Geopolitics

Are Iran And China Quietly Forging A Security Alliance?

There are some signs that China may be gaining economic concessions from Iran in exchange for giving it diplomatic, and perhaps military and security, backing against regime opponents.

Chinese State Councilor and Foreign Minister Wang Yi holds talks with Iranian Foreign Minister Mohammad Javad Zarif in Beijing, capital of China.

-Analysis-

Late in August 2019, as the United States intensified its sanctions on Iran, the Islamic Republic's Foreign Minister Mohammad Javad Zarif traveled to Beijing to talk to his Chinese counterpart, Wang Yi. The intention was to adjust the terms of a putative, 25-year pact the countries signed in 2016, as revealed the following month by the website Petroleum Economist, which cited a clause that foresaw sending 5,000 Chinese troops to safeguard its firms or projects on Iranian territory. Observers also suspected the amendments included Chinese support in the event of a serious threat to the Iranian regime.

Since then, Iranian officials have intermittently denied the pact's reported clauses, or even its existence.

Also around the same time as the Zarif-Wang summit, the head of Iran's Armed Forces Headquarters Mohammad Baqeri visited China, as part of a "defensive diplomacy" that is forging closer ties between two states with radically diverging ideologies: atheist Communism for one, and militant Shia Islam for the other. Baqeri signed agreements whose terms remain unpublished.

This rapprochement comes against the backdrop of Iranian concerns that the administration of U.S. President Donald Trump wants regime change in Tehran. Some observers like CNN's Christiane Amanpour, believed the targeted killing in Baghdad of the Iranian Revolutionary guards commander Qasem Soleimani was an indication of this intention.

China has helped Tehran evade U.S. sanctions, though at a cost to itself.

The talks are in any case in line with Tehran's Look East policy, which gradually took shape in the 1990s and is repeatedly emphasized by Supreme Leader Ayatollah Ali Khamenei. This has strengthened Iran's ties to — and some would say dependence on — the two main eastern powers, Russia and China. In the decade after a ruinous, eight-year war with Iraq that ended in 1988, some Iranian politicians discerned in China a suitable model for rebuilding and developing the Islamic Republic.

Such relations may be going further today, as observers suspect Iran is practically "bribing" China to assure it of support in case of an emergency, including domestic or foreign pressures threatening the regime's existence.

Since the dissolution of Iran's nuclear agreement with Western powers in 2018, China has helped Tehran evade U.S. sanctions, though at a cost to itself. Penalties imposed on several Chinese firms led others to end cooperation with Iran. One of the penalized firms is Huawei, the telecom firm thought to have sold equipment to Iran that is useful in crushing dissent or protests.

Can Iran's regime count on China to prevent its collapse or overthrow? While discussing security affairs is risky and complicated in Iran, one analyst in Tehran recently broached the situation with caution.

Tehran University professor Mohsen Shariatinia wrote in an item published on July 1 in the local business journal Donya-ye Eqtesad (World of Economy) that while China enjoys "strategic partnership" ties with some 80 countries, these do not tend to entail security commitments. He points out that Iran-China trade has not flourished since the suspension of the Iran nuclear pact, and China didn't reap benefits from the $20 billion it invested in Iran while the agreement was in force.

The academic sees Islamic Iran and Communist China as intrinsically divergent. The 1979 revolution in Iran, he points out, was loudly anti-hegemonic, and alignment with China has proved divisive inside Iran. Indeed some of the formulators of the Look East policy, including "pragmatic" or business-oriented politicians or former officials associated with the late president Akbar Hashemi-Rafsanjani, may be feeling uneasy at its pace and conditions. In theory at least, elections in Iran could change the orientation of its foreign policy. In turn, he points out that providing states with security guarantees is a costly task China may not wish to assume right now. China, he adds, unlike the U.S., is not the crux of a security alliance like NATO.

Shariatinia notes that we are in a "fluid" international setting not conducive to solid pacts. The pandemic has hastened changes in relations that might have otherwise taken decades. The nuclear pact took 12 years to forge, but lasted just two years. His conclusion: Any Iran-China pact should neither be given undue significance, nor dismissed. How a pact is implemented is what really matters.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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