Iran-China Mega Deal | Game-changing bargaining chip for Iran

With the US administration exiting the JCPOA (Joint Comprehensive Plan of Action) — popularly known as the Iran nuclear deal, which involved all the UN Security Council members plus Germany (P5+1) as well as Iran — and re-imposing a bevy of sanctions, on May 8, 2018; the Iranian economy was badly disrupted.

The COVID-19 pandemic added to the woes of Iran and obviously so. Thus, Iran, as a matter of necessity rather than choice, has more or less decided to embrace the dragon of the east, China. As per the Iran-China comprehensive cooperation document, “two ancient Asian cultures...will consider one another strategic partners.”

This means, China will invest $400 billion over the course of next 25 years in Iran in multiple sectors such as agriculture, energy, transportation and communication, defence and a host of other domains. Reports suggest that China will also be active in some strategic Iranian ports and will undertake railway development in areas from Pakistan to Lebanon. In return, China will receive discounted Iranian oil over the next many years.

Ironically, the most important aspect of the deal is that it has not been finalised. The deal has been negotiated primarily because Iran’s status as a pariah state was amicably and virtually altered upon its signing of nuclear deal with the P5+1 powers, and its subsequent compliance to exacting terms verified by several UN bodies. The then US President, Barack Obama, thus in a way, justified the Nobel Peace Prize he had received a priori.

Trump, however, in his typical fashion decried the deal, “a horrible one-sided deal that should have never, ever been made”, and relegated it to the recycle bin of history. Before that happened Chinese President Xi Jinping, on his visit to Iran in 2016, offered this deal to Iran. The Persian Gulf power, in a sense, did not warm up to this offer until the sanctions were re-imposed by the US withdrawing from the JCPOA.

Now it is contemplating a tango with the dragon. Only that the duo has not yet hit the dance floor. So, why this delay?

This partnership is going to act as a bargaining chip for Iran as it will, irrespective of the next occupant in the White House, provide Iran with some much-needed wiggle room and breathing space. If the US does not revive the JCPOA, Iran will finalise the deal with China in the terms as dictated by Beijing. If the US does restore the agreement to status-quo ante, no doubt, the strategic leverage of Iran will only increase and may get to bag a better deal from China, which would be finalised. Either way, Iran benefits but by different degrees. China too.

In the words of Bilgehan Alagoz, international relations lecturer at Marmara University, Istanbul, apart from being a projection of power by both potential partners, the agreement seeks to balance the other relations Iran have or may have in the future with Russia and the European Union.

As for China, this partnership, long been under discussion, is a part of its global strategy, and is aimed at securing its vital energy sources in the Persian Gulf. It is interesting to note that China’s main rival, the US, is seeking to contain China on every possible front by utilising its leverage in the Persian Gulf. Invariably, the strategic partnership is a political hedge for China vis-a-vis the threat posed by the US.

To conclude, it is the moral failing on the part of the US and other members of the UN Security Council that has led to this unfavourable situation for the strategic designs of the supreme global power.

Rakesh Neelakandan is a Kerala-based analyst. Views are personal.