From the ground, insider insights into China-Iran economic cooperation

Press | Republic Underground 

May 6, 2021 

Minute marker notations are included throughout to assist the reader in locating speaker comments from the transcript in the replay of our panel event. See video enclosed below. 

“Welcome to the Republic Underground geopolitics series. Today, we will be discussing the recent developments in the China-Iran relations, the different aspects of the deal said to be concluded between China and Iran, as well as Beijing’s interests in the Middle East,” Tsukerman opened the panel and introduced defense analyst Benjamin Minick, Xiyue Wang, Kamil Aboshoka, and John Rossomando. 

(6:16) Xiyue Wang was introduced as a Chinese national researcher who was taken hostage by the regime and was at the panel to describe his experiences. Kamil Aboshoka was a native of the Ahwaz region, Iran which is an ethnically Arab majority province. 

“It’s an oil and gas-rich part of Iran, and this is where most of the petrochemical industry is developing, and where China has been renting oil fields for some time,” said Tsukerman, presenting some background for Aboshoka’s perspective. 

John Rossomando was present to discuss his perspective of the defense aspect of China-Iran relations and its reflection on the United States. 

Last, Benjamin Minick, a defense analyst, and cybersecurity specialist joined the panel to discuss cyber issues and other issues of concern. 

Tsukerman noted that after the initial comments there would be an engaging conversation, and then first addressed Wang, seeking his unique perspective based on his experiences and knowledge. 

“Thank you very much, Irina, for having me here. It’s a good pleasure to be with you and the other panelists. As many of you may know, I was a Ph.D. candidate doing research in Iran, and got arrested and taken hostage effectively by the Iranian Ministry of Intelligence and spent 14 months in Iran’s prison before coming home in 2019 as per a prisoner swap.”

“Before I was arrested I did four almost five months in Iran, in Tehran to be exact. I didn’t get the time to visit the wonderful country. I was in Tehran that entire time, doing research. For obvious reasons, there was no American institution that could provide logistic support to me. From day one, I actually stayed with a Chinese state-owned company in their guest houses,” said Wang, noting that from this guest accommodation he had a first-hand experience observing China-Iran business cooperation. (9:40) 

 

“Believe it or not, there were many eye-opening things for me. I arrived in Iran on January 26, two days after Xi Jinping’s visit,” said Wang, noting that Xi Jinping was the first world leader to visit Iran after the JCPOA agreement was finalized. 

“After the implementation of the JCPOA, China wanted to deepen its relationship with Iran, and this particularly, my Chinese contact at the time, told me that the Chinese were very enthusiastic and hopeful.” (10:57) 

China had hoped that its investment during Iran’s era of sanctions would be paid back. 

“To my understanding, that didn’t happen exactly the way that the Chinese had hoped,” said Wang. 

“In fact, a couple of months following Xi Jinping’s visit, there were many Chinese companies trying to open up cooperation with Iran. 

It was difficult, but the reason was simple. As the sanctions lifted, many western opportunities opened up, especially European cooperation became possible. Iranians preferred to diversify their cooperation with other countries rather than deepening their relationship with China and allowing China to dominate their markets.” Wang noted that his Chinese contacts had told him Iran had initially favored European companies to China despite China’s advanced tech offerings, at a lower cost than the European offering. 

“It was very frustrating for the Chinese company. I have heard stories like this, in fact, quite a lot.” 

(13:00_ ) “In 2018, when the sanction kicked in when other foreign companies started withdrawing from Iran, Iran said ‘okay we have China covering our back,’” he stated, noting that then Iran gave a high profile project to CNPC. He then noted that, by November of that year, even the Chinese had withdrawn some of their cooperations from Iran due to the U.S. sanctions. (14:00) 

“The bilateral trade between China and Iran, I think, in 2017, if I remember right, it was closest to 30+Bn but in 2020 it had come down to 14.9. So, when it comes to sanctions, even China is risk-averse. China would not support Iran at the risk of being sanctioned by the U.S. So sometimes, from that angle, we should think, when the leading media outlets in the U.S. say ‘well China’s got Iran’s back’ then we really have to ask ‘to what extent?’ Because when they say, ‘China is buying Iran’s oil’ well, that’s true, but, during the Trump administration, China was buying Iranian oil at a very low level. 

Only since Biden was elected in November have Chinese purchases of Iranian oil started skyrocketing. By February, China was importing half a million barrels a day, and by March, almost a million barrels per day. I would think that implies the haphazard enforcement of U.S. sanctions against Iran’s oil cells,” said Wang.  (16:00) 

“One other thing that we need to know is that China is buying Iranian oil, but that does not mean that Iran is getting their money back. Because, the Chinese have been telling the Iranians that ‘you’re under sanction so we can only put the money in our banks’ and ‘either way we don’t pay interest’,” he also noted that the Chinese regulate the conditions and currencies with which it makes oil transactions with Iran. 

“Are they really paying the Iranians? Are the Iranians really getting what we think they are getting? Without these questions being answered, we are giving Iran the kind of leverage it doesn’t deserve on the negotiating table,” said Wang. 

Tsukerman thanked him for his comments. 

“We will definitely be back to you with more questions,” said Tsukerman, noting hopes for an in-depth discussion as the panel reached its Q/A segment. She then turned the floor over to Aboshoka, a researcher from the Ahwaz region of Iran. 

“Kamil, if you could tell us a little more about China’s involvement in Ahwaz specifically?” asked Tsukerman, asking Aboshoka to clarify the local regional context. Aboshoka thanked Tsukerman for inviting him to this important discussion of the regional context before he began his comments. (18:00) 

He prefaced his comments by noting that both Iran and China have international ambitions. 

“Each country seeks to control the United States for the longer term and U.S. allies such as some European states, Arab states, and Israel. At the same time, they also have their own interests,” he then went on to describe the context of the status of Ahwaz. 

“Let’s talk about the Iran agreement’s impact on the Ahwazi region.”

He then described the issues of the economic cooperations that the agreement worked out. 

He noted that these economic collaborations would be in the Ahwaz region, in the Baluchi cities. 

“What Ahwazi people benefit from the cooperation? To be honest, their benefit is zero. The deal would ideally make employment rates rise in Ahwaz, but we discussed among ourselves that the deal would make unemployment rise. Because the deal will include all petrochemical companies,” he described how the deal’s relocation of cooperations and assets would cause Ahwazis to lose their jobs in petrochemicals and the fisheries. 

“We have millions of Ahwazi employed in agriculture, so their lands would be impacted by Chinese investments.” (21:05) 

He noted that the changes to the social construct caused by unemployment, environmental impact, and other political issues would cause many Ahwazis to leave their land. 

“So, Iran plans to migrate 1million Ahwazi from their land. Probably China will cooperate with Iran to force the Ahwazi to leave. We believe Ahwazi in the cities of Abadan—, will be forced to leave. Maybe we should ask, why should they leave?” He then explained how the Chinese intend to build an economic zone in the Ahwazi region which will cause nearly thousands of Ahwazi to lose their jobs in the domestic economy. 

“When China has a plan to link Muhamara to Basra, that will make more Ahwazi, who live in the islands, to lose their job opportunities. This gives the Ahwazi two options, to leave the area and move to Iraq or other Iranian cities.” 

“The deal between Iran and China will have huge and dangerous consequences on Ahwazi heritage and their job opportunities, to live in poverty,” he noted that this would result in Ahwazis being located in ghetto conditions, and noted that this would result in deep consequences. (24:06) 

Tsukerman thanked Absohoka for his comments and noted that the panel would follow up with him after initial comments. She then turned the floor over to John Rossomando, a researcher at CSS, noting that he would give broader perspectives and insights on the rumors of China-Iran defense cooperations. 

“Iran is not the only country that China is pursuing a relationship with,” Tsukerman noted that China has relationships with Saudi Arabia, the UAE, and an economic relationship with Israel. 

Rossomando stated that China’s multiregional pursuits are part of a soft power strategy China pursues to become the dominant power in the world. 

“The Chinese have agreed to deploy 5,000 PLA soldiers in Iran, and other things I’ve read include porting of Chinese naval vessels in the Persian Gulf, which would be a direct threat to the United States and its interests,” said Rossomando, noting China’s growing aggression in establishing its Blue Water Navy. 

“The country that controls the seas controls the global economy,” Rossomando noted. 

“The United States and the Biden administration is going to push Saudi Arabia into the arms of China. This is not 2000 when we were the only game in town. No, they will go to the Chinese,” Rossomando noted, describing the Biden administration’s more aggressive policy toward the KSA of late. He then described the production of weapons in China. 

“I also see the likelihood of the transfer of technology between China and Iran,” he stated, noting that China had the potential to share anti-stealth radar that would be attractive to Iran to detect Israeli F-35 craft.

“I think that the Chinese are playing for keeps here. If you look at a map of Eurasia, Iran is right in the middle. It is the Chinese access to the Red Sea,” Rossomando noted that the Chinese would be allowed to work with Iran to control the price and transfer of oil. 

“I really think that President Biden doesn’t know anything about strategy and the Chinese clearly have a big picture strategy and Iran is one piece,” Rossomando concluded. 

Tsukerman thanked Rossomando for his comments and noted that she had a lot more questions for him in the follow-up segment. (28:23)

She then moved to Benjamin Minick, the founder of Timberwolf-Phoenix, of which Republic Underground is a project. She asked Minick more about Chinese-Iran disinformation and surveillance. 

“Thanks, Irina, I’m really honored to be part of this panel. Thank you all for joining us today. I don’t normally do this with Irina, this is really more her area, but this is a hot topic for me,” he then thanked Rossomando for his comments, which enforced some of the sentiments that he often shared regarding the influence of China-Iran over international security issues. 

“I’ll give you a basic rundown of the cybersecurity threat. Just for basic understanding, for the average American that’s watching this, China has always been trying to keep up technologically with the United States and our European allies. That’s a fact. 

(30:00) It really didn’t seem like that big of a deal to them up until the early 90s as far as the cyber threat, which they considered information warfare at that point in time. 

They started to notice that the United States, and what was left of the Soviet Union, or if you want to consider it Russia at that point in time, and Iran, and Saudi Arabia, they all started to pick up on cyber programs.

They didn’t want to be left out so they picked up on the race. It’s kinda fascinating to look at because…There’s a basic path that they took. They started out as a Tier 3, so they weren’t all that serious at that point in time, and they ramped up very quickly.

Minick then noted the western alarm sounded by press cover of the China-Iran business deal and the potential of cyberinfrastructure collaboration between the two.

“During the aftermath of the first Gulf War, China started to really pick up steam and form alliances in the area. It’s not what the average American hears in the news, so everybody I speak to are concerned because a poorly written article from a few years ago made it sound like Iran was going to dump 400 billion (feel free to correct me if this is an incorrect figure), (see this article for western reports on China-Iran business deal) that would mean that over the years that China would have had to have dumped a staggering 16 billion dollars into Iran, ” said Minick. He then went on to explain the staggering amounts of cash that China was purported to invest in Iran’s cyberinfrastructure. 

He then went on to explain China’s strategy.

“So, back in 2004, they published a manual for the PLA. It was the Preparations for Military Struggle, and cybersecurity and cyberwarfare were chief concerns for them. They considered it trying to win local wars.” He noted that China considers its cyber strategy a way of no-contact conflict engagement. 

“They want to have their hands in everything. They participate in cyberattacks,” he noted that China also wants to be involved in the adoption of cyber resolutions, but by his estimations, they want to be able to break those same rules. They rose in significance in threat tier levels. 

“There’s a scale of a Tier 1, Tier 2, and Tier 3,” he began, explaining that Tier 3 can cause inconvenience, but are considered relatively inconsequential. Tier 2 threats are considered to be entering the “big leagues” of cyber threats.  

Minick then noted that China has an entity that is similar to Microsoft, a major producer of American computer parts, but that the entity’s specific purpose is to generate threat. 

“China has the same thing but instead of producing those products they work on wreaking havoc,” he described this effort as a Tier 2 threat and noted that there is a risk to a team-up with Iran, which was also a Tier 2 level threat in terms of cybersecurity. 

“One of the greatest threats that Iran poses is a cyber threat,” he noted that, based on simulations, previously the greatest threat from Iran was asymmetrical warfare. (35:42) 

“One of the greatest threats was cyber warfare,” he stated, noting that, at the time when the U.S. was at crisis level with nation-state actors from this region, they were able to accomplish much. He noted that the White House state library’s website was defaced, but there were not significant accomplishments at this time. 

“Everybody thought it ended when we stopped firing missiles, and we stopped attacking us. But really it’s a continuous threat. They’ve been trying to attempt access,” Minick noted that if China and Iran combined capabilities it would “raise serious flags.” 

“It’s gonna cause some problems for western countries and alliances. It puts us in a very difficult position because China also deals with many countries we deal with in the region. Every one of you has mentioned Saudi Arabia, and Bahrain, and Qatar, and Israel, and the UAE, the Chinese are everywhere. Iran did not want to get left behind.

They wanted to have an established agreement with China as much as everybody else in the region. And in China’s interest, I used to think it was one way, but I’m starting to see that they strategically played that very well because, you know, they can claim it’s for regional stability because if they have agreements with everybody, they’re safe. So, with that, I could go on for a couple of hours, that’s a basic rundown. They’ve caught up and surpassed the majority of the other countries in the world, and their cyber capabilities, if combined with Iran, are going to be a serious problem.” (37:36) 

Tsukerman thanked Minick for his comments and then turned the floor over to a Q&A segment.