China-Iran deal – A game changer for both the countries?

Politics is the game of power and to gain power you should have power. Machiavelli stressed only on power but timing for the use of power is also very important and realistically international politics is too much dependent on this factor. In these times only China has that power(economic and military) to pursue its policy completely even if it is confronting U.S. Last week there came the conformation of big deal between China and Iran. China seems to have hit the iron when it is extremely hot. Estimated size of the deal is 400 billion US Dollars which China will invest (pure investment and loans) in Iran through different projects which will provide a breathing space to Iran in the bad economic situation.

Iran is facing very difficult situation after the Trump administration slapped sanctions on it and irrespective of contradicting stance of some European nations they could not help the Iranian government and they just followed the U.S policy. Covid-19 pandemic has made things much worse for Iran. So all this situation just made things relatively easy for China to turn Iran towards itself which has traditionally looked west.

There are number of aspects of the this deal which have mentioned in the 18 pager draft which is yet to be approved by both countries. These include economic, strategic, defense and foreign relations. This deal and its projects are probably a part of large Chinese BRI program through which it has invested in many countries. Economic aspect includes different infrastructure projects from range of highways, railways, power projects, economic zones at important cities/locations, subways(urban transport), construction and upgradation of different ports. For all this Chinese companies will invest in Iran with guarantees or Chinese govt will provide loans (probably concessionary). Some projects include building of ports and economic zones at Abadan, Maku and Qeshm island, railway project connecting Chabahar to Zahidan and many more. All this will provide the much needed improvement in infrastructure to Iran and will create jobs there.

In return Iran has agreed to provide oil to China for 25 years at a heavily discounted rate probably on 30% lesser rate than market. As China is a big importer of oil so it has established a guaranteed supply line from Iran and Iran also requires big oil importers like China to maintain its presence in oil exporting market (especially after U.S sanctions).

This deal has technological aspect because according to this deal China will provide access to its navigation system Baidu which Pakistan is already using. China will invest in building 5G infrastructure in Iran through its companies mainly Huawei. It will also provide high end weapons and its big firewall for cyber security to Iran.

Draft of the anticipated deal also mentions defence cooperation between two nations which includes intelligence sharing, weapon manufacturing and military exercises.

Intelligence sharing for purposes like terrorism and others will help both countries to combat against elements who are working against their interests. Military exercises and construction of ports at Strait of Hormuz will increase Chinese presence and their hold at that important trade route and it will be disturbing for the U.S.

This deal if approved by both countries will decrease Iran’s traditional reliance on west and bring a tilt towards China. It will be blow to Trump administration’s policy of over suppressing Iran and converted it into a low hanging fruit for China. Even in the time of Obama Iran faced sanctions but Iran did not make this choice at that time because now Iran completely has been choked and nobody capable other than China is willing to help it. So it has no other option. This deal will result in the alignment of Iran’s policy with China’s interests and a much decreased role of India there. We have seen the practical effects of this a few days ago when India was kicked out from two important projects which includes a railway and a development of gas field project because on lack of practical progress on these. India was not able to make any progress citing American sanctions.

This deal also has strategic dimensions. Firstly it will increase the Chinese presence there and they will be there at that major oil supply route which will be disturbing for the U.S. Through this China could become a major player in the Middle East. Now I cannot say how deeply Chinese involvement could be.

Secondly this will align the interests of both countries. Chinese will have interests in both neighboring states Pakistan and Iran. So it could increase cooperation between two states Pakistan and Iran to improve security especially in Baluchistan. It will increase the seriousness of Iran to cooperate because of Chinese investments on both sides.

Through all this China is not investing for Iran’s betterment but developing a future market for its high end product by building their dependency on Chinese products. Secondly through all these projects China will also create offshore jobs for its people. So this deal is not only a strategic move but will have economic effects in future for China. For now it seems that China has played good and now the implementation and continuation of this deal will determine its success or failure.

Disclaimer: The views expressed in the blog are the writer’s own opinion. Dunya News will not be held responsible for any kind of discrepancy. 

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