China, with $400 billion Iran deal, could deepen influence in Mideast

China agreed to invest $400 billion in Iran over 25 years in exchange for a steady supply of oil to fuel its growing economy under a sweeping economic and security agreement signed Saturday.

The deal could deepen China’s influence in the Middle East and undercut US efforts to keep Iran isolated. But it was not immediately clear how much of the agreement can be implemented while the US dispute with Iran over its nuclear program remains unresolved.

President Joe Biden has offered to resume negotiations with Iran over the 2015 nuclear accord that his predecessor, President Donald Trump, abrogated three years after it was signed. American officials say both countries can take synchronised steps to bring Iran into compliance with the terms of the agreement while the US gradually lifts sanctions.

Read | Iran and China sign 25-year cooperation pact

Iran has refused to do so, and China has backed it up, demanding that the United States act first to revive the deal it broke by lifting unilateral sanctions that have suffocated the Iranian economy. China was one of five world powers that, along with the US, signed the 2015 nuclear agreement with Iran.

The foreign ministers of the two countries, Javad Zarif and Wang Yi, signed the agreement during a ceremony at the foreign ministry in Tehran, Iran, on Saturday, according to Iran’s semiofficial Fars News Agency. That capped a two-day visit by Wang that reflected China’s growing ambition to play a larger role in a region that has been a strategic preoccupation of the United States for decades.

“For the region to emerge from chaos and enjoy stability, it must break free from the shadows of big-power geopolitical rivalry, stay impervious to external pressure and interference and explore development paths suited to its regional realities,” a spokesperson for China’s foreign ministry, Hua Chunying, said Friday. “It must build a security architecture that accommodates the legitimate concerns of all sides.”

Iran did not make the details of the agreement public before the signing. But experts said it was largely unchanged from an 18-page draft obtained last year by The New York Times.

That draft detailed $400 billion of Chinese investments to be made in dozens of fields, including banking, telecommunications, ports, railways, health care and information technology, over the next 25 years. In exchange, China would receive a regular — and, according to an Iranian official and an oil trader, heavily discounted — supply of Iranian oil.

The draft also called for deepening military cooperation, including joint training and exercises, joint research and weapons development and intelligence-sharing.

Iranian officials touted the agreement with Beijing — first proposed by China’s leader, Xi Jinping, during a 2016 visit — as a breakthrough. But it has been met with criticism inside Iran that the government could be giving too much away to China.

Hesamoddin Ashena, a top adviser to Iranian President Hassan Rouhani, called the deal “an example of a successful diplomacy” on Twitter, saying it was a sign of Iran’s power “to participate in coalitions, not to remain in isolation.” He called it “an important decree for long-term cooperation after long negotiations and joint work.”

A spokesperson for Iran’s foreign ministry, Saeed Khatibzadeh, called the document a “complete road map” of relations for the next quarter-century.

Wang has already visited Iran’s archrival, Saudi Arabia, as well as Turkey and is scheduled to go to the United Arab Emirates, Bahrain and Oman in the days ahead. He has said that the region is at a crossroads and offered China’s help in resolving persistent disputes, including over Iran’s nuclear program.

China is even ready to play host to direct talks between the Israelis and the Palestinians, hinting that US dominance in the region has hindered peace and development.

In Iran, opinions about China’s expanding influence have been mixed.

After Xi first proposed the strategic agreement during his visit in 2016, negotiations to complete it moved slowly at first. Iran had just reached its deal with the United States and other nations to ease economic sanctions in exchange for severe restrictions on its nuclear research activities, and European companies began flocking to Iran with investments and offers of joint partnerships to develop gas and oil fields.

Those opportunities evaporated after Trump withdrew the United States from the deal and imposed new sanctions that the Europeans feared could entangle them, forcing Iran to look east.

Ayatollah Ali Khamenei, Iran’s supreme leader, ordered a revival of talks with China, appointing a trusted conservative politician and former speaker of parliament, Ali Larijani, as a special envoy.

“China is a friend for hard times,” Zarif, the foreign minister, said after signing the deal. “The history of cooperation between two ancient cultures of Iran and China dates back centuries. Signing the cooperation agreement will further strengthen the ties of the two nations.”

Critics have complained that the negotiations lacked transparency and called the deal a sellout of Iran’s resources, comparing it to one-sided agreements that China has made with countries like Sri Lanka.

Supporters of the deal said that Iran had to be pragmatic and recognise China’s growing economic prominence.

“For too long in our strategic alliances, we have put all our eggs in the basket of the West, and it did not yield results,” said Ali Shariati, an economic analyst who until recently was a member of Iran’s Chamber of Commerce. “Now, if we shift policy and look at the East, it won’t be so bad.”

It remains to be seen how many of the ambitious projects detailed in the agreement will materialise. If the nuclear agreement collapses entirely, Chinese companies, too, could face secondary sanctions from Washington, an issue that has infuriated China in the past.

The US prosecution of Chinese telecommunications giant Huawei includes accusations that the company was furtively trading with Iran in violation of those sanctions.

Hua, the foreign ministry spokesperson in Beijing, emphasised that both countries needed to take steps to resolve the nuclear dispute.

“The pressing task is for the US to take substantive measures to lift its unilateral sanctions on Iran and long-arm jurisdiction on third parties,” she said, “and for Iran to resume reciprocal compliance with its nuclear commitments in an effort to achieve an early harvest.”