling surface-to-air missiles (S-300) to Iran, likely in an effort to be ahead of the post-sanction competition and boost its own sanctions-hit market in the wake of the Ukraine crisis.

Although Russia, along with China, voted in favor of multilateral sanctions on Iran in 2010, Moscow proved to be a crucial player during the Iran nuclear talks, by allowing Tehran to swap low-enriched nuclear material in return for natural uranium per the JCPOA.

It’s not Iran’s nuclear program that is a threat to Russia, but Tehran’s return to the world economy.

Their reemergence comes at a cost for the Kremlin. Iranian gas and oil re-entering the international market threatens Russia’s cash-strapped economy, already reeling from plummeting global demand and prices.

According to Brookings fellow Pavel Baev, “The Chinese wanted the (Iran nuclear) deal for their own reasons and Vladimir Putin, for all of his bluster, is in no position to resist them.”

Indispensable ally?

Sino-Iranian ties pre-date U.S. President Richard Nixon going to China. However, since the 1979 revolution, Beijing proved to be an indispensable ally when it collaborated with Tehran on the Joint Committee on Cooperation of Economy, Trade, Science and Technology.

The initiative offered energy, building material, machinery, mining, and transportation. China even went as far as providing everything from weapons to components to Iran’s nuclear program.

As sanctions amplified, Tehran became heavily reliant on China to withstand the impact of the punitive measures.

But during the sanctions regimen, relations with Beijing became complicated due to Iranian businesses’ dissatisfaction with Chinese services, citing increasing prices and delayed delivery on items.

Still, Iran also managed to benefit by selling oil to China, its largest buyer during sanctions. Chinese oil companies like Sinopec were also some of the only companies working after everyone else left.

China very much depended on Iran for an energy source. As a result of the growing discontent, Iran’s former Deputy Economic Minister Safaei Farahani said, “What is definite is that the speed of growth of trade with China will decrease as of 2017, when the risks of business with Iran will decline, and hence there will be less room for China to maneuver.”

This comes as no surprise since European companies with superior technology to China are expected to dominate the market.

Nevertheless, the Iran Deal isn’t necessarily a bad thing for China.

President Xi’s 2013 initiative “One Belt, One Road” (also known as the Silk Road Economic Belt) sees connections from East Asia extending to Europe through the Middle East and Central Asia.

Iran’s strategic location on the Silk Road is a linchpin to Beijing’s initiative, particularly due to its access to the Caspian Sea and Persian Gulf, which falls under the guise of its 21st Century Maritime Silk Road.

The Chinese government is financing the construction of Pakistan’s part of the long-awaited Iran-Pakistan Pipeline, known as the “Peace Pipeline.” Iran recently became a founding member of the World Bank’s Chinese rival, the Asian Infrastructural Investment Bank (AIIB).

Iran also attempted to join the Shanghai Cooperation Organization (SCO) in recent years, but was rejected due to sanctions. Now with the JCPOA officially being implemented, it is likely that Tehran can finally receive full membership in the SCO.

Counterbalancing act

Fears of a Tehran tilt towards the West are exaggerated.

While Iran opens itself to the international economy, it will lean more toward its position in 2005, before the punitive sanctioning began, with limited ties to the West. This is echoed by Supreme Leader Ali Khamenei’s comments on the Chinese president’s visit, “Iranians never trusted the West… That’s why Tehran seeks cooperation with more independent countries (like China).”

Long-term, Iran will continue to use China and Russia as a counterbalance to the West, particularly the United States.

Iran is not ready to forget how China and Russia helped Tehran in a time of need and will continue to rely on both nations, but when it comes to the latest goods and services they’ll turn to the West.

Once the excitement of entering the world economy dies down, Iranians will return to their original allies. As Iranian Oil Minister Bijan Zanganeh mentioned after the Iran Deal, “Those who were our friend(s) during sanctions will receive our friendship to the same proportion.”

Tehran will continue to be in Beijing and Moscow’s corner of the ring.

 

The views expressed in this article are the author's own and do not necessarily reflect the publisher's editorial policy.

5 Responses to Iran not likely to back away from China, but …

  1. sydran Reply

    January 27, 2016 at 6:15 pm

    Iran might be included into BRICS

  2. napicoyote Reply

    January 30, 2016 at 9:13 pm

    BRICSI or BRIICS ?

    • ALEXANDER PRADO Reply

      March 2, 2016 at 2:00 pm

      iBRICS

  3. sydran Reply

    February 20, 2016 at 10:43 am

    USA and EU do not have promising future. Russia, China and Iran are the FUTURE.

  4. wes Reply

    April 9, 2016 at 1:50 am

    Very informative, thanks Holly 🙂

    It is my understanding that in 2008 Iran created an crude oil exchange, to eventually facilitate a new oil benchmark, and by 2011 had completely dismissed the petrodollar system on crude oil exports.

    It is obvious there has been a growing challenge against the US hegemony since the crash of 2008. BRICS being the primary example.
    Does it not make sense that an oil alliance would also need to exist that competes against the petrodollar? From what I see, Iran already has a system in place to facilitate the “Caspian benchmark”… with Russia / China / Syria / Brazil / and one would assume Iraq, together they would dominate global oil.

Leave a Reply

Your email address will not be published. Required fields are marked *

Anti-Spam * Time limit is exhausted. Please reload the CAPTCHA.