Economy

China Starts Own Big Game With Iran While Tehran Aims At Alleviating Domestic Tension

Fuad Muxtarlı Analysis 11 September 2019
China Starts Own Big Game With Iran While Tehran Aims At Alleviating Domestic Tension

In the grip of a financial crisis and biting sanctions, Iran is seeking backing in China to alleviate social, political, economic problems to reduce the dramatic impact of the aggravated difficulties.

The chief of the General Staff of the Armed Forces of Iran, Maj-Gen Mohammad Baqeri, is to pay an official visit to China on September 11 to discuss regional events and strengthening of relations between Tehran and Beijing.

In the run-up to the official visit, an article in the reputable Petroleum Economist said that China plans to invest $280 billion in Iran’s oil, gas and petrochemical sectors, which is under US sanctions.

According to an article, citing an anonymous but "well-informed and senior official of the Iranian oil ministry," Beijing also pledged to invest $120 billion specifically in Iran’s oil sector and industrial refining infrastructure.

This huge amount will be paid within the first five years after the confidential agreement between the People’s Republic of China and the Islamic Republic of Iran comes into force, and investments can be increased if necessary.

In turn, Iran will give Chinese companies priority right to participate in tenders for any new, frozen or unfinished projects for the development of oil and gas fields, as well as for all petrochemical projects, including the provision of technology and personnel for the implementation of these projects.

Moreover, according to a senior Iranian anonymous author, the agreement includes a clause on the deployment of up to 5,000 Chinese security officers in Iranian territories to ensure the security of Chinese projects.

The information by the Petroleum Economist could indeed become a real bomb, since such an agreement would constitute a truly tectonic shift in the balance of power in world oil and gas markets. Moreover, such Iran-China accords would essentially tear to pieces all the plans of Donald Trump and the American establishment regarding Tehran.

Under the sole condition if the article turned out to be true. In reality, the publication is a real cocktail of various documents - the Agreement on Strategic Comprehensive Partnership between Beijing and Tehran, which was concluded in 2016, and the road map for this Agreement, which the Iranian side prepared for the meeting between Hassan Rouhani and Xi Jinping on the fringes of the SCO-2018 Summit in Qingdao.

To make this mixture explosive, the Iranian source also used some “analytical notes” prepared by the Iranian Ministry of Oil, adding to them a hot pepper in the form of “5,000 Chinese security officers” on the Iranian territory, which, incidentally, is strictly prohibited by the IRI constitution.

But the mythology, to put it mildly, of the published information about the “confidential agreement” does not cancel the very real fact - Beijing began a big game with Iran. Even if not in such forms as they are imagined in the West.

The more difficult are the US-Chinese trade negotiations the more often Iranian oil tankers are unloaded at the ports of China. This is not a secret for the Trump administration, experts at the White House assess the situation with Iranian oil exports as follows: about 30 percent of it goes to Syria. Another ten - diverges among small "black" merchants, but China takes away from 50 to 60 percent. This, of course, is not the amount that was earlier, but in July-August of this year, from 4.4 to 11 million barrels of Iranian oil, or from 142,000 to 360,000 barrels per day, were delivered to Chinese ports. Moreover, the huge spread in numbers in itself is quite eloquent - the existing control systems clearly do not cover the whole picture of what is happening.

And if the statistics are floating, then there are no problems with dating of Chinese purchases from Iran. They began exactly on the eve of how Donald Trump promised an additional 10-per-cent increase in customs tariffs on Chinese merchandise worth $300 billion. Coincidence? I don’t think so.

Actually, it was the trade war with the United States that made Beijing slightly - I emphasize, just slightly - change its attitude towards Tehran. With the Iranian side, everything is clear: China is now a lifeline to her, and the only one. There was no trace of the former arrogance of the Rouhani administration towards Beijing, and the fact that after the debacle with the meetings in Biarritz at the G-7 summit, Javad Zarif did not fly to somewhere else, but to Beijing, is more indicative.

But, as they say, there are nuances in the position of Beijing. Yes, objectively, it has no reason to support the "campaign of maximum pressure on Tehran", which is conducted by the American president. And in China, Iran is viewed without paying attention to all sorts of twists, like the South-North corridor or partnership with India - as an important link of the Belt and the Road project. Figuratively speaking, it is yet another “pearl” in its land area, which, in its geopolitical and geo-economic value, is approximately equal to Turkey or Azerbaijan.

However, for the sake of helping Tehran and partnering with it, Beijing is by no means ready to jeopardize its own interests, for which, it is now fighting with Washington. The intensification of Chinese purchases of Iranian oil is a careful probe of the possibilities of the American reaction to such actions. The tactics of a “cat's paw” - gently touched, pulled back, gently touched at another point, and so on until the Chinese leadership becomes clear where it is possible to go further in relations with Iran, and where it is not even worth approaching the red lines.

That is the essence of the first stage of the big game that Beijing is now starting with Iran. It is quite obvious that it will develop slowly, but it is understandable - for Tehran and Washington, albeit for various reasons, time is running out, it is running out and makes it rush. China does not have such a problem - therefore, it can play the game slowly, but with a traditional scope for it.
 

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