Expert weighs in on Iran-China economic cooperation

Republic Underground, Timberwolf-Phoenix LLC

News, analysis, commentary  

May 14, 2021 

As tensions flare in the Middle East, with open warfare fanned to flame in Israel, Iran and China proceeded with a newly-signed Sino-Iranian agreement. Western agencies have zeroed in on the security implications the new Sino-Iranian agreement will bring. While strained under the reign of the last Shah, Iran and China’s relationship found new ties through a shared rivalry with Moscow and the United States. China’s interests remain in the long game, at present, with Industry Week reporting a $270Bn deal for oil signed between China and Russia. 

Simultaneously, China and Iran move forward on a 25-year agreement plan. The agreement reportedly includes cooperation on Chinese investment in Iranian energy and infrastructure. As China and Iran move forward with their plans, Iran continues its under-the-table onslaught in its war of Islamism in the global theater, which has prompted American politicians of the Republic Party to urge the Biden administration to reconsider the security implications of attempting negotiation with the Iranian regime. 

China has remained economically present in Iran through the past few years of recent history, but its economic developments in Iran were challenged by the presence of western trade in recent years, with Iran choosing to procure from European entities, even at a higher cost, for the qualities of western-made products. As the western world put economic sanctions on Iran, it began to expand more on its relationship with China.

Yet, the sanctions, while they encouraged the Sino-Iran trade to resume, also put some restraints on it. For example, the South China Morning Post reported in April that China was careful to consider and pursue the J-10C barter deal, with “cash-strapped” Iran. Iran was interested in purchasing 36 fighter planes from China, however, it would have great difficulty finding the cash to make the transaction. Iran moved to purchase military equipment after the expiration of the 13-year arms embargo by the United Nations. The proposed J-10C barter deal considered exchanging oil for planes. While military analysts that spoke with South China Morning Post stated that action contemporary with the report’s filing was advised, China considered the deal.  The collapse of the Iranian cash system was a result of years of maximum-pressure sanction campaigns to slow the regime’s capacity to stockpile munitions financed through white collar trade. For more information on Iran’s proxy network, see the following panel.

At a recent Republic Underground panel, Xiyue Wang made comments regarding the incentives of the Biden administration to hastily rejoining the JCPOA agreement. As a former political prisoner of Iran, Wang does not believe the Biden administration’s incentive to be well-informed. He cites the fact that the “reformists” that were recently elected in the IRGC system are not as they appear. 

“”Moderates don’t really exist there, in my opinion,” said Wang.

Wang highlighted the western arguments in favor of a hasty return to the JCPOA.

“Imagine who will benefit from this. Let’s assume, if the deal lacks substance, who will benefit from the deal? Because you can argue that there’s a substance. I think that argument is already happening.”

The motivation, Wang noted, for the United States ot rejoin the JCPOA is one of concern that Iran, cut off from U.S. negotiation, will turn to China for full-fledged economic support.

“The U.S. domestic proponents will argue, look Iran is approaching China. ‘Look, China has become Iran’s supporter. If we don’t approach Iran as soon as possible, Iran will form an anti-U.S. alliance with China and we will be too late. So, let’s go back to the JCPOA ASAP to keep China at bay.’ That creates an internal agency to push for the rapid restoration of the JCPOA.”

“He also noted that when the so-called reformists of Iran promised two things to the Iranian people. First, they promised to grant more political transparency.”

“I think, at the present moment, China has just set out the mat and waits to see how the U.S. will react. By the way, I don’t think that will work out from the U.S. side. ”

“He noted that the Biden administration seems to believe that by engaging the “moderates” of the regime at the expense of the extremists they can somehow work together. Yet, he also described how the “moderates” exist for a form of political posturing, an incentive to keep Iran’s battered people somewhat engaged with false promises. It was in this environment, that China looked onward with caution, waiting for the U.S. to make the first move.

“During the previous administration, China did not sign the deal but waited to see how U.S. policy would develop.”

China plays a long game in the region, one calculated economic measure. Iran plays a game of deception, promising reformation that it does not intend to follow through with. The U.S., in its haste, makes the policy failure of assuming the nature of China and Iran’s agreement, without examining what China considers or how the IRGC operates. China is not as likely to negotiate full-stop with Iran that is under the restraint of economic sanction. Negotiations with the false face of the IRGC likewise are counterproductive to regulating the extremist element within the core of the regime. Likewise, China and Iran have found loopholes of negotiation to the economic sanctions of the west, such as the barter system of oil-for-weapons proposed by the J-10C barter proposal. Within the past month, Reuters reported that China now aims to safeguard this barter system with  Iran, as it has received no indication of sanctions from the Biden administration, and Iran has moved oil into China in record volume.

Should such a system be replicated at some interval of contingency, such as in the event of an extended loan on oil in exchange for a desired commodity, then the validity of a western negotiation with Iran to counter an Iran-China relationship may lose the argued value its contenders place on it. Urgency is in demand, but so is a validation of tactics, as the Sino-Iran agreement moves forward.