The Jerusalem Institute for Strategy and Security

The long-term agreement between the two countries has not been finalized, and its scope and security implications seem to be limited. It is unlikely to force Israel into a complete reconsideration of its economic ties to China.

In January 2016, six months after the signing of the Iran nuclear agreement (the JCPOA), a Chinese head of state visited Iran for the first time in 14 years. During the visit, Chinese President Xi Jinping signed a declaration on a Comprehensive Strategic Partnership (CSP) with his counterpart Hassan Rouhani, which states in its sixth clause that “both sides agree to put [sic] consultations and discussions aimed at concluding a bilateral 25-year comprehensive cooperation agreement.”

The deal was intended to serve as a blueprint for the next 25 years of Sino-Iranian ties to realize their shared economic potential and to expand their cooperation in the fields of energy, infrastructure, industry, technology, and finance. However, the US withdrawal from the JCPOA has since raised concerns of Chinese companies regarding possible sanctions and pushed them to scale down their operations in Iran, and a deal has yet to be concluded.

In the face of rising pressures from the IAEA on Tehran and the economic meltdown of a country laden with sanctions and plague, the Iranian government spokesman Ali Rabiei caught the international community off guard. On June 23 he declared that the cabinet had passed a finalized version of the 25-year Comprehensive Cooperation Agreement between China and Iran as part of the CSP signed by the two leaders in 2016.

A day later, Chinese Foreign Minister Wang Yi held a conference call with his Iranian counterpart Mohammad Javad Zarif, which he opened by expressing China’s general desire to take the CSP a step further, but failed to mention the comprehensive cooperation agreement. When asked at the daily press conference to confirm that negotiations are currently underway between Beijing and Tehran, Foreign Ministry Spokesperson Zhao Lijian dodged the subject.

On July 11, The New York Times reported that it had obtained a copy of the deal. According to the document, China is expected to invest in Iran in nearly one hundred projects spanning several sectors (including security) and totaling $400 billion over 25 years, which “would vastly extend China’s influence in the Middle East.”

A “final version” of the deal, dated to June 2020, has subsequently leaked online source unknown). In contrast to the circulating speculations (from Iranian sources) and the alarming forecasts of pundits, the leaked document does not specify any threshold for trade and investment and does not mention the $400 billion. Likewise, the document does not indicate any Chinese intention to station thousands of troops on Iranian territory, as claimed on various platforms over the past year, nor any intention to acquire strategic islands and ports.

Evidently, the document did not include any new knowledge beyond what was already known since the 2016 Declaration on a Comprehensive Strategic Partnership. Moreover, even without a deal and notwithstanding the American sanctions against the Iranian regime, Beijing and Tehran are already cooperating in several fields, namely energy, infrastructure construction, joint military drills, intelligence sharing and cyber collaboration.

While the 25-year cooperation agreement to be concluded within the framework of the CSP announced by China and Iran in 2016 is not unique, it should nevertheless be carefully assessed on the basis of what we know about previous Chinese partnerships in order to understand how a future deal can be implemented.

Overview of China’s Partnership Agreements

Partnership declarations and bilateral agreements are the bread and butter of Chinese diplomacy. (China vocally maintains a non-alliance principle). Over the years, Beijing has proclaimed itself to be a CSP with more than 30 countries. Other than Iran, Middle Eastern countries on the list include Egypt, Iran’s rival Saudi Arabia, and the United Arab Emirates, Israel’s newest ally.

From the early 1990s to 2016, China has declared bilateral relations with five regional organizations, including ASEAN and the EU, and 78 nations. In 2017, Israel became number 79 when Israeli Prime Minister Benjamin Netanyahu met President Xi in Beijing to ceremoniously mark the launch of a China-Israel Comprehensive Innovation Partnership.

These partnerships that constitute Chinese diplomacy can be categorized as an ascending three-tier hierarchy: a regular partnership, a strategic partnership, and a comprehensive strategic partnership. The three grades are further divided into a nomenclature of 25 types of partnerships. For instance, the Innovative Comprehensive Partnership with Israel versus the Innovative Strategic Partnership between China and Switzerland. The variations in terminology suggest that the partnership with Israel can be classified as “regular”, while the partnership with Switzerland can be described as the more significant “strategic.” The Comprehensive Strategic Partnership, like the one that governs ties between China and Iran since 2016, supersedes both.

One of Beijing’s reasons for using such a complex classification system is organizational. Since November 2019, China has more diplomatic missions globally than the United States (totaling 256 embassies, consulates, and other missions). In such a comprehensive diplomatic structure, categorization facilitates clear boundaries for China’s bilateral relations with each country and focuses on the most important aspects of its relations. The higher the level of partnership, the broader the boundary for collaboration, both in terms of quantity and strategic importance (Bang, 2017). Thus, for example, China does not have military cooperation with all its strategic partners, but the wide boundaries of the CSP allow relations to expand in this direction, as opposed to regular partnerships that are not designed to allow for military cooperation.

The second stimulus behind China’s partnerships is geopolitical. A systematic review of existing partnerships shows that the wider the power gap between China and the US vis-à-vis a particular country, the more likely it is that Beijing will work to establish a regular partnership with that country (Li & Ye, 2019). It is important to note that, as China closes the power gap, it is more likely to seek to upgrade ties to a CSP. The rationale is that China seeks to establish a broad array of bilateral partnerships in every geopolitical arena that can counterbalance the US’s network of alliances, as bilateral agreements ensure that China remains the stronger party.

Subsequently, China promotes partnerships with countries that will help to achieve its goals of modernization and national rejuvenation by 2049, the centenary year of the founding of the People’s Republic of China. The practical aspects of these objectives, which are set out in the Constitution of the Chinese Communist Party, relate to partnerships that will enable China to lay a large economic foundation for its development and contribute to the international recognition of the “great rejuvenation of the Chinese people” reunited under the Party’s flag across China’s traditionally claimed territories under dispute. In practice, prominently in recent years, Chinese diplomacy has directly challenged the US – whether in an attempt to influence pro-American countries (such as the Gulf states and Egypt) or in a clear trend to reinforce anti-American forces, such as Iran.

Strategic and Political Objectives of the Deal and its Limitations

The only commentary in the official Chinese media on China’s motives behind the 25-year deal with Iran was by Professor Fan Hongda of the Shanghai International Studies University (SISU) (Fan, 2020a). He argues that China considers Iran to be one of the most important partners in the Middle East, citing its strategic geographic location, making it a major hub of the Belt and Road Initiative, a flagship project of President Xi, and a key component in achieving the centennial economic and geopolitical objectives. That also makes Iran important to China in Fan’s view is Tehran’s unconditional support for Beijing on contentious sovereignty issues, such as Hong Kong and Xinjiang, both of which are at the heart of the centennial goal.

Fan’s commentary, however, did not touch on other geopolitical motives, such as how deeper Chinese involvement in Iran could increase the pressure on the US in the Middle East through military cooperation and the holding of ports in the Strait of Hormuz. A Chinese port in the strait, a gateway through which one-fifth of the world’s crude oil supply flows through, will expand Beijing’s “String of Pearls” – a chain of strategic ports stretching from Hambantota, Sri Lanka, through Pakistan’s Gwadar, to China’s first overseas military port in Djibouti. China’s presence in Iran could also go hand in hand with the urge to flank India and curb its ambitions in Iran, an especially important task after the deadliest border clash between China and India in more than 40 years, that erupted in June.

Contrary to Chinese reticence, Iran’s media and social networks have burst in a whirlwind of debates about the ramifications of a deal with China for the future of the region. The spokesperson for Supreme Leader Ali Khamenei and the government of President Rouhani praised the deal as an economic lifeline, identifying China as the only force capable of counterbalancing US presence in the Middle East. It is plausible that the leaked document obtained by The New York Times was an Iranian initiative designed to signal to Washington that it would not be able to bankrupt Iran and bring it to its knees.

Apart from the immense economic opportunities inherent in Chinese investment as part of the Belt and Road Initiative, the introduction of the agreement serves internal political purposes. It signals to the people of Iran that the West will be unable to isolate Tehran. Simultaneously, it can be used as a bargaining chip for a future nuclear deal in which Iran can repeal clauses that it does not approve and offset its reliance on China with investments from Europe.

Meanwhile, in the domestic political arena, Iran’s vision for a deeper partnership with China reflects the decline of the pragmatic camp led by President Rouhani, which sought to bring Iran closer to the West, and the dominance of the ideological camp led by Supreme Leader Khamenei, who sought to bring Iran closer to the East. Accordingly, Gholamreza Mesbahi-Moghaddam, one of his advisers, stated that the expected deal had been initiated by the leader, who had sent a special envoy to China to advance the issue.

Whereas Khamenei does not see China as a cultural threat to the Iranian regime (as opposed to the threat from the West), news of the imminent agreement has given rise to many critics, including former President Mahmoud Ahmadinejad. They argued that the government was surrendering Iranian sovereignty to a foreign country behind the back of the people, exposing the country to a Chinese debt trap, and guaranteeing a future where the Iranian market would continue to be flooded with low-cost Chinese products that would cause local businesses to go bust.

President Rouhani’s chief of staff, Mahmoud Vaezi, has predicted that the cooperation agreement will be signed by next March. However, it is not clear at this time whether China will respond to the courtship of Iran. Even if it does, cooperation between China and Iran is likely to remain limited in the foreseeable future, contrary to The New York Times’ assertion that the agreement would dramatically increase China’s dominance in the region.

Any future deal between China and Iran is a function of political stability in the region. China knows that excessive economic and military engagement with Iran could jeopardize stability in the Middle East and harm its ties with other partners in the area who are in strained relations with Tehran. Namely, Israel, China’s partner for innovation, Saudi Arabia, its CSP and the largest oil supplier, and the UAE, a CSP as well, which enjoys the most integrated relations with Beijing in the Middle East.

Despite the growing chasm between Beijing and Washington, the US remains China’s largest trading partner, and the relative regional stability that benefits Chinese companies and secures the energy en route to Beijing is made possible by America’s dominance in the Gulf. In fact, many Chinese firms will not want to risk retaliation under the US sanctions regime and face the same fate as the technology giants Huawei and ZTE.

It has also been noted that, against the backdrop of the global pandemic, volatile oil prices, threats of renewed sanctions and tensions with the US and Europe, it is unlikely that China will commit to spending 15 times more than its total investment in Iran from 2005 to the present (Fulton, 2020), especially after its painful experience in Libya and Syria at the beginning of the decade.

In an opinion column published by Fan Hongda in the Iranian news agency ISCA in Persian, but in Chinese only on SISU’s website, he said that conditions are not ripe for a genuinely comprehensive agreement between China and Iran. Both because of the backlash on Western and Iranian media and among political circles, and because of conflicting views within China on deepening relations with Tehran: “There are also many factors which hinder the development of relations between Iran and China. For example, neither side has yet developed mutual trust or has a clear objective understanding of the other party” (Fan, 2020b).

In light of the above, the attempts to portray the China-Iran deal as a drastic strategic shift – as a Chinese predisposition to negotiating with Iran over China’s other interests in the area – are more likely to reflect Iran’s desires or the willingness of analysts and policy makers to amplify the perception of Chinese intervention in the Middle East for strategic and political reasons.

Implications for Israel

Although no comprehensive cooperation agreement has yet been reached and its final details have not yet been determined, a systematic review of China’s partnerships shows that the CSP, which has existed between China and Iran since 2016, allows any future agreement to effectively extend to areas in breach of Israel and US interests.

Israel’s main concern is that the ever-growing Sino-American split is pressuring China to endorse the JCPOA and to support the removal of sanctions from Iran. In any event, China is undermining US attempts to isolate Iran. Though wary of frontal confrontation in key sectors, such as banking and technology, but as Iran’s CSP, even if it is prohibited from cooperating with Iran on certain channels due to US sanctions, Beijing will continue to seek collaboration with Tehran in other domains.

The practical impact of Sino-Iranian relations on the regional balance of power is minimal. There is no danger of a drastic shift in the near and medium term. The biggest implications for Israel are on the symbolic and diplomatic fronts; whether Iran is perceived as a player which, with the aid of China, can get out of the difficult predicament it faces. Consequently, the Israeli interest is to note the actual contours of the agreement (– unlike the US and Iran which are purposefully exaggerating its importance).

Conditions for a major expansion of Sino-Iranian relations have not yet matured. Israel must make its concerns clear to China through diplomatic channels and concentrate on common economic interests, while emphasizing that a strong Iran will compromise peace and stability in the region.


References

Bang, J. (2017). “Why So Many Layers? China’s ‘State-Speak’ and Its Classification of Partnerships”. Foreign Policy Analysis, 13(2), 380–397. doi:https://doi.org/10.1093/fpa/orw063

Fan, H. (2020a, June 30). yīlǎng xuānbù yǔ huá 25 nián quánmiàn hézuò jìhuà, zhōngyī guānxì néng fǒu jìnyībù zǒujìn? (Iran announces a 25-year comprehensive cooperation plan with China. Could relations between China and Iran get stronger?). (Shanghai Observer) Retrieved from https://www.shobserver.com/news/detail?id=264494

Fan, H. (2020b, July 23). fàn hóngdá:“ yīlǎng zhōngguó wèi quánmiàn hézuò zuòhǎo zhǔnbèi le ma?”, yīlǎng yīsīkǎ tōngxùnshè (Fan Hongda: “Are Iran and China ready for Comprehensive Cooperation?”). (SISU) Retrieved from http://mideast.shisu.edu.cn/04/9d/c3991a132253/page.htm

Fulton, J. (2020, July 15). Iran Isn’t The Only Middle Eastern Country In a Unique Partnership With China. (Atlantic Council) Retrieved from https://www.atlanticcouncil.org/blogs/menasource/iran-isnt-the-only-middle-eastern-country-in-a-unique-partnership-with-china/

Li, Q. & Ye, M. (2019). “China’s Emerging Partnership Network: What, Who, Where, When and Why”. International Trade, Politics and Development, 3(2), 66–81. doi:DOI 10.1108/ITPD-05-2019-0004

Unknown source (2020, July). Final edition of the Iran-China Comprehensive Cooperation Plan. Retrieved from https://documentcloud.adobe.com/link/review?uri=urn%3Aaaid%3Ascds%3AUS%3Af6a1ae0b-9378-4831-b6bf-af56c9f5696d


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