Strong axis emerging in Iran-China deal’s wake is bad news for US

China is already Iran’s top trade partner and oil client, but its signing of a 25-year strategic partnership agreement on Saturday has put US sanctions on the verge of collapse, global observers say.

The agreement covers a variety of economic activity from oil and mining to promoting industrial activity in Iran, as well as transportation and agricultural collaborations. The deal also supports tourism and cultural exchanges.  

A Tuesday report said China is about to import more than 1 million barrels per day of Iranian crude oil in March despite US sanctions designed to penalize buyers.  

The Asian powerhouse has received record amounts of Iranian oil since the beginning of 2021. Reuters pegged China-bound cargoes at 30 million barrels for March, while president of SVB Energy International Sara Vakhshouri estimated Iran oil exports this month exceeded 1 million bpd.

According to Eurasia Group analyst Henry Rome cited by Reuters, “Iran is exporting more oil to China and that poses a challenge to the US sanctions regime”.

Foreign Minister Wang Yi, who signed the agreement in Tehran Saturday, told Iranian President Hassan Rouhani that “no matter how the world situation changes, China’s willingness to develop China-Iran relations will not change”.

China’s Foreign Ministry said late Tuesday that Beijing has “consistently opposed” the US unilateral sanctions and “long-arm jurisdictions” and urged Washington to lift these “illicit sanctions” as soon as possible. The country said last week that it would work to defend the legitimate interests of Sino-Iranian relations.

US vexed, promises new sanctions

The accord has irked the West, with the US saying on Monday that it would evaluate the deal and see whether it could trigger sanctions under American law.

“We of course will take a look and ensure that any sanctions that need to be implemented would be as it relates to this package," White House spokeswoman Jen Psaki told reporters.

The US government has already imposed sanctions on a number of Chinese companies, including state-owned energy company Zhuhai Zhenrong and Cosco Shipping Corporation subsidiaries, for shipping Iranian crude oil.

However, China "does not want to see the Islamic Republic fall because of American pressure, an outcome the Chinese would read as a net loss for themselves, geopoliticaly,” according to Alex Vatanka, an Iran analyst at the Washington-based Middle East Institute. 

Beijing regards the Middle Eastern powerhouse a key destination in China’s trillion-dollar Belt and Road Initiative involving huge infrastructure projects connecting Asia to Europe and beyond.

For years, China has been investing in Iran’s energy and transportation sectors. Some of the ongoing projects include China’s involvement in building a high-speed train line linking Tehran to Qom and Isfahan. Its biggest transportation project in Iran yet is worth $1.5 billion to electrify the rail line from Tehran to Mashhad. 

Iran’s Foreign Minister Mohammad Javad Zarif hailed China as “a friend in hard times” on Saturday. “We thank China for its valuable positions and actions in a period of cruel sanctions against Iran,” he said.

According to Israeli newspaper Haaretz, “more than its declaratory significance, and more than its potential geopolitical importance, the newly signed ‘comprehensive strategic partnership’ between China and Iran is a testament to the dismal strategic policy failure by both the United States and Israel”.

The deal "marks a momentous change in China’s relations with Iran and the region” as relations with the United States deteriorate, former Chinese ambassador to Tehran Hua Liming says.

“Since the Carter administration, the US has often reminded China of its relations with Iran, which was seen by Americans as an impediment to the US-China relationship. But with fundamental changes in China-US relations in recent months, that era has gone,” he told English-language daily South China Morning Post.

Hua noted that China’s oil imports from Iran have steadily increased in recent months despite US sanctions. The new 25-year deal with Iran, he said, marks China’s departure from its low-profile approach to Iran.

“Both China and Iran are interested in promoting their close ties publicly, which has reflected a changed reality. As China cares much less about what the US thinks, we will no longer be restrained by those largely self-imposed restrictions on fostering close ties with Iran,” he told the Hong Kong-based paper.

Russia, Turkey factors

According to Amin Saikal, an adjunct professor of social sciences at the Centre for Muslim States at the University of Western Australia, the signing of the agreement “inserts a new strategic pincer in the Middle East for the United States and its allies”.

“Former US President Donald Trump must bear most of the responsibility for this development, which President Joe Biden now has to handle,” he wrote on the Strategist website published by defense and strategic policy think tank the Australian Strategic Policy Institute (ASPI).

“Deeper and wider cooperation between China and Iran, especially when considered in the context of their close ties with Russia and the trio’s adversarial relations with the US, carries a strong potential for changing the regional strategic landscape,” Saikal said.

When combined with Iran’s close ties with Russia, the China–Iran deal potentially generates a strong axis that can only boost Tehran’s regional position and bargaining power in any negotiations, he added.

The Iranians have traditionally been wary of an alliance with any world power. But America’s constant hammering to pressure and isolate the Islamic Republic, especially under Trump, has steadily driven Tehran to look to the East and to reach the point of concluding the agreement with China, according to Saikal.

“With Turkey also tilting away from the US towards China and Iran, despite Ankara’s and Tehran’s differences in Syria, the de facto alliances emerging in a strategically and economically vital region of the world poses a greater challenge to the Biden administration than may have been anticipated,” he wrote.

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