Iran’s Lifeline and China’s Foothold: Examining the possible implications of the pending Sino-Iranian Comprehensive Strategic PartnershipAugust 7, 2020 in China, Iran, United States
On 11 July 2020, the Iranian government was reported to have approved a draft 25-year deal with China on economic, military and security cooperation. Titled the “Sino-Iranian Comprehensive Strategic Partnership”, Iranian officials have publicly stated that there is a pending agreement with China. A copy of the leaked 18-page document has been obtained by The New York Times labelled “final version” and dated June 2020. One Iranian official and several others who have discussed the agreement with the Iranian government have confirmed that it is the actual document waiting to be submitted to the Iranian parliament for approval. In China, officials have not disclosed the terms of the agreement and it is not clear whether Beijing has approved the deal . In the opening sentence of the document it states: “two ancient Asian cultures, two partners in the sectors of trade, economy, politics, culture and security with a similar outlook and many mutual bilateral and multilateral interests will consider one another strategic partners”. This Sino-Iranian pact throws Iran an economic lifeline at time as its economy is under severe pressure from United States sanctions. The pact also paves the way for Chinese influence to extend into the Middle East. The agreement may create further tension between Washington and Beijing, who are currently engaged in a trade war.
Components of the Partnership
The draft agreement, first proposed by Chinese president Xi Jinping in a visit to Iran in 2016, allows for 400 billion US dollars’ worth of Chinese investment in Iran in exchange for heavily discounted oil. China aims to invest in various sectors in Iran including oil and gas, telecommunications, banking, cyber security and transportation. Nearly 100 projects are cited in the deal including the construction of airports, high-speed railways and subways. Moreover, the deal proposes the development of free-trade zones in Maku, located in north-western Iran; in Abadan, where the Shatt al-Arab river flows into the Persian Gulf and on the Gulf island of Qeshm. The draft also proposes Chinese access to Jask, a major Iranian port located just outside the strait of Hormuz, the entrance to the Persian Gulf. The strait is a strategically important choke point through which one third of the worlds liquefied natural gas and a quarter of the world’s oil pass. China will also build the infrastructure for 5G telecommunications network in Iran in addition to offering the new Chinese Global Positioning System to help the Iranian government in asserting greater control over cyberspace. The draft agreement describes deepening military and security ties, calling for joint military exercises, joint research and weapons development in addition to intelligence sharing. This military and security cooperation, according to the draft, will be in place to fight the “lopsided battle with terrorism, drug and human trafficking and cross border crimes”. The draft also allows for 5000 Chinese security personnel in Iran to protect Chinese projects.
Benefits to Iran
If implemented, the agreement gives Iran a critical lifeline. US president Donald Trump has been waging a maximum pressure campaign on Iran’s economy since 2018. Trump’s administration has threatened to sanction countries in Europe and elsewhere who buy oil and other exports from Iran. Trump said the campaign was aimed at eliminating the threat of Tehran’s ballistic missile program, to halt its terrorist activities around the world and to stop its “menacing activity across the Middle East”. Although Trump’s campaign against Iran has not achieved these objectives, it has pushed Iran deep into recession. Iran’s economy was expected to contract by 7.1 percent in 2019 according to the United Nations and by 9.5 percent according to the International Monetary Fund. The IMF estimated that Iran’s reserves of foreign currency have been reduced to 86 billion, 20 percent below their level in 2013. Oil exports have plunged since the US began imposing sanctions again in 2018. The COVID-19 outbreak, the worst in the Middle East, and rising tensions with the US have put further strain on Iran. Thus, the agreement alleviates a great amount of economic hardship from the Islamic republic.
Benefits to China
The most obvious advantage this agreement provides for China is discounted oil. China obtains 75 percent of its oil from abroad and is currently the world’s largest importer of the natural resource at 10 million barrels a day. Iran also provides an additional terrestrial route for China’s Belt and Road Initiative (BRI), the ambitious global infrastructure development strategy Beijing adopted in 2013. However, trade with Iran has not been a priority for Beijing in recent years. China invested less than 27 billion dollars in Iran from 2005 to 2019. Annual investments have dropped every year since 2016. In fact, China has invested significantly more in Arab Gulf countries compared to Chinese investments in Iran. Furthermore, for years China has mostly abided by US sanctions showing that Beijing prioritised trade with the US over ties with Iran. This particular agreement between Tehran and Beijing was proposed only after the Joint Comprehensive Plan of Action was signed. The JCPOA is an agreement between Iran and major powers including the US to limit Iran’s nuclear capacity in return for lifting sanctions. Therefore, it is possible that China is eyeing other benefits of the deal in addition to its economic dimension.
For instance, this deal possibly allows China a potential foothold in the Middle East, a US dominated area of the world that is becoming increasingly vital to Beijing. About 40 percent of China’s energy needs are imported from the region. Thus, Beijing has significantly increased its economic, political and, to a certain degree, security footprint in the region in the past decade. China became the biggest trading partner and external investor for a significant number of Middle Eastern countries including Iran. Beijing currently participates in anti-piracy and maritime security missions in the Arabian Sea and the Gulf of Aden and maintains a military base in Djibouti for such activities. Beijing has increased mediation efforts in crises in the region such as Syria and Yemen. China has conducted joint naval exercises with Iran on three occasions beginning in 2014. China’s energy needs push the country to have a greater presence in the Middle East. Iran is the only major oil rich country in the region not influenced by Washington, which presents an obvious opportunity for Beijing. The Sino-Iranian agreement could provide Beijing with a greater security role to protect its commerce and energy supply in Iran and the Persian Gulf. For example, access to the major Iranian port, Jask, gives Beijing a strategic vantage point in an area where most of the world’s oil transits and has been the strategic preoccupation of the US for decades. The US Navy’s fifth fleet is headquartered in the Kingdom of Bahrain, not far from the strait of Hormuz. China has constructed a series of ports along the Indian ocean creating refuelling and resupply stations from the South China sea to the Suez Canal. The ports are commercial in nature but also potentially have military value. For example, Beijing has access to ports in Sri Lanka and Pakistan which are widely considered to be potential foot holds for Chinese military presence.
Impact on relations with US
The pact could also have significant implications for Sino-American relations, potentially creating dangerous flashpoints within their deteriorating relations. The US’s 2018 National Security Strategy identifies China as an adversary and depicts the country as a “revisionist power”. On 23 July 2020 the US ordered the closure of the Chinese consulate in Houston, Texas. China retaliated by closing down a US consulate in south-western China. The US state department warned that China would be undermining its own stated goal of promoting stability and peace by defying US sanctions and doing business with Iran. The implementation of this deal could signal Beijing’s frustration with Washington. In 2018 the US started a trade war with China imposing sweeping tariffs on Chinese goods to which Beijing retaliated. The US started a major campaign against Huawei, a major Chinese telecommunications company, barring it from involvement from 5G development in the US. Washington also attempted, without much success, to persuade other countries follow suit. It is likely that Washington will further sanction Beijing if this agreement is implemented. It is also very likely that China will retaliate in like. Sino-American relations are likely to continue to sour over China’s deepening ties with Iran.
A new friction is triggered between China and the US when the US president-elect Donald Trump said that the “One China Policy” is up for negotiation. Following Trump’s phone conversation with the Taiwanese president Tsai Ing-wen, China has become more suspicious of Taiwan’s intent of wanting to push for its independence and Trump grabs this opportunity to use as a bargaining chip against China. The Obama administration, on the other hand, has repeatedly reinforced the US commitment to “One China Policy”. According to Trump, this notion is likely to change under his administration unless Beijing agrees to alter its terms of trade with the US.
“The One China Policy” is a view that there is only one Chinese government and that the US has formal ties with China rather than Taiwan. China also holds that any country that wants diplomatic relationship with Mainland China must break official ties with Taipei. This has resulted in Taiwan’s diplomatic isolation from the international community. “The One China Policy” is, however, different from the “One China Principle” of the “1992 Consensus”, which urges that Taiwan and China are inalienable parts of a single China. The Consensus allows both Taiwan and China to agree that there is only one sovereign state of China but either cannot agree on which of the two governments is the legitimate government of the state.
Although the US, China and Taiwan, apparently, seem be pursuing their respective agendas in this friction, Taiwan should know better than to fully trust the new US administration in its suspected pursuit of independence. Trump, in his election campaign has often tried to portray the US on the loser end of US-China terms of trade, a position that he vows to change. This indicates that Taiwan will only be used as long as it can be used as a bargaining chip to potentially secure US trade advantages over China. Moreover, the Taiwanese President’s recent out-reach to Trump can only endanger Taiwan’s position in relation to China, but not as much, the vested stakes between the US and China relations. There is just too much to lose in the US-China trade relations if diplomacy gets bitter between the two super-powers.
In 2005, China’s parliament has passed an anti-cessation bill authorizing use of force if Taiwan declares independence. Taiwanese companies have invested over $49 billion in China and up to 1 million Taiwanese live in the Mainland. While Taiwanese may worry that their economy is dependent on China, but closer business ties makes Chinese military action on Taiwan less likely, but not necessarily impossible.
The US-China trade relations will unlikely be the lynchpin of China-Taiwan relations in the near future. The US jumping to seize the opportunity to challenge the “One China Policy” is more of a giveaway in negotiation with China because China already knows what is very important to the US and both the countries have mutual stakes in trade partnership. China in 2017 is not the China in 1958 when the Mainland bombarded the offshore islands held by the Nationalist troops in Taiwan, nearly sparking a war between the US and the Mainland. Taiwan being seen as a province of China continues to be an important agenda item of the Communist Party of China (CPC) and it can be said with much certainty that the Asian superpower will not subject itself to be compromised on national sovereignty over trade deals with the US or any country for that matter.
Status quo will, therefore, most likely prevail on the China-Taiwan relations now and in the near future with, however, intermittent escalation of political and military tensions. In terms of trade with the US, China will likely offset Trump’s rivalry with the Mainland with essentially economic strategies. These will soon enough get the US busy in battling China’s economic strategies and to see Taiwan as merely a futile factor to benefit from trade deals with China.
In 1962, China and India were at war. The conflict was a territorial dispute about two portions of the border: the Askai Chin in the western part and the Arunachal Pradesh eastward. India considered these areas as part of its national territory due to the frontier legacy of the British Indian Empire. China, one its hand, rejects the legitimacy of these “colonial” plots and believes that the two areas are an extension of its regions of Tibet and Xinjiang. Winning the war, Beijing had imposed its sovereignty over Aksai Chin while withdrawing troops from Arunachal Pradesh, allowing New Delhi to re-establish its authority. Since then, the status quo prevails but the dispute keeps poisoning the bilateral relationship of the two asian giants.
Territorial tensions: towards a peaceful border?
In September 1993, China and India signed an agreement “to maintain peace and tranquillity” along their disputed Himalayan border. This agreement between the two Asian giants – which required both sides to respect the Line of Actual Control (LAC), that is to maintain the status quo pending a peaceful, final boundary settlement and to reduce military forces along the border in accordance with the principle of “mutual and equal security” – has been described as a “landmark agreement” and “a significant step forward” in their uneasy relations since the 1950s.
However, incidents might still occur within the border. In April 2013, in the border between the Chinese Tibet and the Indian Ladakh, an incident happened between the two. In April, around 50 soldiers of the People’s Liberation Army entered in a territory the Indian considers their territory. Chinese militaries established a camp of about 5 tents whereas the Indian soldiers established their position about 300 meters away. The face to face lasted about 3 weeks and stopped in May, when an agreement has been signed by both parties, requiring each side to withdraw from the disputed area. Hence, this Himalayan region seems to remain a source of unsolved tension between India and China.
In the South China Sea (SCS), the rivalry between India and China is also a current issue. Indeed, SCS is a multi-party maritime dispute involving China, Vietnam, Philippines, Malaysia, Brunei and Taiwan. Of the 3.5 million sq. km. area of the SCS, almost 70 per cent is disputed. Even though India does not claim any of the islands of this area, India, under Vietnam’s request, explores oil within the region. China opposes this oil exploration in the SCS) by calling the area of exploration a ‘disputed’ area and asserting ‘Chinese sovereignty’ over the SCS. It has been continuously expressing its reservation in this regard in the last few years. India has taken note of the Chinese reservation and has carefully gone ahead in signing a few agreements with Vietnam for oil exploration in the SCS.
These tensions over the SCS seem to be not only about oil but also about influence within the region of South East Asia. China is in conflict with all the other parties involved in the SCS and numerous incidents happen with ships and fishermen boats within this region. India, on the other hand, seems to use this conflict to enhance its influence by supporting China’s rivals in the SCS. In addition, India is able to send warships into the South China Sea and that can make China nervous.
Sino-Pakistani relations: a source of tension
The cooperation between China and Pakistan is another source of tension and of preoccupation for India. Indeed, Pakistan is the historical rival of India and the territorial dispute over the Kashmir region has been unresolved for the last half century.
Started in 1962, China and Pakistan got closer whereas Pakistan was the historical rival of India. In 1963, both countries signed a Border Agreement. The cooperation is deep and various: for example, the Pakistani army’s equipment is 60% Chinese. Also, China is currently engaged on a variety of investment projects and infrastructural building activities in the Pakistan-occupied Kashmir (PoK), and these will be expanded under the China-Pakistan Economic Corridor (CPEC) project.
Hence, Chinese officials call their investment and activities in POK as ‘livelihood project’; not being ‘political’, they are just ‘commercial’ in nature. Until now, China has maintained a ‘neutral’ position on the Kashmir dispute in recent times, particularly after the Kargil conflict, terming it as a ‘bilateral historical dispute’ between India and Pakistan. China’s presence in PoK has emerged is an issue between India and China. China’s massive commercial presence in PoK through CPEC would render China’s formal neutrality over the Kashmir issue irrelevant.
Two giant’s partnerships
Even though tensions occur within the two countries, many partnerships and diplomatic gestures illustrate their relations. Several agreements have been signed between Shanghai and New Delhi such as the India-China Strategic and Cooperative Partnership for Peace and Prosperity in 2005. The May 2015’s agreements is another example: China and India signed in Shanghai 21 commercial and cooperation agreements for an amount of 22 billion of dollars. From an economic point of view, commercial trades have significantly increased: from 3 billion in 2000 to 61,7 billion in 2010. China became one of the first economic partners of India.
These agreements also shows the diplomatic relations between China and India with different agreements such as: “(…) with both sides showing mutual respect and sensitivity to each other’s concerns, interests and aspiration” or The two sides believed that enhanced military ties are conducive to building mutual trust and confidence”.
Moreover, the respective leaders have been welcomed in the other country several times in the last decades.
(The full Joint Statement here: http://pib.nic.in/newsite/PrintRelease.aspx?relid=121755)
Battle for spheres of influence
India and China do play a great game of sorts, competing for economic and military influence in Nepal, Bangladesh, Myanmar and Sri Lanka. But these places are generally within the Greater Indian subcontinent, so that China is taking the struggle to India’s backyard. The whole map of Asia now spreads out in front of defence planners in New Delhi and Beijing, as it becomes apparent that the two nations with the largest populations in the world are encroaching upon each other’s spheres of influence. And so, India and China are eyeing each other warily.
Hacking is has been a rising trend within the PRC since the Internet entered the country in 1994 and on November 8th 2012 the Chinese president officially announced, “China will speed up full military IT applications”. China alone accounts for the largest national population of Internet users—some 300 million, nearly one-fifth of the global number. Ever since the 90’s, creation of a lot of hacking groups: The Green Corps, The Hong Kong Blonds and the most famous recent one: the Red Honker Union They created an important hacking culture in China. Some evidences link civilian hackers to the government and the States’ creation of a cyber army. Since 1998, according to Timothy Thomas of the U.S Foreign Military Studies Office, the Chinese army has even recruited civilians into its ‘net militia units’ (Militia Information Technology Battalions), the most famous being the unit 61398.
The State cyber army: unit 61398
As everything on the Internet, it is always difficult to prove the origin of a cyber attack. Nevertheless, the company Mandiant has investigated since 2004 the cyber capacity of China, especially through the unit 61398 considered as a part of the Communist Party of China under the Central Military Commission in the GSD 3rd department (2nd Bureau). Since 2006, a rising number of cyber attacks are believed to have come from this unit and most of them targeted the U.S.
The four most important sectors attacked are: Information Technology, Transportation, High-Tech Electronics and Financial Services. China seems to base its cyber warfare on a method often referred as “Acupuncture warfare”: based on attacking critical IT nodes or pressure points, this method capitalizes on optimizing effects on adversary vulnerabilities and follows the principle of acupuncture practiced for medicine—identifying points that serve as “a tunnel, or access route, to the deeper circulatory channels within”. One application of this theory would be finding the key choke points or supply chain vulnerabilities for an enemy military deployments and influencing them by attacking the supporting civilian infrastructure.
Intents and motivation of the cyber attacks
The first reason for China’s cyber offensive is to gain increased military knowledge through cyber espionage: China also has an interest in accelerating its military development since it is still behind the West, especially the U.S. who often has the lead for new military technology. Different cyber attacks can be quoted as examples, the most famous being the “Titain Rain” in 2007: a massive cyber attack against United States defence contractor computer networks (10 to 20 terabytes including Lockheed Martin and NASA) believed to come from China. Furthermore, numerous attackers originating in China have been accused of infiltrating government computers of numerous countries: the United States, Britain, France, Germany, South Korea, and Taiwan.
A second motivation is to make economic gains by stealing technological process. China’s general technological level is also behind that of the United States, which gives it an increased incentive for industrial espionage in order to achieve economic advantage. Numerous attacks believed to come from China supported this theory: the theft of data from U.S. network security company RSA Security in 2011. Moreover, in December 2007, the director-general of the British Security Service (MI5) informed 300 major UK companies that they were under constant attack from “Chinese state organisations”.
One of the last reasons for China to use cyber offensive is to deter other States by infiltrating their critical infrastructure. It puts the other States on notice that any technological edge it believes it enjoys will not be functional in a conflict with China. It also reminds China’s restive domestic audience that unfettered technological advancement alone does not bring security. Deterrence and possible military actions for this reason could be launching probes to identify vulnerabilities that could be exploited in armed conflict. Two main examples of this reason is Operation Aurora in 2009 where the U.S company Google’s source code has been stolen along with the attack of Denial of service on the White House website in 1999 after the U.S attacked the Chinese Embassy.
The characteristics of cyber warfare
- Anonymous: China has an interest in avoiding exposure to political and military pressure from the West and the United States. Chinese embassy representative Geng Shuang maintains that the allegations against China are groundless, stating: “The Chinese government prohibits online criminal offenses of all forms, including cyber attacks, and has done what it can to combat such activities in accordance with Chinese law.” The Chinese Defense Ministry in January 2013 stated, “It is unprofessional and groundless to accuse the Chinese military of launching cyber attacks without any conclusive evidence.” Here lies a paradox with one of China’s reason for cyber offensive: anonymity prevent from any possible deterrence: China has to find the equilibrium between anonymous to avoid exposure and famous to create deterrence.
- Cheap: cyber weapons are cheap to build and to use.
- Diverse: cyber weapons can target multiple types of system.
- Timeframe: cyber weapons can act quickly and against multiple targets at the same time.
- Flexible: unlike nukes, a virus or any type of cyber weapon can be used multiple times.
China’s offensive cyber: information warfare
Fitting in the Sun Tzu’s spirit of the need of information, China focus on cyber capabilities as part of its strategy of national asymmetric warfare. The Chinese military and their civilian oversees have hit upon a military strategy that aims all at once to close the gap between U.S. and Chinese technological-military prowess. Hence, China considers the cyber domain to be a battle arena.
For the past half century, South China Sea has been an area of tensions and territorial disputes. In 1974, the Chinese seized the Paracels from Vietnam, killing more than 70 Vietnamese troops. In 1988, the same two countries clashed in the Spratlys, with Vietnam again coming off worse, losing about 60 sailors. Ever since, incidents keep happening and have increased in recent year: China’s claims over the islands have become stronger in the past years. The involvement of the United States and the uprising of other regional nations show this conflict is an issue about strength, power and international politics.
What is the argument about?
This dispute is about territory and sovereignty over South China Sea’s islands: the Paracel and the Spratly Islands. Alongside the fully-fledged islands, there are dozens of atolls and sandbanks also disputed. The two main reasons to these conflicts are economic and strategic.
From the economic point of view, the main stake is the fisheries ressources in this part of the sea. Besides meeting the food needs of local populations, it is also long and intensively exploited for export and is currently in a situation of over-exploitation and overfishing.
The other economic issue is a rising one, due to the energetic crisis: the low deposit of oil and gas wihtin the South China Sea. Even though this area is almost uninhabited and uninhabitable, the sovereignty allows the exploitation of the ressources within the exculsive economic zone (EEZ) of 200 nautical miles, according to the United Nations Convention on the Law of the Sea (UNCLOS) of 1982. Thus, gas, oil and maritime ressources are on of the reason of the territorial dispute.
The South China Sea has also two strategic interests. First it is an important passage for international navigation and freedom of navigation is a contentious issue, especially between the US and China over the right of U.S. military vessels to operate in China’s EEZ. Another reason is linked to the strenghtening of nationalist discourse and identity issues. Indeed, in this region, the conflit for the islands represent the conflict between the countries to ensure a stronger position on the regional chessboard.
Who claims what ?
Ever since the last ten years, tensions increased in this region. The most important claimers are China, Vietnam, Philippines and Malaysia. Shows of strength continually occur in this region and have increased in the last few years.
China, with the largest claim in all the South China Sea keeps occupying some islands in this region along with building artificial islands. The last incident of January 2016 occurred when China landed a plane in an island both claimed by China and Vietnam. Both claims the territory based on historical sovereignty.
The Philippines based its claim on geographical proximity to the Spratly Islands. The Scarborough Shoal (see map below), known as Huangyan Island in China, is a little more than 100 miles from the Philippines and 500 miles from China.
Malaysia is also claiming some islands of the Spratlys but most of the incident in the last decade involved China, Vietnam, Philippines and the United States.
Even though the U.S are not claiming any of the islands, it has an important role in the conflict and many of the incidents occuring in this region are between China and the U.S. Supporting rival countries such as the Philipphines or Vietnam, the U.S has also a military presence in the sea and wants to ensure the freedom of navigation. In reality, the U.S presence is much more about showing strength against China which accelerates its coercitive actions within the region.
Towards resolution: between diplomacy and coercion
For the past ten years, many diplomatic talks failed to solve the territorial disputes in this region. The Asian association might have been one solution to this problem: for economic and regional reasons, China is afraid of a united front of others Asian nation about this issue. But as 2012 and 2015 summits illustrated, ASEAN never came with a common declaration about the South China Sea disputes. China has always warned the Asian states about discussing this subject during the summits and thus, the ASEAN does not seem strong enough to resolve this issue.
The U.S confirms their wish to see this issue solved diplomatically by a settlement. However, they will maintain strength against China as long as tensions remain in the region. They have to types of actions: to ensure direct military present and to bolster capabilities of regional actors. Indeed, for the past years, they have increased military help to Philippines and Vietnam.
The latest change in this dispute happened in October 2015 and will shape the future of this region: the Philippines seized The Hague Court. The Permanent Court of Arbitration in The Hague has declared jurisdiction in certain territorial claims by the Philippines against China on South China Sea disputed areas. China has boycotted the proceedings and denies all authority to the Court in this case but juridiction remains and according to the UNCLOS, the decision will have to be applied by both parties.