Recently, China and Iran formally signed a 25-Year comprehensive cooperation agreement to boost their partnership. The agreement holds great significance for both countries — since they are believed to be adversaries of the US. The agreement contains twenty articles and broadly covers political, economic, security, strategic, military, trade, telecommunication, energy, and cultural areas. Chinese President Xi Jinping visited Tehran back in 2016 during which both the countries had signed a joint statement on deep strategic cooperation. Four years ago, the leading Chinese and Iranian strategists met in Zhongnanhai, the central government of Beijing and Tehran to map out the content and formulation of a treaty that could include the military, economics, energy, communications, industry, infrastructure, science, and education. Now in 2021, both the countries going into deep cooperation could change the balance of strategy and geography in the Middle East in the future.
In October 2020, the UN lifted the arms embargo on Iran under the Joint Comprehensive Plan of Action (JCPOA). This enabled Iran to import regular military hardware. Even though Iran’s Foreign Minister Mr. Javad Zarif while addressing the Parliament maintained that Iran does not want or allow China to establish permanent military bases or gain any long-term control of the territory in Iran to secure any economic agreements. However, while developing industrial or infrastructure contracts in Iran, China may seek to provide security for ongoing construction, especially in areas with security risks. Likewise, in the military sector, several developments have been made so far which would significantly enhance their military partnership. These include expanded military training, naval, naval, and air tests, such as last year’s naval exercises in China-Russia-Iran in the Gulf of Oman, and also investment in new military installations and advanced technologies.
Following the lifting of the arms embargo, with an estimated budget of $15-20 billion to protect Iran’s military recruits for naval power, advanced missile development, aerospace technology, and other areas have made Iran’s armed forces in the next decade. The strength of the Iranian military industry remains important despite years of the arms embargo being imposed by the US and the UN. Much of Iran’s missile power comes from the production of custom-made missiles, although Iran retains the S-300 missile system purchased from Russia. The country saw the potential of Iranian missiles when the (Islamic Revolutionary Guard Corps) IRGC on January 8 this year introduced 15-22 round arches made of Ayn al-Asad airbase in the Al Anbar province in western Iraq, in retaliation for the assassination of US Qasim Solaimani. Reports examining the Iranian missile attacks have revealed the attack with the highest quality.
In the economic sector, the China-Iran agreement is likely to cover a wide range of areas specifically in Iran’s energy sector which includes: investment in oil, gas, and petroleum projects along with the provision of new pipelines. Further, Chinese banks can establish Iran’s offices, reforms, and support for Iran’s national banking sector and its private and public economic sectors. Iranian tourism would also get the benefit of this partnership; requiring investment in new hotels, restaurants, tourism infrastructure, and investment in new airports. Chinese companies would be in a position to enter emerging commercial and private markets throughout Iran. Chinese companies can offer advanced technology, robotics, and AI in a variety of industrial sectors. China and Iran must agree on how to deal with US sanctions to reduce risks in its strategic relationship. While exchange agreements that sell Iranian oil and gas contracts for Chinese industries, infrastructure, and power deals are emerging, other alternatives may emerge from negotiations between China and Iran.
Moreover, Iran’s energy sector development is an important part of the industrial sector in the strategic agreement between China and Iran. While China National Petroleum Corporation (CNPC) is issuing an agreement to develop Iran’s 11th phase in the South Pars gas sector, which is adjacent to Qatar’s share of that gas field, a new strategic agreement between China and Iran could revive CNPC’s entry. Currently, the Iranian energy company Petropars is developing Phase 11 in the South Pars gas sector.
A list of new energy deals including oil, gas, petroleum, and renewable energy could follow through a strategic agreement between China and Iran. Chinese companies can also contribute to new oil and gas pipelines connected to existing regional pipeline networks and create new pipelines. In the region, existing pipeline networks include the Central Asia – China gas pipeline, which connects to China’s west-east pipeline grid which runs from the western part of China to the east and covers approximately 7000 km from Turkmenistan to eastern China. The Tabriz-Ankara pipeline runs 2,577 km from Tabriz in north-west Iran to Ankara in Turkey. The Iran-Pakistan gas pipeline also known as the Peace Pipeline foresaw the construction of a pipeline from the South Pars gas field in Iran to Karachi in Pakistan. However, while the pipeline remains delayed, a strategic agreement between China and Iran may provide the necessary final push to complete the Iran-Pakistan pipeline. Currently, Iranian companies have built the 1100 km Goureh-Jask pipeline stretching from the Goureh Oil Terminal near Busher to Mobarak Mount in the western Jask region along the Sea of Oman, with 1 million barrels per day transfer capacity.
Also, Iran’s telecommunications sector needs reform and new infrastructure. While Iran seeks 5G power, internal issues with Iran’s Islamic Republic of Iran Broadcasting (IRIB) that controls 5G with a power of 700MHz and 800MHz remain as IRIB currently looks unwilling to release the spectrum of future 5G services across the country. When the right internal problems are solved, Huawei’s 5G network would likely gain momentum in Iran. Iran maintains a substantial manufacturing industry producing automobiles, electric appliances, telecommunications equipment, military hardware, industrial components, steel, and manufactured commodities for its energy sector. Chinese industrial players may enter to modernize Iran’s manufacturing industry further. This combined with educational and scientific exchanges and partnerships between Chinese and Iranian universities and research institutes may drive educational, scientific, and innovative advances.
In the infrastructure field, Iran effectively enters into China’s One Belt One Road strategy. Due to Iran’s unique geostrategic location with a 2250 km coastline with the Persian Gulf, Strait of Hormuz, Sea of Oman, and the Caspian Sea; in addition to a vast land border with Iraq, Turkey, Armenia, Azerbaijan, Turkmenistan, Afghanistan, and Pakistan; Iran becomes a vital country in China’s maritime One Road strategy and the land-based One Belt strategy.
Chinese port developers may assume the development of Chabahar Port, which India failed to complete in recent years. Chinese port developers may also develop a range of other ports along Iran’s 2250 km coastline along the Persian Gulf and in the Caspian Sea — which then facilitate port and shipping connections to Turkmenistan, Kazakhstan, Russia, and Azerbaijan. Combined with port modernization and port terminal development, Chinese infrastructure developers would likely modernize Iran’s railway structure with high-speed railway networks. China’s strategic infrastructure architecture thinking often combines its maritime ports and port terminals with railways and highways to different inland logistics clusters and special economic zones which form economic corridors enabling supply chain connectivity with countries across vast geographies.
China and Iran may also seek to connect the 3200 km long China-Pakistan Economic Corridor (CPEC) which stretches from Kashgar in the Xinjiang province in Western China to Gwadar in southern Pakistan along the Indian Ocean into Iran’s inland infrastructure and maritime port structure networks. This appears increasingly plausible now as Pakistani Prime Minister Imran Khan visited Tehran twice in 2019 to improve Pak-Iran relations further. Building infrastructure in the border region between Iran and Pakistan may also provide economic development in the tense Balochistan region, which has experienced unrest with various Indian backed groups including the Balochistan Liberation Army and the Baloch Liberation Front which regularly clash with Pakistan’s security forces. Calming tensions in the Balochistan region through economic and infrastructure development may provide employment and new trade networks unlocking the economic potential of this important border region and herald a new economic era for Iranian-Pakistani relations.
In the longer run, a Chinese-Afghan-Iranian infrastructure initiative may emerge, pending negotiations with Afghan authorities and Taliban, constructing an infrastructure corridor including a railway, highway, and a pipeline structure from Western China across the Wakhan Corridor in eastern Afghanistan through the Hindu Kush mountain range to Iran. This may form one of many initiatives driving Afghanistan’s future economic development as US military forces complete their planned withdrawal.
Iran and China may also seek to develop high-speed railway and cargo railway networks across Iran with connections from Iran to Kazakhstan and Turkmenistan, and onward to Tajikistan and Kyrgyzstan, thus connecting Iranian transportation networks to the emerging Central Asian infrastructure architecture. This enables connectivity with the important logistics cluster — Special Economic Zone Khorgos Eastern Gate located 330 km from Almaty on the Kazakh-Chinese border about four hours from Urumqi, the capital in the Xinjiang province in western China. Connecting China and Iran via Kazakhstan and Turkmenistan in addition to Afghanistan and Pakistan cement economic corridors across Central and South Asia. Fundamentally, the China and Iran strategic agreement forms a geostrategic economic architecture by connecting a China-Pakistan-Iran corridor, a potential China-Afghanistan-Iran corridor, and a China-Central Asia-Iran corridor into a geostrategic China-Iran Economic Corridor (CIEC). Although China and Iran face various challenges by entering a 25-year strategic agreement, both China and Iran constitute historical trading and merchant civilizations with substantial manufacturing industrial bases and traditions in advanced scientific innovation. This provides a unique historic opportunity for both countries to finally form what may become a new strategic economic theater from East to West Asia for the coming decades transforming the geopolitical equilibrium in the Middle East as it, in reality, negates large parts of the US sanctions regime; propels Iran’s economic development eastwards, and grows the economic landscape from China to Iran. This strategic agreement shifts the political equality in Iranian relations with Saudi Arabia because it exacerbates the situation, which Saudi Arabia wants to maintain.
In short, the China-Iran agreement reportedly would likely bring certain benefits to Pakistan even though Pakistan is not the signatory to the agreement. There are widespread deliberate speculations that the China-Iran deal would undermine the CPEC however, these claims are baseless as the nature of CPEC is quite different from the agreement China signed with Iran. Besides, there is no land connection between Iran and China which makes these claims baseless. Mushahid Hussain Syed had negated these claims last year when the agreement was under discussion. Pakistan can benefit from this deal while playing Chinese cards. The strategic agreement would help Pakistan and Iran to meet the shortfall, improve their commitments, and begin joint efforts in addition to their joint Rapid Reaction Force program to address their joint security concerns. It would oust Pakistan on suspicion of Indian presence in Iran. China’s comprehensive agreement with Iran forms the basis for the China-Iran Economic Corridor (CIEC) which could change the strategic equity and geographical structure in the Middle East in the coming years to create a tectonic strategic direction in the east of China.