China and Iran Settle on A $400 Billion Economic Partnership Agreement
Iranian Foreign Minister, Mohammad Javad Zarif (right) and Foreign Minister Wang Yi pose for a photo in Tehran After Momentous Deal. Source.
A meeting in Tehran on March 27 rang in a potential new era for the Middle East, as China and Iran agreed to a 25-year economic partnership. This deal has been in the works for a half-decade, as the two nations agreed on a plan worth $400 billion of Chinese investment in exchange for Iranian oil.
This maneuver will directly undercut America’s influence in the Middle East as China is opting in to buying Iranian oil, who is currently under American sanctions. These sanctions have isolated Iran in the Middle East and have limited Iran’s opportunities for foreign investment. Historically, sanctions have been an effective form of punishment as long as the nation has no one else to turn to economically. With China’s economic extension to Iran through a 25 year deal, this offers both a relief to Iran economically while also allowing it to think freely concerning other issues such as the Iran Nuclear Deal.
The sanctions were raised against Iran after former President Donald Trump withdrew America from the Iran Nuclear Deal in 2018. Now, President Joe Biden has offered to re enter negotiations with Iran concerning their nuclear deal in the hopes of reestablishing the accord. President Biden has slowly lifted the sanctions, but will not remove them in totality until negotiations are reopened. It is still unclear how much of the Chinese-Iranian deal can come into effect while Iran is still negotiating with America concerning its nuclear program. But China, another participant in the Nuclear Deal, has now offered Iran more leverage over America as the sanctions are undercut by this economic deal.
The $400 billion agreement is among a series of Chinese investments a part of their Belt and Road Initiative (BRI), where China spends billions on infrastructure investment in exchange for economic and political security. This program began in 2013 by President Xi Jinping, as an initiative to slowly expand China’s influence from Asia all the way through to Europe. Many are skeptical of the program and see it as a false move by the Chinese government to place nations under their influence. These skeptics such as former President Trump have done little to offer an alternative to participating nations.
The specifics of the deal have not been released by either China or Iran, but it is suspected that the 18 page draft revealed last year is very similar to the deal signed in late March. The deal outlined that the $400 billion would be allocated to invest in “banking, telecommunications, ports. Railways, health care, and information technology, over the next 25 years.” In exchange for these investments, China will receive a regular and discounted supply of Iranian oil. Another portion of the deal enhanced military cooperation between the two nations such as joint training, research, and a sharing of weapons developments and information.
Moving forward this deal and increased involvement of China in the Middle East could potentially lead to unrest. With the added leverage Iran now obtains against America, the Iran Nuclear Deal may become harder to negotiate. America has stated it is in their best interest to re enter the deal, but the stakes of this deal have been preemptively rewritten by China’s involvement with Iran. China has also made other moves in the Middle East to undermine America’s authority there. Overall, the near future and China’s next moves may rewrite the current conditions of the Middle East .