The agreement comes as the U.S tightens economic sanctions on Teheran.
With the White House focused on the epidemic and the new administration working in restoring the old alliances in Asia and Europe, a new player is pushing in. A groundbreaking economic deal between China and Iran could change the rules of the game in the Middle East. The agreement comes as the U.S tightens the sanctions on Bejing and Teheran with the two countries, already under pressure, extend their cooperation to fight back against Washington.
The Deal
According to the agreement, China will invest in Iran for the next 25 years in return for Iranian oil. The deal comes as the US has imposed new sanctions on China, and Biden’s Administration refuses to sit back to the table on Iran nuclear program, leaving harsh restrictions on the mullahs.
On 27 March 2021, the two parties signed the Iran-China 25 year Cooperation Program on Comprehensive Strategic Partnership between Iran and China. Petroleum Economist reports that the agreement includes up to US$280 billion developing Iran’s oil, gas and petrochemicals sectors and another US$120 billion investment in upgrading Iran’s transport and manufacturing infrastructure.
Under the agreement, Beijing will also deepen the military involvement in the Middle East to “fight terrorism, drug and human trafficking and cross-border crime.“
As the China foreign minister Wang Yi, during the meeting with his Iranian counterpart, pointed out “China firmly supports Iran in opposing hegemony and safeguarding national sovereignty and dignity. China stands ready to work with Iran to defend the legitimate rights of the two countries and other developing countries.”
US-China relations
The agreement is expected to exacerbate tensions between the United States and China, whose relations have deteriorated since the outbreak of the Sars-CoV-2.
Washington has recently condemned human rights violations towards the Muslim in the region of Xinjiang, and Tibet by Bejing. It has also formally criticised China’s aggressive actions in Hong Kong, Taiwan and the South China Sea calling these actions a “threat to the global stability.”
“It is speculative, but the timing suggests that China was ready to fill the gap created by Iran’s undoubted disappointment with the unwillingness of the Biden presidency to undo the damage done by imposing sanctions and withdrawing the US from the JCPOA Nuclear Program Agreement of 2015 by the Trump presidency,” says Richard Falk, professor of International Law at Princeton University cited by TRT World.
The geopolitical implications
In 2013 China launched a sophisticated operation, called the Belt and Road initiative, with the aims to build a network of countries in which the Asian giant will invest expanding its influence worldwide.
According to many analysts, a cooperation agreement will give Iran “a lifeline” to the collapsing economy and the chance to bypass sanctions. At the same time, China will gain a strategic presence in the region and strengthen its position as an economic power while the United States will suffer a severe blow to its position in the region.
The renewal of the sanctions under Trump and the threat to punish companies that are in business with Teheran have driven investors away and restricted the economic ties with the country. China has taken its chance to fill the gap left by the U.S.
The BRI is composed of 6 corridors to move goods in and out of China. The new Eurasia land Bridge economic corridor, the China-Mongolia-Russia corridor, the China-Central Asia-West Asia corridor, the China-Indochina peninsula corridor, the Bangladesh-China-Myanmar corridor.
This trade network is the core of the global strategy to control the world economy by China. However, as many specialists underlined, BRI is also a debt trap in which countries not able to pay the debt will give strategic assets to Bejing.
According to the report by the Center for Global Development “How China Lends: a Rare Look into 100 Debt Contracts with Foreign Governments” twenty-three BRI members are at heavy risk that they could end up owning half of their foreign debt to China.
Will it happen also with Teheran?
“The feeling is that the importance of this agreement is rather overestimated. Both China and Iran have given great visibility and emphasis to the deal, but what has been signed is nothing so revolutionary. It is an agreement on a path of global strategic collaboration for the next 25 years” stated Mr. Antonello Sacchetti, Founder of Diruz and journalist specialised in Iran.
“Pechino is a long-term strategy that is changing the cornerstones of Iran’s international approach. The agreement with China is part of a strategy in which Teheran – looking at a possible return of Washington to the negotiation table at JCPOA – does not want to preclude itself from any chance” Mr Sacchetti underlined.
