The Iran-China deal: What could this mean for Iran?

Iran and China are reportedly in the final stages of a 25-year comprehensive strategic cooperation deal. The two powers have a long historical alliance – from China providing the largest source of military equipment to Iran during the Iran-Iraq war, to now being Iran’s largest trading partner

The shockwaves of the partnership are being felt worldwide. This raises the question: why has the response to the news of the expansion of this alliance been so immense? After all, the alliance between Iran and China is nothing new. This, of course, would mean that the terms of the deal are undeniably significant, with profound consequences for Iran and China’s economy, political climate, and influence within the global community. 

In reviewing the many areas the deal will encompass, it makes sense that one of the adjectives that come before its title in the joint statement is ‘comprehensive’. There are five domains to the partnership: political, executive cooperation, human and cultural, judiciary, security and defence, and regional and international domains. It is still in draft form, but, in essence, Iran would receive an investment of nearly $400 billion over 25 years. In return, China will gain access to Iran’s oil at a considerable discount and have a greater influence in virtually every sector of Iran’s industry. As made clear by the joint statement, there is hardly an aspect of the economy which is not covered. From energy to infrastructure to communications, ‘comprehensive’ is truly the appropriate word. There will also be efforts in counterterrorism, as well as cooperation within academic and intelligence sharing fields. 

Why have Iran and China expanded their alliance?

In order to understand the repercussions of the Iran-China deal, it is important to analyse the initial circumstances that led to this deal. In considering almost any question regarding international relations in 2020, there are two factors that are often impossible to overlook: the United States and COVID-19. Indeed, they both have a big part to play in the causes of this particular co-operation. 

The main reason for this is its role in the breakdown of Iran’s economy. COVID-19 has had a crippling effect on the global economy, and it is undeniable that this impact can be felt in Iran. The Iranian Parliamentary Research think tank said that as many as 6.43 million Iranians could lose their jobs due to the coronavirus and the rial (Iran’s currency) has fallen a further 14 percent in June to its lowest level ever.

This is also due in part to the United States’ sanctions on Iran since 2017. These have been put in place in order to deprive Iran of enough money to be able to carry out what Mike Pompeo, the U.S Secretary of State, refers to as ‘its violent foreign policy’. Though the term encompasses human rights issues, the sanctions are ultimately a result of nuclear politics.  

After Trump’s withdrawal from the Iran nuclear deal in 2018 and the killing of Iran’s major general Qasem Soleimani in January 2020, tensions between the U.S and Iran are at an all-time high. The Iranian government announced that it will no longer comply with any limits of the deal – as a result, the risk of nuclear conflict has been exacerbated. Undoubtedly, these tensions mean that the chance of a deal between the U.S and Iran in ending the sanctions and thus alleviating Iran’s economy is extremely unlikely. 

Economic distress creates a ripe breeding ground for discontent, as demonstrated by recent street protests in Iran. If the regime wants stability, it needs to counter the sanctions. With the rial having lost about 70% of its value following the U.S. withdrawal from the nuclear deal, Iran is now looking to the East for economic help. Indeed, it also fits in with Iran’s wider policy of turning to the East, increasing the ‘irrelevance of the West in Iran’s long-term foreign policy orientation.’

For China, the motivations behind the deal are great. Beyond the immense economic gain that access to Iran’s rich natural resources will provide, there are also political benefits. Following the Hong Kong security law, tensions between the U.S and China have considerably increased. 

Like Iran, China has a strong aversion to American imperialism. With this mutual objective to negate US power, it seems only pragmatic for China to counter U.S influence in the Middle East through Iran. Indeed, the deal will allow Beijing to exert strategic influence in the Gulf due to the Iranian foothold. By providing a lifeline for Iran’s economy and political stability, China’s power in the Middle East will escalate and potentially counter that of the United States. 

What has the reaction to the deal been?

A brief analysis of the socioeconomic climate of Iran and China does indicate an imbalance of power. In short, China has stronger leverage. The National Bureau of Statistics of China’s latest press report states that ‘the national economy shifted from slowing down to rising in the first half of 2020’ and ‘main indicators showing restorative growth.’ This contrasts with Iran’s economy which is in a far weaker position.

In turn, this has provoked domestic concern in Iran as well as among the Iranian diaspora. Backlash can particularly be seen on social media with trends such as #چین_برو_گمشو#, which translates to #China_get_lost and  ایران_فروشی_نیست#  which translates to #Iran_is_not_for_sale. The Constitution of the Islamic Republic of Iran emphasises national sovereignty and there are fears that the deal will threaten this integral aspect of Iran’s revolutionary identity. Certainly, the social media response reflects this sentiment. These worries can even be seen within the Iranian press itself which indicates that it is not a solely diasporic view or one held by a tiny minority. For example, the newspaper Arman-e Melli criticised the Iranian government, writing on its front page that ‘Iran Is Not Kenya or Sri Lanka (to Be Colonized by China)’

The fear lies in the interpretation that the deal is a ‘colonial agreement’. There are worries that Iran’s reliance on China to save their economy will risk its sovereignty. The sheer range of aspects over which China could have potential control reinforces this fear. For example, the influence that Beijing could have over Iranian internet and telecommunications is of particular concern. This is due to the development of the 5G mobile phone network in the country which raises the question of just how much influence will be exerted. 

What does this deal mean in the long term?

Whether fears are justified or not, the expansion of the alliance will have a considerable impact on Iran. The economic potential is undeniable; the increased exportation of crude oil and the investment in infrastructure will be of huge benefit to Iran. Investment projects such as airports, high-speed railways, and subways ‘would touch the lives of millions of Iranians’. Certainly, this would be a lifeline for the struggling Iranian economy.

It is also important to consider that Western perceptions of the Iran-China deal are often reported through a strongly sinophobic lens. With the implications of the alliance being negative for the US, reports that emphasise China’s allegedly colonial intentions are to be expected. They are, after all, fuelled by fear. A fear which is highlighted best by Pompeo’s statement that the sanctions will be applied to China too if the deal is signed. Even criticism from within Iran and the Iranian diaspora has a strong nationalist current which must be considered. Taking this into account, it is essential to become more critical about foreign reports of China’s intentions. 

Reports that accentuate China’s desire to dominate Iran are challenged by China’s support for Iran in the global sphere. For example, the recent opposition to US threats at the UN to pressure Iran and the demands to the US to end the sanctions. These instances of solidarity should not be totally disregarded as being ingenuine. This is especially poignant when one considers the long history of alliance between Iran and China. In this case, there is a viable possibility that the deal will be beneficial for both countries. 

While nationalist backlash is a reality, the loss of sovereignty may not necessarily be a consequence. Even if China really does intend to ‘dominate’ Iran, Beijing has ‘little experience’ in maintaining a colonial sphere of influence within the regions in which it has no cultural roots. This is particularly true of a region as volatile as Iran. Indeed, China must be careful to not lose links with its other alliances within the region who are also Iran’s enemies, such as Israel. 

If anything, the deal could benefit Iran diplomatically. As well as preventing isolation, the economic benefits would provide Iran with more leverage in future talks with the West and Middle Eastern rivals such as Saudi Arabia. Certainly, this would be beneficial especially for opening up talks again about the Joint Comprehensive Plan of Action. Nonetheless, there is the ‘bitter reality’ that Iran will have to increasingly rely on China in conducting its foreign affairs. Even if China is of help to Iran in the diplomatic sphere, it would be China who is countering US influence in the region, not Iran. This ultimately undermines the fiercely independent nature of the Islamic Republic. 

It is difficult to predict the specific outplaying of events in Iran that would follow the expansion of the alliance. The potential for a loss of sovereignty cannot be overlooked and would have huge implications for Iran’s future. Ultimately though, with the US sanctions and the impact of COVID-19, Iran has little other choice but to seek China’s help. Questions of reliance become almost irrelevant for a regime that needs stability, fast. The surge in investment and the potential economic and diplomatic benefits of this could strengthen Iran’s power, and subsequently, the regime’s stability.