This week it was reported that China and Iran are in the process of signing a long-term, 25-year agreement valued at close to $400 billion. The agreement, proposed in 2016 by China, covers key sectors such as energy, infrastructure, and telecommunications and is likely to considerably expand China’s presence and influence in Iran.
As per the agreement, China will invest in building Iranian infrastructure, and in return, Iran will supply energy resources to China for the next 25 years. The closer relationship between China and Iran will add a positive dimension to China’s Belt and Road Initiative (BRI) and has strategic implications for the geopolitics of the Middle East, balance of power in Asia and India’s security strategy.
Iran has been at the loggerheads with the United States and has been facing crippling sanctions owing to its nuclear program. Last year, the US decided to withdraw from the nuclear deal with Iran, known as the Joint Comprehensive Plan of Action (JCPOA), signed in 2015 and to apply ‘maximum pressure’ on the Iranian regime. This has made it extremely difficult for Iran to export its energy resources. For example, since 2019, India has reduced energy imports from Iran significantly.
Iran and the US along with its regional allies such as Saudi Arabia are also engaged in a complex, proxy war in the broader Middle Eastern region including in civil wars and/or political competition in Syria, Iraq and Yemen. The US’ sanctions and aggressive foreign policy towards Iran have now resulted in Iran and China coming closer to each other.
Overcoming contradictions
Iran and China share a similar outlook towards the US; both have an antagonistic relationship with it and are interested in reducing the US’ influence in world affairs. Both would like to challenge the existing balance of power in their respective regions and perhaps tilt it in their favour by kicking out the US. Glaring contradictions that exist in the political systems in China and Iran have not come in the way of the budding partnership. Iran is a theocratic state with a major role for religion in national affairs whereas China is a communist state and the Chinese Communist Party is officially atheist. Hard-nosed calculations of national interests always trump such contradictions as has happened in this case as well.
China’s key partner in South Asia, Pakistan, and Iran have conflicting interests towards each other over the treatment of Shia Muslims, the question of Baluchistan and the political future of Afghanistan. Strengthening of the Sino-Iranian relationship is likely to influence the Iran-Pakistan relationship positively. China’s stakes in the $ 62-billion China-Pakistan Economic Corridor (CPEC) and the promised investments in Iran are expected to provide the necessary glue for this relationship. India will not be pleased to see the cordial Iran-Pakistan relationship built with China’s nudging.
Partnerships premised on opposition to US & West
It is interesting to note here that over the years, China has built closer ties with several states that have been at the odds with the US and the Western world such as North Korea and Myanmar. China has supplied these states with necessary economic, political and military support to ensure that Western sanctions and global isolation do not imperil their survival as a viable nation-state. In return, China has managed to gain immense strategic influence over these states. With Iran, China is likely to pursue a similar strategy.
China has also built closer ties with Russia, which has been facing biting Western sanctions since the annexation of Crimea in 2014. China and Russia have also invested in long term energy and economic partnership and are opposed to the US strategy in the Indo-Pacific region. Ostensibly, a closer relationship between China, Russia and Iran holds the potential to not just change the balance of power in the Middle East but also influence geopolitics in Central and Inner Asia. Moreover, their partnership and convergence of interests are not just limited to the Asian mainland but also extends to the maritime domain. Last year, these three states held maritime exercises in the Gulf of Oman. Such exchanges are likely to intensify in future.
China’s overtures towards Iran could also be regarded as a part of its larger strategy to systematically increase its footprint in the Indian Ocean. China has already opened a military base at Djibouti in 2017 and is developing the port of Gwadar in Pakistan. It is rumoured that China would like to open its second military base at Gwadar. Along with Djibouti and Gwadar, significant politico-military presence in Iran will give China the ability to further solidify its footprint in the Indian Ocean and consequently, increase the capacity of the Chinese navy to operate in the region.
India’s challenges
For India, these strategic developments do not bode well. Closer Sino-Iranian partnership is likely to result in further deteriorating the security environment in South Asia and in the Middle East. The implications of it will be felt not just in the Indo-Iranian bilateral relationship but also in Afghanistan and towards India’s desire to establish and regularise overland connectivity to Central Asia and Russia.
Just as the news of Sino-Iranian partnership broke, it was also announced that Iran had dropped India from a key 623-km railway project that connected Chabahar port to the town of Zahedan and was expected to extend to Zaranj in Afghanistan. The timing of this announcement makes it even more remarkable. The railway project would have been crucial in facilitating India’s access to Afghanistan via Iran.
India is developing the port of Chabahar in Iran and managed to get the American waiver for the railway and the port project. However, India’s inability to build the railway in time has resulted in the exclusion of India from this project. India’s difficult balancing act between Iran and the US lies at the root of these tensions between the stated commitments and their actual implementation.
Iran moving into China’s orbit is an ominous development for India at a time when India-China relations are undergoing significant change and the Chinese navy is expanding its presence in the Indian Ocean. Intensifying competition between China and the US is likely to strain many such relationships for India. The closer relationship between an energy-rich, geostrategically-located, significant Middle Eastern power like Iran with China complicates India’s external security dynamics. It is likely to test India’s ability to manoeuvre and respond to evolving strategic changes in its extended neighbourhood.
(Sankalp Gurjar is a Research Fellow with the Indian Council of World Affairs, New Delhi. Views are personal)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.