Geopolitical circumstances and economic necessity are pushing Iran and China into an unlikely partnership. While Iran would like to forge a full-fledged strategic alliance, China appears more interested in concentrating on commerce, especially in the energy sphere.
In recent years, China has elbowed out Italy, Germany and other European countries as Iran's top trade partner. Officially trade between the two countries totaled $9.5 billion. But Tehran-based economic observers believe the actual trade figure is significantly higher, as official statistics do not account for China's sizable armament sales to Iran. They also do not reflect the huge volume of goods brought into Iran by smugglers via the United Arab Emirates.
On April 4, the head of Iran's Customs Administration, Mohammad Hashem Rahbari held talks in Beijing with his Chinese counterpart. Mou Xin Sheng. Rahbari expressed "Tehran's readiness to promote all-out ties" with China, the official IRNA news agency reported.
At latest count, nearly 250 Chinese firms are engaged in industrial and construction projects, or are flooding the Iranian market with low-priced consumer goods. "The two countries neatly complement each other's needs," a former Iranian Foreign Ministry official told EurasiaNet. "China has the capital, the know-how and the goods that Iran wants; Iran has oil, gas and strategic minerals for China's industries. In addition to these, everybody knows that both countries are opposed to US dominance."
China has generally provided political backing to Tehran during the crisis over Iran's nuclear program. [For background see the Eurasia Insight archive]. Chinese officials have endorsed Russia's effort to mediate an end to the crisis. [For background see the Eurasia Insight archive]. Following Russian President Vladimir Putin's visit to China in late March, Chinese Foreign Ministry Qin Gang said all parties should show "patience and flexibility in order to create favorable conditions for the proper solution" of the Iran nuclear issue., according to a Foreign Ministry statement.
At the same time, if the Iranian nuclear issue is taken up by the United Nations Security Council, Iranian experts believe China would probably not block the possible imposition of sanctions against Tehran. A Chinese veto in favor of Iran could cause a disruption in Chinese-US trade, experts believe. Despite existing geopolitical tension between Beijing and Washington, Chinese leaders appear reluctant at this time to do anything that could endanger China's exports to the United States.
The architect of the explosion in Iranian trade with China is Fereydoun Vardinejad, whose tenure as Tehran's ambassador to China just ended. Vardinejad is widely regarded as a behind-the-scenes troubleshooter and has the reputation within Iranian intelligence and diplomatic circles as being among the country's most skilled envoys. In the 1980's, Vardinejad played an important role in secret negotiations with representatives of the Reagan Administration, according to well-informed sources. In what came to be known as the Iran-Contra scandal, Vardinejad helped arrange the purchase of American arms. US officials used the profits from those secret deals to help fund the anti-Communist Contra militia in Nicaragua. At the same time, Washington sought to influence perceived Iranian moderates to help secure the freedom of American hostages being held in Lebanon at the time.
Some of the more prominent Chinese investment projects either currently under construction, or in the planning stages include the completion of Tehran's subway system and the construction of a new $3-billion oil refinery. Chinese entities are also involved in numerous smaller ventures, such as the construction of fish canneries, sugar refineries and paper mills.
The two countries have been exploring a 25-year energy deal worth up to $100 billion, under which the Chinese conglomerate, Sinopec, would buy up to 10 million tons of liquefied natural gas (LNG) per year. Sinopec would also receive a majority stake in the development of Iran's Yadavaran oil field, which reportedly has a production capacity of 300,000 barrels per day. Access to Yadavaran oil would go a long way towards meeting China's exploding demand for oil. [For background see the Eurasia Insight archive].
The signing of the deal has been delayed over a LNG pricing dispute. In addition, Iran has said it won't have the means to export LNG until 2009. Tehran now says the deal could be signed later in 2006, but some experts suspect that this timeframe is overly optimistic, given Iran's present lack of LNG export capability. Other Iranians familiar with the ongoing negotiations say the two countries are anxious to conclude the deal before the UN Security Council's possible consideration of the Iranian nuclear issue.
China and Iran are also active in the arms trade. Beijing has sold large quantities of conventional arms to Iran, including surface-to-surface cruise missiles and anti-ship missiles. In addition, China reportedly helped Iran develop long-range ballistic missiles, such as the Shahab 2 and the Shahab 3. Some security observers in Tehran say China appears set to replace Russia as Iran's main arms provider.
Though trade is booming and diplomatic ties are stronger than ever, Chinese officials have not shown enthusiasm for Iran's desire to forge a more formal strategic relationship. Pragmatism, and not ideological considerations, is governing Beijing's policy towards Tehran, observers say. Thus, Iranian officials are coming realize that there are limits to bilateral cooperation.
Still, Iranian policy makers are counting on China, as well as Russia, to play valuable diplomatic roles on behalf of Tehran. As Iran's former foreign minister, Ali Akbar Velayati, noted in a newspaper interview: "We should not expect either Russia or China to veto UN Security Council resolutions against us," he said. "What we may see, though, is that the two countries would try to dilute these resolutions to our advantage."
Kamal Nazer Yasin is a pseudonym for a freelance journalist specializing in Iranian affairs.