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Iran–China strategic agreement could be a game-changer


The signing of a 25-year cooperation agreement between the oil-rich and regionally influential, but U.S. sanctioned, Islamic Republic of Iran and the globally powerful, but U.S. pressured, People’s Republic of China inserts a new strategic pincer in the Middle East for the United States and its allies. Former U.S. President Donald Trump must bear most of the responsibility for this development, which President Joe Biden now has to handle.

The agreement is the culmination of growing economic, trade and military ties between the two countries since the advent of the Iranian Islamic regime following the revolutionary overthrow of the Shah’s pro-Western monarchy 41 years ago. Although the contents of the deal haven’t been fully disclosed, it will certainly involve massive Chinese investment in Iran’s infrastructural, industrial, economic and petrochemical sectors. It will also strengthen military, intelligence and counterterrorism cooperation, and links Iran substantially to China’s Belt and Road Initiative as an instrument of global influence.

China–Iran trade amounted to some U.S.$31 billion in 2016 following the conclusion of the landmark multilateral Iran nuclear agreement known as the Joint Comprehensive Plan of Action, or JCPOA. However, it declined after Trump withdrew from the deal in May 2018 despite opposition from the other signatories (Britain, France, Germany, Russia and China) and imposed harsh sanctions on Iran. The trade volume is now nonetheless set to reach new heights. Underpinning this exponential elevation of relations is the two sides’ mutual interest in countering the U.S. and its allies.

Deeper and wider cooperation between China and Iran, especially when considered in the context of their close ties with Russia and the trio’s adversarial relations with the U.S., carries a strong potential for changing the regional strategic landscape. So far, China has been careful not to partner with Iran to an extent that could jeopardise its lucrative relations with the oil-rich Kingdom of Saudi Arabia (Iran’s regional archrival) and its Arab allies. In 2019, China imported some 17% of its oil needs from Saudi Arabia alone, not to mention 10% from Iraq, smaller amounts from Kuwait, the United Arab Emirates and Oman, and only 3% from U.S.-sanctioned Iran. China also enjoys reasonable military and intelligence cooperation with Israel, another main regional adversary of Iran.

However, Beijing’s conclusion of the deal with Tehran, which has been in the making since 2016, is bound to deeply concern the Gulf Arab states, Israel and indeed the U.S.. These countries are already troubled by a perceived Iranian threat, given Tehran’s expanding influence across the Levant (Iraq, Syria and Lebanon) and Yemen as well as its support for the Palestinian cause against Israeli occupation.

The U.S. is also concerned by Iranian leverage in Afghanistan, where American and allied forces have been fighting the Taliban-led insurgency for two decades without much success, and from which Washington wants to extricate itself with some face-saving measures as soon as possible.