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.
US President Donald Trump has stated that he will soon begin “renegotiating” the North American Free Trade Agreement (NAFTA) with his Canadian and Mexican counterparts.
According to the newly sworn-in president, meetings have been scheduled with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto. The White House website states that if Canada and Mexico refuse to accept a renegotiation of the agreement that provides a “fair deal” for American workers, then the US will move to withdraw from it.
Speaking at a ceremony to swear in senior White House staff, President Trump also stated that he would tak with Mexican President Pena Nieto about immigration and and border security in a meeting that the White House says will take place on 31 January. No date has been given for a meeting between Mr Trump and Mr Trudeau.
Meanwhile on 21 January, President Pena Nieto’s office disclosed that the Mexican leader had called Mr Trump to congratulate him. In a statement, the Mexican president “reiterated the strategic priority of bilateral ties…and expressed his interest in maintaining an open dialogue.” President Trump meanwhile has stated that “Mexico has been terrific. The president has been really very amazing.” In regards to the NAFTA renegotiations, President Trump stated, “I think we are going to have a very good result for Mexico, for the United States, for everybody.”
President Pena Nieto has faced criticism in Mexico for lacking a clear plan of action to deal with President Trump’s threats, which include building a massive border wall at Mexico’s expense and imposing a tax on Mexican imports. Protests were held on 20 January outside a Ford showroom in Mexico City after the car company cancelled a US $1.6 billion plant that it had planned on building in Mexico.
What is the NAFTA Agreement?
The North American Free Trade Agreement came into effect between the US, Canada and Mexico in 1994, when Bill Clinton was president. The agreement effectively created one of the world’s largest free trade zones by reducing or eliminating tariffs on most products. The pact was meant to benefit small businesses by lowering costs and reducing bureaucracy in a bid to facilitate buying and selling abroad. However whether it has ultimately helped or harmed Americans has been hotly debated. In 2015, the Congressional Research Service, which provides independent analysis, stated that “in reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters,” adding that “the net overall effect of NAFTA on the US economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of US GDP.”
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.
On Thursday 5 January, top US intelligence officials told a congressional hearing that Russian cyber attacks pose a “major threat” to the United States. The statement comes despite scepticism from President-elect Donald Trump about findings that Moscow orchestrated hacking of the 2016 presidential election.
On Thursday, Director of National Intelligence James Clapper, National Security Agency Director Mike Rogers and Undersecretary of Defense for Intelligence Marcel Lettre testified before the Senate Armed Services Committee, which is chaired by Republican John McCain, who has been a vocal critic of Russian President Vladimir Putin. During the hearing, the intelligence officers described Moscow as a major threat to a wide range of US interests because of its “highly-advanced offensive cyber programme” and sophisticated capabilities. In a joint statement, they disclosed that “Russia is a full-scope cyber actor the poses a major threat to US government, military, diplomatic, commercial and critical infrastructure.”
US intelligence agencies say that Russia was behind hacks into Democratic Party organizations and operatives before the election. This conclusion is supported by a number of private Cybersecurity firms. US intelligence officials have said that the Russian cyber attacks were aimed at helping Mr Trump defeat Democrat Hillary Clinton in the 8 November election. While several Republicans have acknowledged the Russian hacking, they have not linked it to an effort to help Mr Trump win. Moscow has denied the hacking allegations. Last week, President Barack Obama ordered the expulsion of 35 Russian suspected spies and imposed sanction on two Russian intelligence agencies over their alleged involvement in hacking US political group sin the 2016 election.
While on Thursday, Mr Trump called himself a “big fan” of the intelligence community, analysts have indicated that he is heading for a conflict over the issue with Democrats and with some fellow Republicans in Congress. Tensions are rising as many lawmakers are wary of Moscow and distrust Mr Trump’s praise of Russian President Vladimir Putin and efforts to heal a rift between the US and Russia.
Sources have indicated that Mr Trump, who will become the US President on 20 January, will be briefed by intelligence agency chiefs on 6 January on hacks that targeted the Democratic Party during the presidential election campaign that he won.
A United States hate-attack monitoring group has disclosed that it has documented 437 cases of intimidation and abuse towards minorities since the general election, which was held on 8 November.
The Southern Poverty Law Centre (SPLC) has disclosed that it news tracking method had found “on an anecdotal level (the increase in hate attacks) has been obvious,” adding that many of the attacks were linked to supporters of President-elect Donald Trump. The news comes after the FBI reported a 67% rise in anti-Muslim bigotry last year.
The SPLC has also been critical of President-elect Trump’s decision to appoint a right-wing media executive to the role of chief White House strategist. The group has accused Stephen Bannon of being “the main driver behind Breitbart (News) becoming a white ethno-nationalist propaganda mill.”
Senior SPLC fellow Mark Potok has disclosed that the monitoring group has created an online form for victims where they can report hate attacks, adding that it was also monitoring social media and news reports of hate incidents. Across the country, a number of hotlines have also been formed. The Massachusetts Attorney General has set up a hotline for citizens “to report bias-motivated threats, harassment and violence.” New York Governor Andrew Cuomo has also established a state-wide hotline due to an “uptick in recent reports of discrimination, bias-motivated threats, harassment and violence.” In a statement, the governor indicated that “any acts of discrimination or intimidation will be met with the full force of the law.”
Hate Crimes Also Reported North of the Border
Meanwhile across the border in Canada, hate crimes have also been reported however it currently remains unclear if they have anything to do with the US election.
The Toronto Police hate crimes unit has disclosed that it is investigating after signs urging people to join the “alt-right” were posted around town. The posters began “Hey, white person” and directed people to join white nationalist groups. Meanwhile in Ottawa, the capital city, police are investigating after a swastika was spray painted on the door of a local Jewish community centre.