Are Iran and China Allying Against America?
Iran has neither fully committed to the “East Pivot,” nor will it do so if it can get an agreement with the West. But failing an agreement with the West, Tehran will fully commit to China.
ARE CHINA and Iran about to become strategic partners? Or does the West have nothing to worry about? What might be called the “alarmist” view is that Iran and China have concluded a strategic pact which binds them for a quarter of a century touching a wide range of domains, not only oil and gas, but also military, intelligence, and connectivity to China’s Belt and Road Initiative. By this token, Iran’s “pivot to the East” represents a permanent shift in its strategic posture, ensuring an era of competition with the West. The basis of this view is a memorandum of understanding (MOU) that was leaked in June 2020, which purports to be a Comprehensive Strategic Partnership Roadmap between the governments of Iran and China. This eighteen-page document exists in three languages (Farsi, Mandarin, English), but only the Farsi version has been released. The $400 billion deal struck between Beijing and Tehran was officially announced in late March of 2021.
The second view might be termed the “assuager” view and it posits that no Iran-China rapprochement is in the works; It’s business as usual in the world of great power politics, and what is uppermost in the minds of the Chinese leadership is how to restore normalcy in its trade relationship with the United States ($550 billion annually versus $25 billion with Iran). As for the “China-Iran” deal, this is merely posturing and chest-thumping on the part of Iranian authorities attempting to sway public opinion at home; to persuade the Iranian people that it is not about to crumble and that it does have options other than the United States.
On these views, similar policy trajectories emerge—each inhospitable to a “clean return” to the 2015 Joint Comprehensive Plan of Action (JCPOA). The implication of the first view is that Tehran and Beijing (and Moscow too) have a common strategic interest in containing and countering U.S. military preeminence and will seek to do so in a hard-nosed manner. Amid this posture, the United States is best served with a policy of isolating Iran and seeking a “longer and stronger agreement” that would deal with other “deeply problematic” issues.
Similarly, the second view reasons that given that no permanent strategic partnership is in the works, nor is a long-term partnership likely to emerge, it is best to dispense with the 2015 JCPOA, and to negotiate new terms better suited for the current security landscape. Hence, whatever diplomatic leverage has emanated from President Donald Trump’s “maximum pressure” policy should be the basis for negotiating a new comprehensive agreement which addresses the concerns of U.S. regional allies (Saudi Arabia, United Arab Emirates, Israel), failing which sanctions must persist, including secondary sanctions (deterring third parties from conducting business with Iran), and if Iran continues to pose security concerns, all options ought to be on the table.
ASIDE FROM hindering nuclear diplomacy, these worldviews signify the likelihood of longer-term difficulties between Washington and Tehran. Indeed, if Tehran is seen as being steered by Beijing, or alternately if it is conceived of as a middling power lost at sea, the pathologies of the American national security establishment will have little other to do—rightly so—than to land on a mixture of bellicose threats and minor adjustments. But strategists in Washington who have taken to these views have been too intoxicated by old ways of practicing international politics: an incessant obsession with maintaining “credibility” and paying lip service to a “rules-based” order. These tendencies have come at the cost of clear-eyed thinking on Iran.
Blessed with decades of prosperity and security, we have lost the tradition of thinking geopolitically about international politics (as practiced by Alfred Mahan, Walter Lippmann, George Kennan, and Henry Kissinger). It is this habit of mind that is much needed in an assessment of Iran—an awareness for the nature of change in global politics and a sense of what opportunities and difficulties present themselves accordingly.
On this approach, there is a third view which grows from a middle-ground understanding of the Iran-China strategic context. This view suggests that Iran has neither fully committed to the “East Pivot,” nor will it do so if it can get an agreement with the West. But failing an agreement with the West, Tehran will fully commit to China. The policy implication of this view—if one accepts “strategic competition” as the guiding principle on China—is that the Biden administration should “test the opposite premise” of isolating Tehran, “by restoring nuclear diplomacy, lowering regional tensions, and forging new arrangements.” Crucially, to accomplish this vision, a “fast timeline” of re-joining the 2015 Iran deal is necessary—but far from sufficient.
This paper elaborates on this third view. First, I outline China’s strategic interest in Iran. Second, I lay out Iran’s strategic interest with regard to China and the West. Third, I address what the United States’ response should be in view of this strategic context. Ultimately, I argue that the national interest is best served with prudent diplomacy towards Iran, that it’s best to avoid the risk of pushing Iran further into China’s arms, and that a “clean return” to the JCPOA as soon as a feasible re-entry solution is found is critical. Then and only then can the shift to tackling regional instability (proxies and missiles) occur. Of greater significance, such an opening gambit would mark the beginning, not the end, of redefining the United States’ relationship with Iran.
TO UNDERSTAND China’s strategic interest in Iran, we must first take a bigger picture view of China’s grand-strategic aims in the region. In 2013, President Xi Jinping announced China’s Belt and Road Initiative (BRI) during his visit to Kazakhstan and Indonesia. Xi outlined China’s priorities in the region in terms of growing economic ties, widening access to maritime trade corridors, establishing security relationships, and facilitating cultural exchanges. Most significantly, however, is China’s vast collection of infrastructure projects—railways, energy pipelines, highways, seaports, border crossings—both westward, through the mountainous former Soviet republics, and southward, to Southeast Asia. China’s ambition is stunning. Presently, more than sixty nations (representing two-thirds of the world’s population) have signed on to projects related to China’s BRI.
But China’s regional ambitions—as structured by the overarching BRI—face a clear hurdle with respect to Russia, namely that any successful engagement with the Middle East, key to Xi’s broader notion of a Sinosphere of shared prosperity in Eurasia, is to a great extent at the mercy of Russia. Since the late 1950s, Moscow has been a major political actor in countries like Egypt, Syria, Iraq, and Libya—each of which were at one time Soviet client states. Today, Russia remains a key power broker in the region, maintaining relationships with three major constituents: Israel, Iran, and the Arab states. For its part, Beijing sees Russia as a “genuine strategic partner” based on the two countries’ fundamental interest in deterring the United States from undermining their domestic and global position. But even this Beijing-Moscow “authoritarian international” faces its challenges—and this is particularly true in the Middle East. For starters, Russia seeks a potential role for itself within the U.S.-China paradigm as the leader of a nonaligned movement—a “third way.” Second, Moscow has engaged in a precarious balancing act, pursuing opportunities for cooperation with countries such as India, Korea, and Japan, which represent Beijing’s regional rivals. Lastly, both Beijing and Moscow are positioned to be in growing conflict over the Arctic and its potential of being a strategic resource base. These general developments have led to “cooperation, ambiguity, and tension” in Sino-Russia relations. As one analyst framed it, cooperation between Beijing and Moscow is “hamstrung by historical suspicions, cultural prejudices, geopolitical rivalry, and competing priorities.”
China’s pact with Pakistan—a country that is peerless in terms of the depth and extent of BRI investment (including launching Pakistani sensing satellites from China and developing fighter jets such as the JF-17)—has been a singular success for China to break out of the Russian straitjacket in Central Asia and create a bypass through South Asia. But Pakistan is not enough, and without Iran there can be no meaningful infiltration of the Middle East.
From this perspective, it becomes clear what Iran means to China: elbowing out of the Russian straitjacket in Central Asia and paving the bricks of the Eurasian BRI. Both in terms of geography and political-economy, Iran represents a series of opportunities for advancing the BRI agenda. Iran provides overland access to Iraq and Syria—where postwar reconstruction by Chinese firms can be turned into permanent arteries of trade. Iran is also a necessary powerbroker in Syria, a country with a foothold in the Mediterranean, where Chinese outposts are being implanted in Greece and Italy. Iran also provides the Caspian-Gulf linkage (ending in Chabahar Port in the Persian Gulf, downstream of the Strait of Hormuz, not far from Gwadar Port in Pakistan, the terminus of the China-Pakistan Economic Corridor). Iran is also a pivotal player in Iraq, Lebanon, and Yemen, and has a key cultural foothold in Afghanistan, notably amongst the Dari-speaking population (Afghan dialect of Persian) including the Hazaras (Persian-speaking and of Shiite faith), chipping away at Russia’s cultural dominance of Central Asia.
Iran’s political leverage in the region emanates from its historical, cultural, and economic ties (as an example, over half of electricity consumed in Iraq originates from Iran, either as gas sales to Iraq which is used in power generation or direct electricity sales). All this is not lost on the Chinese leadership. Indeed, the MOU underscores the importance of joint cooperation in “third countries” (indicating Iraq, Syria, Lebanon, Afghanistan, Pakistan, Turkmenistan, and Azerbaijan) as one of the pillars of the partnership, as well as the establishment of a Shiite pilgrimage circuitry extending from Afghanistan and Pakistan all the way to Iraq and Syria.
Thus, the emphasis that is often placed on China’s interest in Iran’s oil and gas resources, which is undeniable, tends to mask the greater game that is at play. Given this statement of Chinese strategic interest, we must now ask: what is the Iranian interest?
FROM AN Iranian perspective, there is a clear sense that not all that glitters is gold. Although the MOU with China contains no monetary figures, an independent source puts the estimate at $400 billion investment over a twenty-five-year period, in five-year stages. Given that Chinese investment in Iran is meagre (although there is trade to a tune of $25 billion a year), the question is why doesn’t Iran go for it, especially in view of continued rebuffing from Biden administration officials and the lethargic reaction from the Europeans?
Considering that the document in question is an MOU and not a prescription of executable projects—and the ambiguity about the extent to which China would actually implement it while the U.S. sanctions regime on Iran stands—the fundamental fact is that Iran would much rather cut a deal with the West than the East. This is the case for three main reasons.
First, the conservative political class in Iran fears encroachments from China that would threaten Iran’s sovereignty. On a number of occasions, hardliner parliamentarians likened the MOU to the 1828 Treaty of Turkmenchay, in which Iran forked over sovereign land in the Caucasus region to Russia.
Second, from an Iranian perspective, China is not considered a reliable strategic partner. China has tended to treat Iran as a bargaining chip in its global diplomacy. Mohsen Aminzadeh, a former deputy foreign minister of Iran under President Mohammad Khatami, has noted numerous occasions when China resorted to double-dealing or reneged on its commitments to Iran in the last four decades—that is, during the entirety of the lifetime of the Islamic Republic of Iran, including cancellation of a commitment to build an enrichment facility—and gives voice to Iran’s worry: China has so much at stake in a functional relationship with the United States that it will not hesitate to tear up and toss away whatever deal it makes with Iran to mend that relationship. Lending credence to this view, China is notorious for its wheel and deal approach towards Persian Gulf politics. Iran’s hardliners have not overlooked the fact that China has helped Saudi Arabia expand its nuclear program (and that Riyadh is the biggest crude supplier to China) or that Chinese investment has tripled in Israel’s technology sector in the last five years.
But even if the core issues of sovereignty and double-dealing were to be sufficiently resolved, China’s burgeoning BRI investments have proven perilous for some countries—such as Sri Lanka and Djibouti—who have accumulated extreme amounts of Chinese debt such that key pieces of national infrastructure and territory have been used as repayment. China has denied that it engages in “Debt-trap diplomacy,” but Iran’s leadership will be wary of any possible efforts on the part of Beijing to control key strategic port facilities (e.g., near the Strait of Hormuz).
For these reasons, Iran would much rather cut a deal with the West than commit to Beijing. From a Chinese perspective too, the strategic relationship with Iran is ambiguous at best given that, as Seyed Hossein Mousavian, a former Iranian diplomat, noted in February, “Beijing does not know if Iran’s relation with China is a function of its conflict with the West or [a genuine interest in China].”
Be that as it may, from an Iranian perspective, no deal is not an option. If diplomacy with Washington fails, Beijing will suffice. Despite the pitfalls of the MOU, a strategic partnership with Beijing will nonetheless garner more concrete investments to help Tehran revive its failing economy. Iran and China both stand to gain from the formalization of a long-term partnership which organizes their bilateral relations.
In addition, a cursory glance at Iran’s macroeconomic indicators (high inflation and unemployment, exchange rate depreciation, and a poverty level at 55 percent), not to mention two successive social revolts that rocked the system (2018 and 2019), and devastation from COVID-19, make it abundantly clear why no deal is not an option.
Also significant, given that Iran’s leadership has thus far recoiled at the prospect of striking an entirely new deal with a party it sees as having unfairly reneged on a previous deal, and that the Europeans too lack the political appetite for JCPOA+ type deal, the most likely outcome of a “no-rush” approach will be a permanent Iranian posture towards Beijing. It is no surprise that hardliners in Tehran are seriously eyeing a revival of Iran’s “look East” policy that was the guiding principle of Mahmoud Ahmadinejad’s presidency. Now as then, the policy entails robust cooperation with China in security, trade, technology, and infrastructure in order to reduce the stranglehold of the West’s sanctions. In an environment characterized by growing rivalry between the United States and China, a Beijing-aligned Iran would present a graver threat to U.S. interests.
In view of the Sino-Iranian strategic context, we may now ask: what ought to be the United States’ policy towards Iran?
CHINA HAS become the grand organizing principle of world geopolitics, much like the Soviet Union was during the Cold War era. The Sino-U.S. rivalry has manifested in trade, the science and technology sectors, intellectual property espionage, cyber and outer space, as well as the more traditional military issues of maritime expansion in the South China Sea and the bolstering of regimes in North Korea, Syria, and Iran. But as National Security Advisor Jake Sullivan noted, the Cold War analogy is not entirely accurate. China represents a far more challenging competitor. Its economy is more diversified, flexible, and sophisticated than the Soviet Union’s ever was.
Indeed, what is most concerning from the standpoint of U.S. global leadership is that China’s continued rise signifies the advent of a new Sinocentric political-economic order. China’s successful development into a major superpower represents an alternative to the Western model of democratic market economy. Instead, Beijing has illustrated that a combination of authoritarianism and oligarchic central economic planning can produce outstanding results in terms of generating growth and alleviating hundreds of millions from poverty. At the same time, the West is plagued with a sense of existential angst about its own ability to generate growth, innovate, prosper, and resolve issues relating to class, race, gender, and climate change.
Tellingly, during his Senate confirmation hearing, Secretary of State Antony Blinken explicitly stated that China seeks to become “the leading country in the world, the country that sets the norms, sets the standards, and to put forward a model [that] … countries, and people will ascribe to” and that crucially, it was the responsibility of the United States “to make sure that our model is the one that carries the day.” Interestingly, Sullivan concurs on the centrality of the rivalry with China, writing in late 2019 that there is “a growing consensus that the era of engagement with China has come to an unceremonious close” and then making the case for a “clear-eyed coexistence on terms favorable to U.S. interests and values.”
WHATEVER THE short- and medium-term steps towards Iran are, the long-term outlook is that either Iran will be in the camp of the West as a stumbling block to China’s Eurasian agenda, or it will be a part of that camp which will exacerbate the United States’ China containment policy. Therefore, the most prudent course of action is to view the Iran problem as part and parcel of the China problem. Under this view, as Sullivan has noted, “we are going to have to address Iran’s other bad behavior, malign behavior, across the region” at a later time, and that “from our perspective, a critical early priority has to be to deal with what is an escalating nuclear crisis.” The critical logistical issue is to determine who takes the initial steps. Does the United States lift sanctions before Tehran complies or the other way around?
Speaking in early February, State Department spokesperson Ned Price said to reporters that, “if Iran comes back into full compliance with its obligations under the JCPOA, the United States would do the same.” Taking the opposite view, Iran’s former Foreign Minister Javad Zarif urged for the United States to lift sanctions first, stating in his February CNN interview, “if we are away from strict limitations of the nuclear agreement it’s because the United States tried to impose a full economic war on Iran,” adding that “now if it stops that, we will go back into full compliance.”
The conditions for achieving a “clean return” are not as clear as many would hope. But in view of the strategic backdrop explored in this paper, a “critical early priority” must be returning to the 2015 nuclear entente. If one accepts these premises, the Biden administration faces the challenging task of evaluating how to engage with an increasingly bellicose Tehran whilst lifting its stranglehold on Iran’s economy with the clear intention of returning to the 2015 deal before it is too late.
BROADLY SPEAKING, sanctions on Iran fall into two categories: primary and secondary sanctions. Primary sanctions are prohibitions that apply to U.S. entities transacting between the United States and Iran. Secondary sanctions extend to non-U.S. persons, with the implication being that those who do not abide by the sanctions are cut off from transacting with the United States.
The United States has put into effect a robust sanctions regime on account of Iran’s nuclear program, support for proxy armed groups, advancing ballistic missiles program, and egregious human rights violations.
As part of the JCPOA, the Obama administration agreed to lift secondary sanctions imposed over Iran’s nuclear program (the EU dropped all nuclear-related sanctions). The 2015 JCPOA did not lift sanctions taken for non-nuclear-related reasons.
For its part, the Trump administration imposed primary and secondary sanctions on Tehran, targeting Iran’s heavy industry (petroleum, construction, manufacturing, mining, and textiles), as well as members of the Islamic Revolutionary Guard Corps and, ironically, Zarif himself.
The Biden administration may wish to reverse both these primary and secondary sanctions imposed by the previous administration. Next, the administration may wish to consider proffering incentives, in the form of sanctions relief, in sectors that are crucial to Iran’s economy such as banking assets in South Korea, aviation, maritime, and mining sectors. This is not a novel idea, to be sure. Prior to the diplomatic talks that gave rise to the 2015 JCPOA, the United States and Iran drafted a list of persons and entities that could be relieved from prior sanctions. Iran, the United States, and the EU will certainly engage in a similar process of negotiating sanctions relief in return for compliance. On this point, it is interesting to note that Zarif contemplated the prospect of having the EU’s foreign policy chief, Josep Borrell, synchronize diplomatic efforts to return to “strict” compliance.
MORE DEXTEROUS diplomacy towards Tehran should mix carrots and sticks to draw Iran into a long-term dialogue on issues of concern to the United States and its allies. The use of incentives implies a rebuke of the policy of isolation. As it relates to Iran, economic integration (primary sanction relief) and political integration, in exchange for verifiable political ends should be the guiding diplomatic principle.
Of growing significance to any strategy towards Iran is the simple fact that Iran has a disproportionately young and well-educated population (nearly half of Iran’s population of 83 million is under thirty years old), with a strong cultural preference towards the West, situated at the crossroads of Asia’s emerging markets. Consequently, the Iran of the next two decades is uniquely positioned to promote the interests of the United States in a stable and economically vibrant future—or, alternatively, to sow greater chaos under the Sino security umbrella.
Of special importance to U.S. officials presently, a cooperative Iran can be a critical partner in the aftermath of the drawdown of American forces in Afghanistan. Though an ironic point, Iranian objectives in Afghanistan align almost perfectly with postwar U.S. interests. Indeed, officials in Tehran prefer a stable government in Kabul free of fundamentalist Taliban control to blunt the tide of Sunni extremism in the region. Furthermore, both sides have prioritized countering narcotrafficking in Afghanistan—the main lifeline for guerrilla warfare in the country. Interestingly, too, a cooperative Iran can serve as a natural balancer to Pakistani influence in Afghanistan, an increasingly desirous proposition for Islamabad-wary officials in Washington. This point has been lost in contemporary debates. It is worth remembering that Iran played a critical powerbroker role in prewar Afghanistan when it convinced the Northern Alliance to support Hamid Karzai.
But the geostrategic merits of a rapprochement between Washington and Tehran are not merely confined to the Eurasian landmass. The seemingly implacable Vladimir Putin has taken great advantage of an isolated Iran. Iran and Russia are natural competitors in the global commodities market and vie over both market share and resources as, for example, in the Caspian Sea. In addition, Moscow has used an isolated Iran as a “last-resort” market for selling outdated weaponry, jets, and machinery. Denying Moscow a full-fledged ally would rebalance the region’s power centers in favor of U.S. interests.
Curiously, a fundamental rethinking of U.S.-Iran relations would provide an opportunity for greater consensus among America’s traditional allies. Indeed, Westminster’s “integrated review” of its security and foreign policy placed a premium on competition with China, on global trade as a means of establishing diplomatic ties, and on becoming “the broadest and most integrated presence” of any European state in the Indo-Pacific. These core interests can be effectively pursued under both bilateral and multilateral channels with Iran.
THERE IS an ugly reality about the emerging world order, but it is a reality that must be confronted head-on, nonetheless. The age of relative peace between the world’s great powers is ebbing away and making room for the dawn of a new era—where great and middling nations increasingly act on the world stage according to their perceived national interests. The rules-based order to which we have grown so familiar—and of which we are the proudest purveyors—has confused rather than clarified America’s role in the world today. Looking ahead, U.S. officials should take a clear-eyed view of the nation’s grand strategic objectives and align means and ends in an adaptive and forward-looking manner. The time for revamping foreign policy debates in Washington is long overdue.
As it relates to Iran, a forward-looking foreign policy would see Iran as a Eurasian country, not a Middle Eastern one. China understands that Iran is a major regional power located at the crossroads of the Middle East and Central Asia—an area that is important to its BRI. The United States should avoid paralysis by analysis. The strategic context makes clear that time is of the essence, and if social tensions ratchet up once again, without prospects of a breakthrough with the West, Iran might just snuggle up to the dragon. The consequence of this is not that Iran will get a second lease on life—for the same would result if it were to cut a deal with the United States—but that in one case a major step would have been taken towards the China containment strategy, and in the other, it would be a major setback to that strategy, compounding the setback from nuclear disengagement and the threat of proliferation.
Lyes Mauni Jalali is a JD candidate at Yale Law school.
Image: Reuters.