When from the west you receive mainly sanctions and constant pressure, the next thing is to turn to the east. This is how Iran’s current policy can be described.
With negotiations to restore the nuclear deal effectively frozen, largely the responsibility of the US and the EU, which currently view Iran primarily as an ally of Russia, and the economic and social costs of sanctions to is large, Iran appears to have no other choice to develop economic relations than to turn eastward.
And if the relationship with Russia is mainly about defense cooperation, with all indications that Iran has contributed to the Russian war effort in Ukraine, mainly with its drone expertise, the relationship with China is mainly about the economy.
Let’s not forget that China has for years had a specific strategy to upgrade its economic presence outside its borders through the “One Belt, One Road” strategy.
This was already seen in 2016, when Xi Jinping visited Iran in the context of promoting bilateral cooperation. An even more significant upgrade of cooperation was reflected in the signing by both countries of an agreement with a 25-year horizon for overall cooperation in a range of fields, from economy to culture.
China is Iran’s main trading partner
China is Iran’s main trading partner anyway. First, most of the 1.3 million barrels a day that Iran currently exports amid sanctions goes to China. In 2022 the amount of Iranian oil reaching China was in the range of 700,000-900,000 barrels per day. In December, China’s crude oil imports from Iran reached 1.2 million barrels per day.
Between March 2022 and January 2023, bilateral trade between Iran and China, excluding fuel, reached $25.3 billion, of which Iranian exports to China amounted to $12.8 billion while $12.7 billion were China’s exports to Iran.
The search for strategic cooperation
The 2021 agreement itself indeed had the character of a strategic alliance. For Iran, it was particularly important as it set out a number of goals, including its commitment to provide a steady flow of crude oil to China and China’s commitment to make a total investment of $400 billion in Iran’s infrastructure.
It also included plans for large oil storage facilities in China, but also for Iran to become the center of transit routes of the new “silk road”, especially those that would go directly to the Middle East without passing through the Arabian Peninsula. And of course it also included agreements on defense cooperation between the two countries.
However, with the exception of an increase in Iranian oil exports, little progress has been made in implementing the agreement. This also has to do with the fact that China and Chinese companies are particularly cautious about “openings” that may come up against Western sanctions against Iran.
We note that this agreement had also been criticized within Iran from various quarters, as it was considered that it could lead to dependence on China, in a country whose collective memory still weighs negatively on the Turkmenchai Treaty of 1828 which meant very large concessions to Tsarist Russia.
On the other hand, indicative of the Iranian leadership’s willingness to seek alliances to the east, an element that also seems to be the position of the Supreme Leader Ali Khamenei, is the choice to join as a full member in the most basic institution of “Eurasian integration”, namely the Shanghai Cooperation Organization of which it became a full member last September.
Iranian concerns and Chinese balances
At the same time, relations between Tehran and Beijing are defined by China’s overall policy in the Middle East and the Persian Gulf.
And this is because China has recently invested heavily in upgrading its relations with Persian countries, culminating in Xi Jinping’s recent meetings with Arab leaders, centered on his visit to Saudi Arabia. This is part of China’s overall foreign policy that tries to broaden the range of its interlocutors. But this worries the Iranian side, which traditionally treats the Persian states with concern and suspicion.
In addition, Iran has not taken kindly to the way China has taken sides in the long-standing dispute between Iran and the United Arab Emirates. This concerns three islands, the Great Tunb, the Little Tunb and Abu Masha, located in the Strait of Hormuz and occupied by Iran in 1971, immediately after the withdrawal of the British from what is now the United Arab Emirates, islands of which even today the UAE claims from Tehran.
Against this backdrop, there was an Iranian embarrassment at the joint statement by the leaders of China and the UAE where, among other things, it was argued that the issue of the islands should be resolved through bilateral negotiations and in accordance with international law, which was read as an indirect challenging the Iranian position. However, indicative of Tehran’s willingness to forge a partnership with China was the choice not to have major reactions to this joint statement.
Iran is preparing for the possibility of no deal on its nuclear program
The Iranian leadership, although coming from the “conservatives” who succeeded the “moderates”, would like to complete the negotiations on the agreement on Iran’s nuclear program, as this would mean the lifting of sanctions and greater possibilities to exploit the energy wealth , increase exports and attract investment. This would provide a developmental dynamic that would also respond to the strong dissatisfaction with the economic situation that is fueling the protests inside Iran.
But the prospect of a deal appears to be receding as the West moves to the logic of a more divided world, where Iran’s special relationship with Russia weighs more heavily than the prospect of Tehran moving closer to acquiring a nuclear weapon.
This may explain why the tendency to upgrade economic cooperation with China is becoming more intense even if the latter does not identify in all matters with the priorities of Iranian foreign policy.
