Chinese President Xi Jinping and Iranian President Hassan Rouhani in a file photo. Photo: Facebook

In recent weeks, Iran and China have been hammering out the details of a potentially momentous cooperation deal meant to span the next quarter-century and chart a future decoupled from the United States.

Under the terms of a draft viewed by Asia Times, China will invest tens of billions of US dollars in Iran as part of Beijing’s ambitious Road and Belt Initiative. The 25-year agreement includes economic, security, and military dimensions.

Such a deal is particularly important for Iran’s ailing energy sector, which is in dire need of substantial investment to refurbish an aging oil industry, which requires upwards of $150 billion for much-needed modernization of wells, refineries and other infrastructure.

The negotiations are ongoing, even as the Donald Trump administration continues to pin hope on Iran’s economic strangulation by a unilateral maximum pressure strategy and against the backdrop of growing US-China rivalry.

If approved by the Iranian parliament, the plan represents a major affront to the Trump administration’s relentless pursuit of Iran’s economic isolation in the international community. As expected, news of the China-Iran agreement has set off a chorus of condemnation in the West.

Some Iranian opponents in exile have branded the plan as the Islamic Republic’s “sellout” to China and view it as a testament to China’s ability to transform Iran into one of its “satellites.” Critics have falsely claimed the plan contains a “monopoly clause”, most controversially granting China control over one of Iran’s Persian Gulf islands.

Reputed leaked versions of the agreement, clearly aimed to undercut the deal, have been published in Farsi and in English and claim to include provisions that could be perceived as harmful to Iran at China’s expense.

Aerial view of Iran’s Chabahar port. Photo: Wikimedia

Should China undertake such a massive long-term investment in Iran, it is very likely that Beijing will take over the strategic Iranian port of Chahbahar — the country’s outlet to the Indian Ocean.

The port enjoys a waiver from US sanctions imposed on Iran, which was granted as a nod to India’s ambitions for the port. In Tehran’s view, New Delhi has squandered that opportunity by effectively siding with the US on oil sanctions and failing to make adequate investments in the port.

The new Iran-China agreement points to both nations’ changing strategic calculus in the current international milieu, where international norms and principles have been eroded largely by the Trump administration’s unilateral and aggressive policies vis-a-vis Tehran and Beijing.

Slowly but surely, a triumvirate of China, Iran and neighboring Pakistan is forming. This alliance could also encompass Afghanistan and over time is expected to add Iraq and Syria, strategic anathema to Washington and New Delhi.

A complementary new agreement between Iran and Syria, praised by President Bashar al-Assad, signifies Iran’s intent to retain its strategic foothold in that war-torn country, both as a gateway to Lebanon and the Arab world and deterrent to Israel. That has come irrespective of Israeli-Gulf Arab pressures, including recent attacks inside Iran.

Much like responding to “maximum pressure” with “maximum resistance,” Iran traditionally exerts counter-pressure to any regional and or extra-regional pressure.

Tehran understands itself to be as a pivotal power in West Asia and the Middle East, and can be expected to retaliate against the culprits behind recent attacks on Natanz nuclear facility and the Parchin military complex at a time and place of its choosing.

The Nantanz nuclear facility after a still-unexplained apparent fire. Image: Agencies

A final China-Iran deal would be a win-win serving the national interests of both sides.

For sanctions and pandemic-hit Iran, it will offer important leeway to economically survive at a difficult juncture, when Iran’s military and nuclear sites are targeted for destruction, likely by a concerted effort involving Israel and some Arab Gulf states. 

According to a Tehran-based political scientist who wishes to remain anonymous, “the purpose of these attacks on Iran might be related to the perception that the Trump administration is willing to strike a deal with Iran in the next few months prior to the November elections.” 

In turn, this raises questions about Trump’s real Iran strategy, notwithstanding the major recent setback for the US at the UN Security Council, which flatly rejected a draft US resolution on Iran calling for an indefinite arms embargo. 

Moreover, a UN expert denounced the US drone killing in January of Iran’s top general Qasem Soleimani and nine other Iranian and Iraqi officials as ” unlawful and arbitrary under international law.” 

According to the UN report, the drone attack violated Iraq’s sovereignty and in turn has “institutionalized” Iranian hostility toward the US, making it nearly impossible for any Iranian official to engage in direct diplomacy with the Trump administration. That’s particularly true since Iran’s new parliament led by hardliners commenced its work.

Combination image shows US President Donald Trump and President Hassan Rouhani. Photo: AFP /Nicholas Kamm / Handout

President Hassan Rouhani’s moderate government is about to enter a lame-duck period prior to the presidential elections in 2021, making it less and less capable of any major foreign policy initiatives. 

Some analysts in Iran contend that there is still a narrow window of opportunity for a new Tehran-Washington deal, prompted partly as a reaction to the amentioned Tehran-Beijing agreement. 

Given Iran’s post-revolutionary position of “superpower equidistance,” the agreement with China reflects a “new look East” approach by Tehran while under Washington’s pressure. At the same time, it serves the opposite logic of a “new look West” for the sake of navigating the treacherous currents of a new cold war in favor of equilibrium.

That assumes, of course, that Washington is willing to ease its persistent sanctions and threats. That remains to be seen. Meanwhile, the recent spate of suspicious fires and sabotage at the Natanz nuclear facility and Parchin military complex will embolden Iran’s hardliners, who see no ground for optimism of a possible US policy shift.  

They see China’s steadfast defense of Iran at the UN Security Council as a testament to Beijing’s reliability. Iranian hardliners are also cognizant of their country’s ability to serve China’s BRI, not only for the 80 million-strong Iranian market but the larger Eurasian landmass encompassing some 4.6 billion people. 

Kaveh L. Afrasiabi is an Iranian-American political scientist and author or co-author of several books on Iranian foreign policy, including Iran Nuclear Negotiations: Accord and Détente Since the Geneva Agreement of 2013Iran Nuclear Accord and the Remaking of the Middle East (2018); and Trump and Iran: Containment to Confrontation (2020). He has taught political science at the University of Tehran, Boston University, and Bentley University and was a visiting scholar at Harvard University, University of California-Berkeley, Binghamton University, and the Center for Strategic Research, Tehran. From 2004 to 2005, he was an advisor to Iran’s nuclear negotiation team.