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Tehran And That Other Superpower: China Aims At Iran’s Economy

While most of the attention around Iran is related to its nuclear program, an open ended deal may give China the legal foundations it needs to take a controlling stake in Iran's economy, and in time, undermine its independence.

Iranian foreign minister Mohammad Javad Zarif and Chinese foreign minister Wang Yi have signed a 25-year Iran and China strategic partnership act.
Iranian foreign minister Mohammad Javad Zarif and Chinese foreign minister Wang Yi have signed a 25-year Iran and China strategic partnership act.
Roshanak Astaraki


LONDON — After several years of "secret talks', and to the dismay of many everyday Iranian citizens, officials of the Islamic Republic of Iran and China have signed a comprehensive 25-year agreement said to cover three broad axes of strategic-political, economic and cultural affairs.

The origins of the ambiguous document go back to 2015 when China's Xi Jinping visited the Islamic Republic and met, perhaps unusually then, with the Supreme Leader Ali Khamenei. The two heads of state then signed a joint communiqué declaring a commitment to actively upgrade ties through "comprehensive and strategic cooperation."

Five years later, in the summer of 2020, the government of the Iranian President, Hassan Rohani, approved a draft of the cooperation document and Rohani tasked his foreign minister, Mohammadjavad Zarif, with its public presentation.

The two countries have been moving closer for years as part of Khamenei's "Look East" policy format and with recurrent visits by top officials from both countries. That includes a recent trip to China by the head of the Iranian Armed forces joint headquarters, Mohammadhossein Baqeri, to discuss "enhanced defensive diplomacy."

Iran was placing major sectors like energy, security and military affairs under Chinese oversight.

Last July, the website Oil Price reported on some of the deal's details and scope. That report, in turn, prompted what may have been an Iranian foreign ministry "leak" in the form of an 18-page "correction," perhaps meant to counter the Oil Price article's impact on social media.

The Oil Price report suggested that Iran was placing major sectors including energy, security and military affairs under Chinese oversight, and effectively giving China control of its economic, political and military development for 25 years. Not surprisingly, U.S. President Joe Biden has publicly expressed concern.

Many Iranians are also alarmed, especially now that the deal has officially been signed. People have voiced their anger on Twitter using hashtags like "Iran on Sale", "Iran is Not for Sale" or "Shameful Agreement". There have been scattered protests in some Iranian cities like Tehran, Karaj, Isfahan and Kermanshah.

The refusal, on both sides, to reveal the terms of their agreement have only intensified concerns, as has the fact that, to avoid having to submit the text to parliamentary approval and effectively sidestep the laws of the Islamic Republic, Iranian officials aren't calling it an agreement — despite the scope of its concessions. Instead, they refer to it in lesser terms like a collaborative document, road map, or a document of understanding.

Article 153 of the regime's Constitution forbids "any agreement leading to foreign control of natural and economic resources, culture, army and other national institutions."

While Supreme Leader Khamenei has called the deal "correct and wise," critics see echoes of an earlier international agreement: The secret accord that was signed in 1919 between a weakened Persian government and Great Britain and that effectively placed Iran under British imperial tutelage.

Desperate for allies

While the Islamic Republic has for years sought out the friendship of Russia and China — the former communist bloc — as part of its systematic hostility to the West, the failure of more recent moves to improve ties with Europe have pushed it deeper into China's embrace.

Effectively, Khamenei's Look East framework has incremented Iran's subservience to Russia and China and effectively led it to a deal that looks like an outright surrender. And China, for its part, is delighted to walk the red carpet laid out before it. Iran not only has natural resources to meet the Asian giant's energy needs but also potential in other areas like mining or services, which Iran's post-revolutionary governments could not find much use for but could be put to good use in China.

China can use Iran's cheap labor and resources to cut the price of its exports to the West. Or it can invest in the petrochemicals sector, as the deal envisages, to fuel its factories. In political terms, the deal forwards its bid to establish a balance of power in the world, especially with its main economic rival, the United States.

The Islamic Republic expects benefits for itself.

It will also allow China to get ahead of two other rivals, Russia and India. China has been working on curbing India's expanding economy through massive investments in surrounding states including Sri Lanka, Myanmar and Bangladesh. This deal will thwart India's plans to turn the Chabahar port on the Persian Gulf into a link to Western Asian markets and a port to compete with Karachi, inside its hostile neighbor Pakistan. Chinese presence on the Persian Gulf will also solve the problem of distance from the Middle East, which had hitherto been a Russian advantage.

The Islamic Republic naturally expects benefits for itself. The deal is expected to mitigate the impact of Western sanctions and weaken the U.S.-imposed security cordon in the region. It may give Iran more leeway in negotiations with the West.

Iranian authorities also hope to modernize their aged naval and air equipment with Chinese help and reap some of the economic benefits of China's New Silk Road initiative.

While the pact may enhance the security of Iran's regime or even "immunize" it against the West, it can prove equally threatening to Iran and its people. A key danger is that officials of the Rohani government working with Ali Larijani, a senior conservative close to Khamenei, have forged a broad-ended and vague text that can thus remain outside the framework of international treaties, and absolve the government of any obligation to publish it or seek parliamentary ratification.

Not that ratification is a problem in Islamic Iran. When parliament is told to ratify, it will: it voted in the 2015 nuclear pact within minutes!

In the next stage, the government will be able to implement the deal through specific agreements with China on sectors or projects. And China will be able to expand its presence and do business in Iran this way, for 25 years.

For many Iranian officials, communist China is not just a partner, but a "model." Chinese firms will now flow into Iran and proceed to crush domestic production, before tightening their grip on the country's economic, political and military forces.

Twenty five years gives them more than enough time. And who can be sure they will not move troops onto parts of Iran's southern shores or its islands in the Persian Gulf?

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