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Foreign policy background of the Iranian crisis

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Despite all the complexity and ambiguity of the situation now exiting in the world, the summer and fall of 2019 saw a certain degree of success, achieved by Iran’s Middle East policy both in the region and inside the country itself.

Tehran’s foreign policy achievements have also helped strengthen the “Shiite belt” spanning Iraq, Syria and Lebanon, where Tehran’s influence remains very strong. However, the events of the past few weeks have shown that this belt is starting to “snap.”

Iraqis have for more than a month been holding rallies against the authorities, accusing the government of corruption and demanding the resignation of Prime Minister Adil Abdul-Mahdi. Many are chanting anti-Iranian slogans, because they believe that the government is getting a great deal of support from Tehran. In Karbala, considered a holy city for Shi’ite Muslims, protesters set ablaze the Iranian consulate, crying “Iran, go away!” in a violent flare-up that left more than 300 people dead.  The Iraqis blamed the killings down on members of the pro-Iranian militia.

The picture in neighboring Lebanon is much the same with the Lebanese actively protesting not only against corruption and low living standards, but also against the Iranian influence in the country, namely the Hezbollah, an Iranian creation, which plays an important role in Lebanon. According to observers, it is against this backdrop of anti-Iranian sentiment that Hezbollah has gradually been losing control of the situation there.

In Syria – this main link of the Shiite arc – the situation is equally alarming for Tehran, but this is a separate story that deserves a separate analysis.

What makes the situation so noteworthy though is that Iran is in various degrees influencing the domestic political situation in all these three Arab countries, with Iraq, Lebanon, and especially Syria each being an Iranian enclave in the Arab world.

However, it is precisely in these countries that initial “shocks” – the harbingers of serious upheavals for Iranian politics in this region – are being felt now. Moreover, these shocks dangerously resonate with the political situation in Iran proper, which has seen a recent wave of mass protests flaring up on November 15, 2019, sparked by an increase in gasoline prices.

Historical analogies

Over the 40 years of its existence, the Islamic Republic of Iran has seen a number of social disturbances, but they were usually of a local nature, caused by local problems and limited to rallies and strikes at individual enterprises. However, in the last decade, waves of mass discontent, already on a national scope, have risen repeatedly.

The first nationwide anti-government protests in post-revolutionary Iran happened in 2009, caused by alleged voting fraud and irregularities in presidential elections that resulted in a surprise win for Mahmoud Ahmadinejad. Those protests are known as the Green Revolution.

The protests took place in several major Iranian cities, with middle-aged people, representatives of the intellectual elite and political opposition predominantly taking to the streets. At the height of the tensions, hundreds of thousands of people gathered in the streets and squares of the relatively liberal Tehran, where the protests originated. The sole demand was to cancel the results of the 2009 presidential election, won by Ahmadinejad.  Presidential hopefuls Mehdi Karrubi and Mir-Hossein Mousavi formally spearheaded the protests which, heated as they were, still remained within the framework of the political system of the Islamic Republic.

A distinctive feature of those protests was that Iranians used social networks not only to coordinate their actions, but also to let the rest of the world know what was going on in their country.

The second powerful wave of protests rocked Iran in late 2017 – early 2018, this time caused by a spike in food prices. The protests flared up in one of Iran’s most conservative cities – Mashhad – and almost simultaneously in more than 50 cities and numerous villages (where people traditionally support the government), and were much bigger in scope than the previous ones. Most of the protesters were young people with the rallies attended by representatives of various social and political backgrounds. What started as a purely economic protest, quickly acquired a political nature directed against the country’s leadership. The fundamental difference that set the second wave of protests apart from the previous one is that the protesters demanded a reform of the country political system and even the elimination of the principles of the Islamic Republic. The Iranian protest was rather chaotic too. as there were no single leaders and common demands being made to the powers-that-be. Another important feature of those events was that at a certain stage all Internet access was blocked. While in 2009 there were around 1 million Internet users in Iran, in 2017-2018 their number had jumped to 48 million, and this is in a country of 82 million people! The list of those detained during those protests included the country’s ex-president Mahmoud Ahmadinejad.

Events of November 2019

On November 15, 2019, Iran encountered a third wave of civil protests after the government of Hassan Rouhani announced that it was raising gasoline prices by as much as 200 percent.

Protests against this decision engulfed the entire nation, flaring up in Tehran and then spreading to about 100 towns and villages elsewhere in the country, involving more than 100,000 people. Maybe not much for a country of 82 million, as previous protests were much bigger in scope, but certainly more radical. In a number of places, more than 100 bank offices, including those of the Central Bank, were set on fire, and 900 branches and 3,000 ATMs were damaged.

The protesting crowds attacked police officers, gas stations and public offices, with economic slogans quickly making way for demands for a new government.

The protesters also want Tehran to stop sponsoring Islamic movements abroad because they believe that it is exactly where the money from the gasoline price hikes will go, instead of helping the poor. “Not Gaza and not Lebanon – I sacrifice my life for Iran,” protesters chanted. Another demand is to change the country’s foreign policy, which, according to the protesters, is turning Iran into a rogue country, suffering under heavy economic sanctions.

Iran’s leaders put the blame for the social unrest on a mix of enemies, including the United States, Saudi Arabia and Israel, as well as groups like the People’s Mujahedin of Iran, the Kurdistan Free Life Party, the Islamic State (banned in Russia), and now also the clan of the ousted Shah Mohammad Reza Pahlavi and, above all, his son – heir to the throne Reza Cyrus Pahlavi.

I believe that although the countries opposed to the Islamic Republic of Iran, did of course provide moral and media support for the civil protest against the existing regime, they could still hardly be able to organize such anti-government rallies inside the country. As for Reza Cyrus Pahlavi, living in the United States, he often makes political forecasts and comments, but always avoids political activity. He has no ambitions to restore the monarchy, saying only that he would like to see Iran without theocracy. The current protests in Iran apparently stem from domestic, primarily social and economic, problems.

Economic background of the crisis

On November 15, the Iranian government announced an increase in retail gasoline prices. While motorists were previously allowed to buy 250 liters of fuel per month at a price of 10,000 rials (19.14 rubles), now they have to pay 15,000 rials (28.71 rubles) with the fuel quota reduced to 60 liters (up to 400 liters for taxi drivers). Iranians are now supposed to pay 30,000 rials (57.42 rubles) for every additional liter in excess of the quota at a price of 30 thousand rials (57.42 rubles). This is exactly what triggered much of the mass-scale protests.

Here are the three main points that need to be highlighted and emphasized:

First, Iran’s economy is in a very bad state now. And not only because of the US sanctions. According to Gholamhossein Shafei, President of Iran’s Chamber of Commerce, Industries, Mines & Agriculture (ICCIMA), the Iranian economy suffers from two key problems: corruption and stagnation …  Economists describe stagnation as a derivative of an ineffective  management, lack of financial discipline, and exhaustion of the existing model as a whole. According to some experts, this could eventually ruin the country’s entire political system.

Second, the aggressive financial and economic sanctions imposed on the Islamic Republic by the United States have cost the country tens of billions of dollars and contributed to its economic woes.

According to the IMF, as a result of a combination of multiple factors, Iran’s GDP this year is projected to decrease by 9.5 percent – the worst indicator since 1984. Annual inflation will exceed 35 percent (according to other sources, it could climb to 52 percent). Food prices are up almost 60 percent, and price increases for many non-food products exceed 80 percent.

Since January, the national currency, the rial, has lost 70 percent of its value against the US dollar. People and businesses have turned to the black market for currency and, as a result, the rial’s exchange rate finally detached from the official one. When the rial’s fixed exchange rate was introduced in April 2018, one US dollar bought about 60,000 rials. By July, the unofficial rate had jumped to 112,000 thousand rials, and by early September – to 145,000 rials. A year later, the “street” rate rebounded a bit to about 115,000 rials for one US dollar, but the gap with the official exchange rate, frozen at 42,000 rials per dollar, remains huge nonetheless.

Overall, the damage inflicted on the Iranian economy by the new US sanctions and the sixth-month devaluation-inflation spiral was officially estimated at 4.9 percent of the country’s GDP.

Meanwhile, employers are massively switching to short-term contracts, which adds to the sense of anxiety among the people.

According to the Statistical Center of Iran, a government agency controlled by the country’s president, the official unemployment rate in 2018 reached 27 percent among young Iranians, and 40 percent among university graduates.

Third, under the circumstances, the government had no other choice than to jack up fuel prices, because even though the IMF hadn’t discussed such a raise with the Iranian authorities, it had still advised Tehran to cut fuel subsidies, which means raising fuel prices. According to the Iranian government, fuel subsidies cost the state $2.5 billion a year and are an incentive for smuggling.

Indeed, the price of gasoline in Iran was one of the lowest around (about $0.3 or 19 rubles). And this provided fertile ground for large-scale smuggling of gasoline to Afghanistan (where it costs $0.65 or 41.5 rubles) and, to a greater extent, to Turkey (where the price of gasoline is $1.2, or 77 rubles.)

So, according to a report by the Iranian parliament’s research center, as a result of the economic downturn, caused by multiple reasons, objective and subjective, as well as external and internal, the living standards of the Iranian people keep falling.

Amid last month’s social unrest, on November 18, the Iranian government, in an effort to reduce tensions, announced additional payments to the poorest segments of the population, hit the hardest by the rising gasoline prices. They were promised up to 2 million riyals in the first week, followed by subsidies to be provided on a monthly basis. By the end of the first week of protests, the government had managed to somewhat dampen the tensions and restore a semblance of normalcy.

Conclusions

While analyzing the current situation in Iran, we should single out the following points:

Iran has over the past three years going through an internal systemic economic and political crisis, as the pace of development of the model of managing economic and social processes is falling behind the requirements of our time.

The past two years have seen a notable rise in social tensions, caused by the people’s general unhappiness about their socio-economic situation, the government’s foreign and domestic policy and certain fatigue from the framework of Islamic demands.

The mass protests of November 15-22 were not so much the result of ramped up gasoline prices, but rather of a consistent rise in the degree of general popular discontent. The gasoline price hike was merely a spark, which ignited the flames of protest.

The protests happened without concrete leaders steering them as both Internet and mobile phone communications were blocked by the authorities. Therefore, the protest actions were spontaneous and apparently not coordinated by external forces.

The protests did not and could not lead to a breakdown of the country’s Islamic statehood because, for all the flaws in the existing model of governance, the ruling elite and the specific state structure it has established still enjoy a margin of strength due to the balance of checks and balances.

The protests further undermined the positions of President Hassan Rouhani and his team. Trying to make the most of the situation, the radical conservative opposition accuses the president of inability to bring the situation and the whole country under control. Simultaneously, supporters of liberal reforms blame the president for being unable to create conditions for implementing these reforms, which would result in a lifting of international sanctions imposed on the country.

The events of the fall of 2019 will factor in very heavily in the outcome of the 2020 parliamentary elections as well as the presidential elections in 2021. Because it is unlikely that supporters of the liberal (by IRI standards) Hassan Rouhani will gain legislative and executive power, this will result in a toughening of Iran’s policy across the board, which in turn would complicate the country’s external and domestic situation and possibly exacerbate internal contradictions.

The protests of November 2019 demonstrated once again that the crisis-hit Islamic Republic of Iran needs radical reforms in almost every sphere of life.

From our partner International Affairs

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Middle East

Rejiggering Gulf Security: China’s Game of Shadow Boxing

Dr. James M. Dorsey

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China and its Gulf partners appear to be engaged in a game of shadow boxing.

At stake is the future of Gulf security and the management of differences between the region’s conservative monarchies and revolutionary Iran.

With governments passing to one another unofficial subtle messages, intellectuals and journalists are the ones out front in the ring.

In the latest round, Baria Alamuddin, a Lebanese journalist who regularly writes columns for Saudi media, has cast subtlety aside.

Ms. Alamuddin warned in strong and rare anti-Chinese language that China was being lured to financially bankrupt Lebanon by Hezbollah, the Iranian-backed Lebanese Shiite militia.

Writing in Arab News, the Saudi Arabia’s primary English-language newspaper, Ms. Alamuddin suggested that the Lebanese Shiite militia’s seduction of China was occurring against the backdrop of a potential massive 25-year cooperation agreement between the People’s Republic and Iran.

Her tirade was as much a response to reports of the alleged landmark agreement as it was to a declaration by Hezbollah leader Hassan Nasrallah that China was willing to invest in Lebanon’s infrastructure.

“Chinese companies are ready to inject money into this country. If this happened, it would bring money to the country, bring investment, create job opportunities, allow heavy transport, and so on,” Mr. Nasrallah said.

In a state-controlled media outlet in a country that has studiously backed some of the worst manifestations of Chinese autocratic behavior, including the brutal crackdown on Uyghur Turkic Muslims in Xinjiang and the repression of democratic expression and dissidents, Ms. Alamuddin did not mince words.

“Chinese diplomacy is ruthless, mercantile and self-interested, with none of the West’s lip service to human rights, rule of law or cultural interchange.”

“Chinese business and investment are welcome, but Beijing has a record of partnering with avaricious African and Asian elites willing to sell out their sovereignty. Chinese diplomacy is ruthless, mercantile and self-interested, with none of the West’s lip service to human rights, rule of law or cultural interchange,” Ms. Alamuddin charged.

She quoted a Middle East expert of a conservative US think tank as warning that “vultures from Beijing are circling, eyeing tasty infrastructure assets like ports and airports as well as soft power influence through Lebanon’s universities.”

She went on to assert that “witnessing how dissident voices have been mercilessly throttled in Hong Kong, Tibet and Xinjiang, Lebanese citizens are justifiably fearful that their freedoms and culture would be crushed under heavy-handed, authoritarian Chinese and Iranian dominance, amid the miserable, monolithic atmosphere Hezbollah seeks to impose.”

Ms. Alamuddin’s outburst implicitly recognized that China was signaling Gulf states, at a time of heightened uncertainty about the reliability of the United States’ regional defense umbrella, that they need to reduce tensions with Iran if the People’s Republic were to engage in helping create a new regional security architecture.

China was signaling Gulf states, at a time of heightened uncertainty about the reliability of the United States’ regional defense umbrella, that they need to reduce tensions with Iran.

Expressing concern about last month’s US decision to withdraw troops from Europe a day after Ms. Alamuddin’s stark criticism of China, Gulf Cooperation Council (GCC) Assistant Secretary-General for political affairs and negotiation Abdel Aziz Aluwaisheg suggested that “a more systematic framework, with organic feedback to the leadership and decision-makers” was needed for US-Gulf security discussions.

The GCC groups the Gulf’s six monarchies: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain.

China has been subtly pressuring Gulf states through academic and Communist party publications and public statements by prominent scholars with close ties to the government in Beijing.

Its messaging has primarily targeted Saudi Arabia, the one Gulf state that has so far refrained from engaging in any gestures towards Iran that could facilitate a dialing down of tension.

recent article in a renowned Chinese journal laid out the principles on which China is willing to break with its long-standing foreign and defense policy principles to engage in Gulf security.

The principles included “seeking common ground while reserving differences,” a formula that implies conflict management rather than conflict resolution.

Most Gulf states have extended a helping hand to Iran, the Middle East country most hard hit by the coronavirus pandemic.

The Iranian and UAE foreign ministers agreed in a recent video call to cooperate during the health crisis.

“We agreed to continue dialogue on [the] theme of hope—especially as [the] region faces tough challenges, and tougher choices ahead,” said Iranian Foreign Minister Mohammad Javad Zarif on Twitter.

UAE officials said earlier that there were limits to a reduction of tensions. They said a real détente would only be possible once Iran changed its behavior, meaning a halt to support for proxies in Lebanon, Iraq, and Yemen and a surrender of its nuclear ambitions.

The Chinese-Gulf shadow boxing takes place against a slow-moving and seemingly troubled US and Chinese-backed Pakistani effort to mediate between Saudi Arabia and Iran.

The Chinese-Gulf shadow boxing takes place against a slow-moving and seemingly troubled US and Chinese-backed Pakistani effort to mediate between Saudi Arabia and Iran.

Pakistani Prime Minister Imran Khan said last week without providing details that he had averted a military confrontation between the two Gulf powers. He said mediation was “making progress but slowly.”

Ms. Alamuddin’s column coupled with Saudi Arabia’s refusal to capitalize on the pandemic as way to reduce tensions, suggests that Saudi Arabia has yet to fully embrace Mr. Khan’s efforts.

Mr. Khan’s efforts are likely to be further complicated by the disclosure last month by Pakistani law enforcement that a Baloch gang leader, who was detained in 2017, had confessed to giving “secret information and sketches regarding army installations and officials to foreign agents,” believed to be Iranians.

It was not immediately clear what prompted the disclosure.

Pakistan has long asserted that Iran and India have lent support to Baloch nationalist militants responsible for multiple attacks on military and Chinese targets in the South Asian state.

“The Iran-Pakistan border issues are mainly affected by the sectarian rivalry between Iran and Saudi Arabia. For Pakistan, this is a costly and difficult diplomatic situation at this time,” said Michael Kugelman, a South Asia scholar at the Wilson Center in Washington.

Pakistan has a vested interest in helping dial down Saudi-Iranian tensions. It takes, however, two to tango and a mediator whose efforts are not burdened by bilateral issues of his own with any of the parties.

To move the pendulum, more will be required than a regional go-between or subtle nudging. With the US likely to refrain from doing the heavy lifting, that task may be left to China. If Ms. Alamuddin is an indication, China is already discovering that changing the paradigm in the Middle East is easier said than done.

Author’s note: This story was first published in Inside Arabia

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Evolving Japan-UAE ties

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Mohamed bin Zayed with Japan's Abe. Image Credit: WAM

Japan and the UAE share a unique relationship with each other. Japan recognised the UAE as an independent state in 1971 and opened its Embassy in the UAE in 1974 and on the other hand, UAE opened its embassy in Japan in 1973. Both nations share strong bilateral economic relations, dating back to 1961 when the first shipment of the crude oil was exported from Umm Al-Sharif offshore field in Abu Dhabi to Japan. Japan is known to be the world’s fourth-largest importer of oil. In 2017, it was the second-largest export market, behind China, for Saudi Arabia, the UAE and Qatar. The UAE became the top destination in the Middle East region for Japan’s exports, valued at $7.18 billion in 2019, taking economic bilateral relations to a great level. However, on 19 July 2020, UAE spacecraft rocketed into blue skies from a Japanese launch centre at the start of a seven-month journey to Mars on the Arab’s world’s first interplanetary mission. This mission gave a boost to its strategic relations as well as space cooperation.

Understanding their bilateral relations

The longstanding cordial relationship between the UAE and Japan has been honored for decades. In 2013, PM Shinzo Abe visited the UAE and both nations jointly announced the statement on the strengthening of the Comprehensive Partnership between Japan and the UAE towards stability and prosperity. The relations between both countries have mostly focused on the economy and trade ever since they established their diplomatic relations. Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces H.H. Sheikh Mohammed bin Zayed Al Nahyan visited Japan as an official guest in February 2014 to follow up the Joint Statement issued during the Prime Minister’s visit to the UAE in May 2013.

In 2016, the number of Japanese citizens living in the UAE totalled 4,000, while hundreds of Emirati citizens are in Japan for education and investment purposes.

According to the Japan External Trade Organisation (JETRO), In 2017, Japan imported Dh57.3 billion worth of oil from the UAE.

In 2018, the Comprehensive Strategic Partnership Initiative (CSPI) was signed between the two countries when Abe visited the UAE. With the signing of the CSPI, the relationship between Japan and the UAE entered a new era of strategic partnership for the future and joint cooperation strategy between the institutions of the two countries. They also agreed to increase trade in areas which included renewable energy, advanced robots, artificial intelligence and health care. Ensuring cordial energy ties are critical under the CSPI. In 2018, Japan also acquired an oil concession in Abu Dhabi for the coming 40 years which proved that Japan is an important strategic energy partner in the UAE.

The leadership of the UAE has been keen on strengthening ties with Japan in areas like education, scientific research and industry. It aims to seek its ties with Japan to new levels as Japan possesses advanced technology which would serve the sustainable and comprehensive development goals in the UAE. Cooperation is very strong in the education field. The first Japanese school was inaugurated in the UAE in 2009 and began teaching the Arabic language, Islamic education and social studies to the students of the Emirates along with the Japanese curriculum. Furthermore, around 100 students from the Emirates are studying in Japanese universities for bachelors, masters and even PhD degrees.

In 2019, an attempt of initiating to teach Japanese as a second foreign language in some UAE high schools was discussed among both countries. Akihiko Nakajima, new Japanese ambassador to the UAE affirmed that ‘both nations are currently giving importance to educational cooperation’. The friendly ties were further strengthened in recent times when Sheikh Hazza Bin Zayed Al-Nahyen, Deputy Chairman of Abu Dhabi Executive Council and Dr Sultan Ahmad Al-Jaber, Minister of State and Special Envoy to Japan, attended the enthronement ceremony of the Japanese Emperor Naruhito in 2019. They wished that Japan shall achieve a brighter and more prosperous future during the ‘Reiwa Era’.

Japan and the UAE have been closely cooperating in space sciences. In October 2018, ‘KhalifaSat’ was launched into outer space from the Tanegashima Space Centre in Japan aboard an H-IIA rocket. In January 2020, Shinzo Abe made an official visit to the UAE and other Gulf countries to further bolster the strong ties which have been evolving on multiple fronts like trade, energy, technology, space and education. “UAE-Japan relations are historic and based on trust, cooperation, respect and mutual interests,” Sheikh Mohamed bin Zayed said. Abe and Sheikh Mohammad also witnessed the signing of an Energy Cooperation Agreement between supreme Petroleum Council, represented by Adnoc (Abu Dhabi National Oil Company), and Japan’s agency for natural resources and energy.

Space Cooperation

The lift-off of the Mars orbiter named Amal or Hope probe on 19th July 2020, from a Japanese launch centre is to be followed soon by China and the United States. Amal blasted off from the Tanegashima space centre aboard a Mitsubishi heavy industries H-IIA rocket. This has given a major boost to space cooperation between Japan and the UAE. Amal is set to reach Mars by February 2021, which will mark the year the UAE celebrates 50 years since the country’s formation. It points out that the launching of Amal was well planned in line with the celebration of 50 years of the country’s formation. “The UAE is now a member of the club and we will learn more and we will engage more and we’ll continue developing our space exploration program,” UAE Space Agency chief Mohammed Al Ahbabi told a joint online news conference from Tanegashima. The Amal statecraft costs $200 million and it is about the size of a small car, carries three instruments to study the upper atmosphere and monitor climate change. Japan’s services of such launches are known well for accuracy and on-time record. However, the providers are working to cut costs to be more competitive internationally. Japan also has its own Mars mission planned in 2024, where it aims to send spacecraft to the Martian moon Phobos to collect samples to bring back to Earth in 2029.

The objective of the UAE’S mission is to provide a comprehensive image of the weather dynamics and fundamentally, building a human settlement on Mars within the next 100 days. Omran Sharaf, the mission’s project manager said, “What is unique about this mission is that for the first time the scientific community around the world will have a holistic view of the Martian atmosphere at different times of the day at different seasons. Sheikh Abdullah Bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation has said that ‘Hope Probe’ exemplifies the distinctive strategic partnership between the UAE and Japan.

It is the first time that the UAE attempted to send a deep space mission, that of a mission to Mars. It clearly sends a strong message to the Arab youth that if the UAE is able to reach Mars in less than 50 years, then they certainly can do much more. Emiratis also believed that it represented a step forward for the Arab world and for scientists.

However, energy remains a key priority in the ongoing relations between the two countries which may contribute significantly to energy development and economic diversification in the UAE and Japan. Through space and strategic cooperation, the two countries are looking to expand and deepen the fields of cooperation. A successful mission to Mars will indeed be a major step for the oil-dependent economy seeking a great future in space. The launch of the hope probe demonstrates that effective space cooperation is a driving force for strengthening their bilateral ties. Hope is expected to begin transmitting information back to earth by September 2021.

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China-Iran Deal and its implication for the region

Ashish Dangwal

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From the past few years, the increasing partnership between China and Iran has raised major concerns among many countries. Sinking economy and the recent COVID crisis pushed Iran into the corner and China timely manifested itself as a perfect partner for Iran. The diplomatic ties between these two countries were established in 1971 and over the years China’s demand for energy and Iran’s isolation from the international community brings them together. The recent investment and security pact covered almost every sector from Telecom, banking, ports, railways and dozens of other projects. Though the secret details of the pact were leaked but soon rejected by Iranian officials.

In 2016, Xi Jinping made a state visit to Iran and then laid the structure of this deal. Soon after in 2019, China announced its plan to invest $ 400 billion. Iran’s economy is suffering greatly because of the U.S.A sanctions and needs a lifeline to revive their domestic market. Where one side, most of the companies from different nations pulled out their businesses from Iran, On the other hand, Chinese investment can play a significant role in Iran’s survival. This partnership between these two nations directly challenges U.S.A efforts to cut off Iran from the international market arena. China’s ever-growing aspirations to increase its involvement in the Middle East perfectly sync with the geostrategic location of Tehran. However, Iran’s ambition to become a regional power needs huge investment in its domestic market. That’s where both countries see themselves as an emerging partner. 

China-Iran Economic Relationship

As a growing economy, China dependence on Iran’s oil is quite reasonable. Though this relationship is not just based on the energy, but even on the many different aspects. After 2016, China and Iran were agreed to increase their trading relations to $600 billion in the upcoming 10 years. The agreement was concordant with One Belt, One Road framework. A total of 17 agreements were signed, including one which relates to the Iran nuclear programme. The Chinese will help connect Tehran with Mashhad via their high-speed rail technology.  After the sanctions levied by the USA and other western countrieson Iran, its dependence on China increased in recent years. The trading relationship is not only limit to purchase of crude oil but even China’s involvement inIran’s upstream and downstream production processes through major investments.From 2005, both countries signed seven upstream production agreement with each other. All these agreements involve the state-owned Chinese companies, which shows the significant presence of China in Iran.

China-Iran-Syria Nexus

In December 2019, Syrian president while giving an interview to a Chinese media expressed his willingness to join the BRI project and projected Syria as a perfect partner for the Chinese investment. Syria suffered a lot because of the decades of war and wanted to start the reconstruction activities in their country. Iran and China identified themselves as the ally of Syria and they even wanted to make a strategic nexus between these countries. For the reconstruction process, China is helping Syria from Port of Tripoli by setting up it as a logistic base for the reconstruction process. China wanted to link this port with Syria’s “Four sea strategy” and connect the BRI project to the eastern Mediterranean area. This whole economic bloc could challenge the American hegemony in the region. Iran and Syria are already strategic allies in this region and by adding China in this situation, it would promote the autocratic rule in the region to counter America.

The implication for the Region

Trump administration’s ‘maximum pressure’ policy towards Iran pushed many countries like India and Japan to cut off the trading ties with Tehran. This was seen as the major diplomatic blunder made by the U.S.A because of the one very simple reason that these countries could play a major role to find the middle ground for the talks between Iran and the west.As claimed by the reports, China will increase its partnership to build the ports too, getting a port in the Persian Gulf will provide the major boost to Chinese strategic plans. If China successfully expands its presence in Iran then it will lead to the major conflict between the U.S.A and China. Though China has already invested heavily on the Gwadar port, it will not hesitate to gain an upper hand in the Persian Gulf. From where Beijing can keep its eye on U.S.A movements in the region. India’s investment progress in Iran was slow and that’s the reason recently Iran started the railway track construction work on its own.

The growing instability in the region will further escalate, as the partnership will grow between these countries. China’s ambitions to expand its BRI projects and Syria’s “Four seas strategy” can become a foundation for future projects in the whole region. Syrian President Bashar Assad has promoted this four seas strategy since 2009 that would transform the Damascus into a major trading hub. Syria wanted to form an economic space between Iran, Iraq, Turkey and Syria that will shape a new bloc of nations in the region. This plan includes the four seas of the region from the Mediterranean, Caspian, Black Sea, and the Persian Gulf, which makes easy for these nations from investment to transportation. 

The expanding partnership will lead to the architecture of a security structure between these three countries and will directly undermine the U.S.A presence in the region. The gradual consolidation of powers based on Anti-American and Anti-west sentiments can even form a proper security alliance where the inclusion of Turkey would be a possible scenario shortly. All these countries kind of having the same political regime one way or another, so for them it will be a great strategy to stop America’s presence from their domestic issues. If U.S.A wants to stop China’s involvement in the region, it needs to involve its key Asian partner, so that there will be some major power players in the region to maintain stability. 

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