A New Deal
A leaked document recently created havoc on Indian media and many started guessing the outcomes and the implications of the deals mentioned in the documents. The document outlined how the relations between China and Iran will be entering into a 25-year strategic partnership to uplift Iran’s economy and infrastructure.
Many declared it fictitious – however, in August 2020, the Iranian President’s Chief of Staff tweeted through his official Twitter account that “the plan for strategic cooperation between Iran and China would be designed on equal footing, on the basis of common views, and with the purpose of supporting multilateralism.”
Before this tweet, the President himself also hinted the same a couple of times during his speeches – and also made a public announcement after getting approval from the Iranian Parliament. Moreover, Iranian Foreign minister, M. Javed Zarif clearly stated that there was nothing to hide about the deal and that the details would be made public to citizens soon.
The statements of the officials very clearly reveal that the deal has been confirmed. Therefore prospects and implications of the new geopolitical ties can be debated. The Iranian President also supports the emerging geopolitical order in which China will be leading the rest of the Asian nations.
In a recent speech, Dr. Rouhani, the 7th President of Iran, stated that “pressures that the US administration is putting on Iran, China and other countries are aimed at dominating the entire Asia and the world”. The concerning question however is how the new landscape will affect Pakistan? Is the new geopolitical environment more favorable or otherwise for the region?
An Overview of China-Iran Bilateral Relations
China and Iran have had cordial relations from the start of the 20th century till now, with China remaining a consistent buyer of natural gas and crude oil from Iran even during the harsh sanctions imposed by America. The draft of this famous 25-year Comprehensive Strategic Partnership (CSP) was crafted in 2016 and was signed and approved in July 2020.
This draft contains 9 articles which include the vision of both the parties, their mission and goals, steps, supervision, and implementation. Interestingly, article 7 encourages third-party co-operation in such a way that benefits all (a door kept open for neighbors), and Article 9 rejects third-party pressure or negative interference.
In a seminar, Iranian Minister of Economic Affairs, Farhad Dezhpasand, stated that the infrastructure of almost every sector would be uplifted in Iran including Iran’s oil and gas industry, production and transportation infrastructure, 5G infrastructure, banking, telecommunications, railways, ports, IT, HR, free trade zones, and various others.
The Chabahar Port Project
In this deal, the Chabahar Port is the pivotal point and so are the projects related to it. It is more or less similar to the Chinese-operated Gwadar port; however, more advanced projects come under this deal. The Chabahar port will connect to Zhedan through a rail route in such a way that it will stretch from the borders of Iran and into Afghanistan and Central Asian Nations – eventually linking the whole region.
Therefore, more economic corridors will be created within this region which will provide a win-win situation for stakeholders in Iran, China, and Pakistan. Under this project, $120 billion will be spent on transportation and infrastructure, and around $280 billion in the Iranian petrochemical, gas, and oil sector development. This will help Iran with its economic regeneration, and in return, Iran will sell its oil to China at discounted prices.
A striking feature of this project is the 5G telecommunications network installation by tech giant Huawei, and the deployment of the latest technology. China will be making its payments in soft currencies, that is, China won’t be using any banks to transfer these huge amounts. Furthermore, China doesn’t make payments in dollars and uses the digital currency e-RMB to reduce the dominance of the dollar.
Additionally, the Chinese GPS will regulate Iran’s cyberspace. China is also aiming to conduct joint military training, intelligence sharing, and weapon development to eradicate terrorism. This will also serve to eliminate drug and human trafficking and introduce advanced methods to counter cross-border crimes.
Moreover, in the first phase, China will deploy 5000 troops to ensure the security of these projects. Some rumors state that Russia, too, will be taking part in the aforementioned military exercises. If that happens, Russia will also gain access to Iranian airbases.
India’s Lost Opportunity
The 1200 acre Chabahar Port is also very significant and pivotal for the International North-South Transport Corridor because it provides a route from Mumbai to Moscow. It means that if India had timely initiated the Chabahar Port project it could’ve easily connected itself to Europe, Asia, Russia, and Central Asia. Therefore, CSP has also effectively shut India out of Central Asian trade.
Interestingly, India had major interests in Iran and also signed multiple agreements with them to establish new trade routes, but India used delaying tactics and didn’t initiate the projects mainly due to intense pressure and sanctions from the United States. Moreover, India started building ties with Israel, which slowly turned into strategic military ties.
This greatly displeased Iran as India was increasing relations with its adversary Israel, and the Iranians decided to join hands with China instead. However, the main interest of India in Chabahar port was to counter Gwadar port, gain access to central Asian markets through the shortest route possible, and create an ally in the region to refrain from getting isolated.
Iranians very proudly call the Chabahr Port “A Gateway to Central Asia” – their claim is not wrong. Backing their claim are their oil reserves and their growing relationship with China, a rising global power.
Iran’s ability to connect China or any other nation to Central Asia means that these countries will find new markets via a shorter and cheaper route which will result in a reduction of transportation costs. Also, Kyrgyzstan is rich with uranium reserves, oil and gas deposits, mineral wealth – and can also provide a route to Europe, resembling the ancient amber road.
Implications on the Region
The first and foremost implication of China’s influence in Asia will be stability in the region. China always ensures the security of its projects and never allows a third party to disrupt its devised plans. The new and emerging geo-political order will be in favor of Pakistan if things work out under Biden’s administration.
Pakistan might get crude oil at a very cheap price and the collaboration may also allow Pakistan to resume the Iran gas pipeline project as Iran has already completed the pipeline on its side. Moreover, Turkey, Iran, and Pakistan have made public announcements to resume the 2009 Istanbul Tehran Islamabad railway project, which also aims to connect with Azerbaijan.
The dynamics are already changing in the region and major realignments in Asia might be observed over the few years; Iran moving away from India and joining hands with China is also a major sign and Israel moving closer to the Gulf States and initiating huge projects like the “City of Neom” in Saudi Arabia.
Furthermore, as China is a strategic partner of Pakistan, it will work towards ensuring strong relations between Pakistan and Iran. Moreover, stability at the Pakistan-Iran border region is necessary to make CPEC a success story. Therefore, Pakistan will get another trustworthy ally in the region and bilateral relations will flourish between the two.
The 2300 km long route will connect Tehran to Xinjiang – passing through Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan. The other end of the route will extend beyond Turkey and into Europe, which might result in another major shift. Additionally, a 628 km long railway line extending from Chabahar to Zhadan is another significant project that will connect Iran to Afghanistan, and if the rail route stretches into Afghanistan then China may also try to stabilize it first – and then proceed with the projects.
If Afghan peace talks are successful and China initiates projects there, it may also greatly develop Afghanistan’s infrastructure. Uplifting and developing Afghanistan is necessary because the country has long been used as a hub for rebels, extremists, and radical thinkers. India’s interference in Iran and Afghanistan will also come to an end, as the presence of RAW in Iran, Afghanistan, and Baluchistan is secret to none.
Another implication is that China will be able to undermine U.S. dominance in the region. After getting ahold of Bander-e-Jask located at the Strait of Hormuz, China will have control of one-third of the world’s seaborne oil trade. With the Gwadar and Djibouti ports, China is ready to increase its foothold in the Indian Ocean region
However, this new evolving axis is worrying the United States, as they wanted to punish Iran by crushing it under sanctions and completely isolating it. Since the United States is planning to withdraw troops, its influence in the region will also decrease. The superpower will definitely retaliate and for that reason, it is providing India with the latest ammunition and weaponry.
China desperately needs more routes because of the disputes in the South China Sea and the heavy presence of the U.S. military near the disputed islands. Moreover, 80% of Chinese goods pass through the Strait of Malacca, a strategic chokepoint. Therefore, CPEC and Chabahar routes are ideal for the safe transportation of goods under the current situation.
Additionally, the UN arms embargo on Iran expired in October 2020. China will now try to stock Iran with weapons if it finds a way to bypass US sanctions. Moreover, under Biden’s presidency, China’s prospects may improve.
Challenges for the Chabahar Port Project
The biggest challenge for the deal is having the United States as an adversary. The bitterness between Iran and the United States increased exponentially after a U.S. drone strike killed the powerful Iranian General Qasem Soleimani. Moreover, the situation further deteriorated when a few gunmen assassinated a top nuclear scientist.
It resulted in country-wide protests and consequently, officials expressed fury and vowed revenge. The deteriorating China-US relations may create further problems. The United States might attempt to contain China and obstruct its expansionist policy mainly due to the fear of being replaced by China.
The United States has previously tried to punish China with tariffs, and China retaliated, which resulted in a Trade War between the two. The United States also supports anti-China nations and states, even declaring Hong Kong a free state, and placed sanctions on officials and businesses that neglected or overrode the autonomy of Hong Kong in July 2020 under the Trump administration.
China has condemned such unilateral sanctions of the United States. Huwaei was also banned from developing 5G in America and a criminal case was filed against the company for concealing its investments in Iran, dodging the sanctions. Having a hostile neighbor like India is no less than a challenge since it had also made attempts to sabotage the China-Pakistan Economic Corridor (CPEC).
Kulbhushan Jadav was caught on the Pakistan-Iran border, and in a video, he admitted that he was involved in state-sponsored terrorist activities. He also believed that the Iranian Chabahar Port was used to launch these operations in Pakistan and claimed that the Baloch extremist groups were being funded by RAW to dismantle and disrupt CPEC projects.
Another challenge is that all global powers have major interests in the Middle East as it is the source of energy, with huge mineral deposits, and huge oil and gas reserves and hence the only thing which may deter the China-Iran relationship is the fact that China has very good relations with the anti-Iran Gulf States such as Kingdom of Saudi Arabia, UAE, and Israel.
If you want to submit your articles and/or research papers, please check the Submissions page.
The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.