International Relations


The ambitious deal between Iran and China in the name of Iran-China cooperation has been
making rounds creating room for controversies and opinions. The much talked about deal came
into light after a leaked document was published by New York Times. The proposed deal is said
to have involved around $420 bn worth of Chinese investments making their way to Iran.While
China Pours in lots of investments in the areas of Infrastructure, Banking,Telecommunication,
Ports, railways and dozens of other projects, Iran is expected to host several companies and
military troops as a part of strategic Partnership.
This proposal of cooperation however has many implications involved. As Chinese government
funds most of the Projects, it would give a wider importance to China in the geopolitics of Iran
and ultimately create a strong threshold in the Middle East for the fact that Iran is in the heart of
the Middle east. It can cause the shift of wind from the USA to Asia and act as a challenge
against the dominance of the USA and Trump’s “Maximum Pressure Policy”. If not handled
Properly, this deal can attract lots of implications to countries in the middle east as well as India.
As a Part of the deal, Chinese Companies are to be set up in Iran by employing cheap workforce
available in the country and the plan is to access western markets through Chinese led Belt and
Road initiative and Iranian Port which would largely complement the string of Pearls around
Indo Pacific Region. This enables China to gain dominance around the middle east and gain
access to ports like Hormuz, and Chabahar. There are widespread talks about Iran leasing out
Gulf Islands to China, which would further add to China’s dominance in the region of which
truth is yet to be known.
Further, the leaked documents talk about several agreements such as delays of Payments by upto
2 years to Iran by Chinese and acceptance of soft currency for payments at a time when their
value is more fluctuating. Through this deal, Chinese companies and projects are said to receive
around 12 percent Discounts through the process of bidding where the Chinese projects will be
the maximum priority. The cooperation agreement also talks about dozens of such projects.
There are rising concerns in the Iranian parliament about the intentions of Chinese through these
projects and some talk about the possible debt trap.
One of the important parts of this deal that has gained widespread attention is the cooperation in
the areas of defence and military. China has in this regard taken a greater turn from economic to
military cooperation as it would invest in improving the anti missile technology of iran to fight
against countries like the USA and Afghanistan. It further envisaged a deepened military
cooperation through provision of Jamming systems, Early Warning systems through
sophisticated technology and Joint Military exercises between both the countries. These
provisions will thus act as a vantage Point for the Chinese government by increasing their scope
for surveillance in the gulf.
For China, this deal might act as a vantage point of its quest for power across Asia. It would
provide greater leverage from Caspian Sea to the Indian Ocean and would enhance the prospects
of the Belt and Road Initiative which would aid its trade through the Middle East and South
China Sea which aptly resembles the expansionist policy of systematic economic investments.
As Iran sits in the prospective middle east, with it being an indispensable ally, china would
further gain importance in the Middle East. Of all the important ideas to concern, one such idea
that is most agreed upon is China’s intention to counter the USA’s Power in the region and take
advantage of its sanctions in Iran.
For Iran, this can be a breathing space amidst its hustle with sanctions by the USA. Infact, the
actions of the USA against Iran pushed the country to arrive at a strategic cooperation with
china. In addition to the sanctions, Various problems like the inefficient governance,
developmental problems and unrest across the country also acted as catalysts for the
proposal.The advent of Global Pandemic has further crippled the nation and this partnership can
be seen a hope to revive the economic activity and relieve domestic and international Pressures.
Many Critics argue that for Iran to counterbalance the USA’s sanctions on its oil export, the
country needs to produce more amounts of oil for which huge amounts are required. That’s
where this Partnership comes in. Through the finances procured from China, Iran will be able to
produce oil that would ease the country’s GDP to a certain extent.
While it can be agreed that both nations can benefit from the deal, critics across the world are
apprehensive about various hidden intentions of China. This Proposal can be seen as a Bluff
negotiation with evidence of Chinese statements about investments in Europe in the past. It
should be noted that the amount or investment involved in the proposal further strains the
Chinese FDI budget which is already experiencing negative development for the past few
years.Through this it can be said that china is promising more than it can deliver.
In a rather unusual way, this deal can be seen as a bargaining chip of China which it is using
against Iran to hit back on the USA. The fact that china through this deal would be spending half
of its FDI to one single country is far away from being a notion of reality. Also, Beijing has been
maintaining relations with Saudi Arabia through its 2030 vision Mega Project which it is not
ready to jeopardize with. On the other hand, the Israel government has also got greater ties with
china in regards to Shipping and startups also point out the unsatisfying notion of why Iran alone
should be important to china. It is thus visible from the deal that the Iranian foreign policy would
be impacted to a greater extent in the long run. Besides it can attract security complications and
conflicts from neighbouring nations if the proposal is Put forward. It is therefore necessary to
take a look at the BRI of china across Pakistan through which there is no visible benefit to
Pakistan although the investments touched nearly $62 Billion before arriving at a conclusion that
Iran and china Cooperation agreement would favour Iran more than it does to China.

Author: Mudunuri Navya, Research Associate, Center for Human Security Studies.

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