A Fact Check of the 25-Year Iran China Agreement

A Fact Check of the 25-Year Iran China Agreement

The signing of the 25-year Iran-China Strategic Cooperation Agreement on March 27th, 2021 set off alarm bells in the media and prompted a frenzy of commentary. It has alternatively been called an “alliance”, an “open challenge to the United States”, and a game-changer.[1] It has also been derided as the selling of Iran to China, turning Iran into a “Chinese gas station”, and a new “Axis of Evil.”[2] Some reports have claimed the deal is worth $400 billion dollars, while others claim a number as high as $500 billion.[3] With such headline-grabbing claims, it can be difficult to cut through the noise and find the agreement’s real details and implications.

However, the initial consensus emerging among a growing number of China-Iran and China-Middle East experts paints a very different picture. Scholars working on China-Iran relations increasingly hold that the terms, significance, and price of the agreement have all been greatly exaggerated.[4] This consensus can be summarized as follows:

First, the agreement is not an alliance, pact, or legally binding document. According to Zhao Lijian of the Chinese Foreign Ministry, the China-Iran Strategic Comprehensive Agreement does not include “any quantitative, specific contracts and goals” and “will provide a general framework for China-Iran cooperation going forward.”[5] Reza Zabib of the Iranian Ministry of Foreign Affairs similarly called the agreement a “non-binding document,” in contrast to a “legally binding agreement” which the government would be required to publish.[6] Indeed, the document itself has not yet been published. However, a leaked draft and a fact sheet put out by Saeed Khatibzadeh, spokesperson of the Iranian Ministry of Foreign Affairs, shows that the deal contains no financial targets, figures, or specific goals.[7] What it does contain is a list of aspirations and areas in which China and Iran would like to see additional cooperation in trade, infrastructure development, and institutional cooperation.

So what is in the agreement? Based on the leaked draft and official statements from Iranian and Chinese media, the agreement consists largely of vague, diplomatic language that lays out a “framework” for future partnership. In various areas from banking, to infrastructure investment, to trade and consumer goods, to defense and intelligence sharing, China and Iran “pledge” to increase “cooperation” in undefined ways. For example, the Appendixes that lists the “steps” that should be followed to implement the agreement consist of non-committal bullet-points that could hardly be considered concrete steps.[8] These include “Encouraging companies on both sides to develop Iranian oilfields through partnership or joint investment” and “Development of basic services (including search engines, email providers and social messaging systems).” While the range of investment categories is large, the “steps” lack any detail on how to achieve these goals. This is the same approach China has followed with practically every other country with whom it has signed a Strategic Cooperation Agreement. In short, it is a “roadmap,” a declaration of intent to increase cooperation.

Second, the $400 billion figure is inaccurate and based on a poorly-sourced article. The astronomical value of the deal being quoted is, to quote Greer and Batmanghelidj, “not real.”[9] This figure has been circulating since the summer of 2020, when the New York Times first reported on a leaked draft of the agreement. It can be traced to an article in the industry magazine Petroleum Economist, which claimed China would invest a total of $400 billion in Iran over the next 5 years, split between $280 billion in oil development and $120 billion in infrastructure projects. However, the article relies on anonymous sources and has since been taken offline. The figure has been repeated ad nauseum since then, with little fact checking or attempt to trace its source. When the document the article claimed to be based on was leaked, there was no mention of any figure at all.

Even if the figure were from a document, is would be wildly unrealistic. Jacopo Scita has shown how this would account for roughly 2/3rds of China’s planned budget for BRI investment for the world during this period. “If the Chinese were indeed set to spend $400 billion on Iran, the recent French proposal to extend a $15 billion credit line to restore JCPOA’s (Joint Comprehensive Plan of Action) economic benefits would be completely useless given Chinese largesse.”[10] The article’s calculations were partly based on the development of the South Pars gas field, a project which the Chinese state oil company China National Petroleum Corporation (CNPC) recently pulled out of entirely.

Third, claims of military bases, the selling of Iranian land, and other exaggerated claims have no basis in reality. Especially on Iranian social media, rumors have run wild that Chinese construction workers will soon flood the country, and that there is talk of stationing Chinese troops in Iran, dumping of Chinese radioactive waste in the Iranian desert, and selling islands in the Gulf.[11] None of these claims have any evidence to back them up. The claim of military troops can also be traced to the same Petroleum Economist article, which claimed that the deal included “up to 5000 Chinese security personnel on the ground in Iran to protect Chinese projects.” There is no mention of anything like this in any document, leaked or official.

The only military and defense cooperation discussed in the draft includes coordination of information sharing with regards to terrorism and international crime, drug trafficking enforcement, and the formalization of joint military exercises. All of these already exist in one form or another between China and Iran or China and other Middle Eastern countries and hardly represent a dramatic change.[12]

Fourth, the agreement largely brings Sino-Iranian relations in line with Iran’s other regional rivals. Since the Trump administration and the re-imposition of sanctions, Sino-Iranian relations have fallen to a relatively low level compared to China’s relations with Iran’s neighbors. As Jonathan Fulton has said, China’s present connections with the Gulf Arab states are “deep and broad” while they are “shallow and narrow” with Iran. “China’s Middle East interests are largely commercial, so it is unreasonable that Beijing would risk its more valuable relationships with the United Arab Emirates and Saudi Arabia for the chance to make a quick buck with Iran, assuming it could avoid sanctions.”[13]

Strategic Comprehensive Agreements are also not unique to Iran, nor do they signal an especially deep partnership. China has concluded them with dozens of countries around the world, including the UAE, Saudi Arabia, Egypt, and Iraq.[14] These agreements are also non-binding “road maps” that mostly serve to set up a framework for cooperation.

Fifth, the implementation of the agreement is contingent on improvements in U.S-Iran relations. Zhao Lijian has stressed that the agreement does not “target any third party,” and Chinese Foreign Ministry Spokesperson Hua Chunying recently re-emphasized China’s commitment to the Joint Comprehensive Plan of Action (JCPOA) signed in 2015. “In a synchronized and reciprocal manner, compliance should be resumed in an orderly way to bring the JCPOA back on track.”[15] Similarly, Iranian Foreign Minister Javad Zarif stressed that China was not interested in earlier proposals from Iran until after the JCPOA was signed, which led to the first announcement in 2016 that such a deal was in the works.[16] It seems most likely that the deal’s finalization was impeded by the re-imposition of sanctions, and benefitted from the prospect of a resumption of the JCPOA.

The terms of the agreement will be far easier to implement without the threat of sanctions looming over Chinese companies. At present, Iran struggles to repatriate money earned from Chinese oil contracts and the sanctions were a major factor in the decline of Iran-China trade over the past four years. Therefore, despite the rhetoric, China from a practical standpoint is unlikely to develop a much deeper relationship with Iran than it has now without positive developments in U.S-Iran relations.

This does not mean that the deal lacks any significance or does not signify increased Sino-Iranian relations. Many other nations that China has signed Strategic Comprehensive Agreements with have seen ties deepen, but none to the degree predicted with regards to the Iran-China agreement. From an international diplomacy perspective, the agreement provides the Iranian government with some room to posture amid attempts by the United States to isolate it diplomatically. It is also supported by those in Iran who see China as a more stable partner after years of negotiations with the West collapsed when Trump pulled out of the JCPOA. However, it seems unlikely that China is willing to commit to the degree that supporters of closer relations with Beijing would like. As all parties, including the United States, China, and Iran, re-enter negotiations for the JCPOA in Vienna, the agreement ensures that it is in China’s interests to push for a resumption of JCPOA. Whether this will have any impact remains to be seen.

Endnotes

[1] Iran and China sign agreement aimed at strengthening their economic and political alliance, March 28 2021, CNBC, https://www.cnbc.com/2021/03/28/iran-and-china-sign-agreement-strengthening-economic-and-political-alliance.html

Biggest East Asian move into Mideast since the Mongol Empire: In Open Challenge to US, China inks 25-year, $400 bn Deal with Iran, March 28 2021, Informed Comment. https://www.juancole.com/2021/03/biggest-mideast-challenge.html

 The China-Iran pact is a game-changer, April 2 2021, Asia Times, https://asiatimes.com/2021/04/the-china-iran-pact-is-a-game-changer/

[2] Will Iran Turn Into a Chinese Gas Station? March 30 2021, National Review, https://www.nationalreview.com/2021/03/is-iran-being-turned-into-a-chinese-gas-station/

China, With $400 Billion Iran Deal, Could Deepen Influence in Mideast, March 27 2021, New York Times, https://www.nytimes.com/2021/03/27/world/middleeast/china-iran-deal.html

“The new Axis of Evil” @MatthewKroenig https://twitter.com/matthewkroenig/status/1375837612125134853

[3] U.S. Pressures China and Iran, They Move Closer to Their Own Deal, March 26 2021, Newsweek, https://www.newsweek.com/us-pressures-china-iran-move-closer-deal-1579144

[4]No, China Isn’t Giving Iran $400 Billion, August 20 2019, Bourse and Bazaar, https://www.bourseandbazaar.com/articles/2019/9/20/no-china-isnt-giving-iran-400-billion

Slender Beijing-Tehran Agreement: More is Less, Despite Hype, 1 April 2021, The Arab Gulf Institute in Washington, https://agsiw.org/slender-beijing-tehran-agreement-more-is-less-despite-hype/

How China’s Middle East charm offensive succeeded despite affecting little change, April 2 2021, South China Morning Post, https://www.scmp.com/comment/opinion/article/3127800/how-chinas-middle-east-charm-offensive-succeeded-despite-affecting

China and Iran announced a new economic and security partnership. That’s not as alarming as it sounds. April 1 2021, Washington Post, https://www.washingtonpost.com/politics/2021/04/01/china-iran-announced-new-economic-security-partnership-thats-not-alarming-it-sounds/

A “$400 billion” China-Iran Deal? The View from History, Oct 14 2020, Jadaliyya, https://www.jadaliyya.com/Details/41852

[5] Foreign Ministry Spokesperson Zhao Lijian’s Regular Press Conference on March 29, 2021, Ministry of Foreign Affairs of the PRC, https://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/t1865136.shtml

[6] رضا زبیب، مدیرکل شرق آسیای وزارت خارجه ایران، در پاسخ به اینکه چرا سند مربوط به «همکاری ایران و چین» منتشر نمی‌شود، در توییتر نوشت: «انتشار موافقتنامه‌ها الزام قانونی دارد اما انتشار اسناد غیر تعهدآور چندان متداول نیست. تحریم هم مانع دوچندان است.» @IranIntl https://twitter.com/IranIntl/status/1376093224293576705?s=20

[7] https://twitter.com/SKhatibzadeh/status/1375856763401076738?s=20

برنامە همکاریهای جامع (٢٥ سالە) ایران و چین https://newsmedia.tasnimnews.com/Tasnim/Uploaded/Document/1400/01/08/140001081353133292248560.pdf

[8] Last Among Equals: The China-Iran Partnership in a Regional Context, September 2020, Wilson Center, https://www.wilsoncenter.org/sites/default/files/media/uploads/documents/MEP_200831_OCC%2038%20v3%20%281%29.pdf

[9] China and Iran announced a new economic and security partnership. That’s not as alarming as it sounds. April 1 2021, Washington Post, https://www.washingtonpost.com/politics/2021/04/01/china-iran-announced-new-economic-security-partnership-thats-not-alarming-it-sounds/

[10] No, China Isn’t Giving Iran $400 Billion, August 20 2019, Bourse and Bazaar, Slender Beijing-Tehran Agreement: https://www.bourseandbazaar.com/articles/2019/9/20/no-china-isnt-giving-iran-400-billion

[11] #قرارداد_۲۵_ساله  #قرارداد_۲۵_ساله_با_چین @Golshifteh

https://twitter.com/Golshifteh/status/1376556533606182913?s=20 @MaysamBehravesh

Classic example of the absolute bs pro-Trump @manototv feeds Iranian audience: Soon there’ll be so many Chinese workers in #Iran that China towns will be created across the nation, neighborhoods most prone to crime all over the world. Then wait for Iran’s capitulation to #China! https://twitter.com/MaysamBehravesh/status/1377529188580741120?s=20

[12] Iran isn’t the only Middle Eastern country in a unique partnership with China, July 15 2020, Atlantic Council, https://www.atlanticcouncil.org/blogs/menasource/iran-isnt-the-only-middle-eastern-country-in-a-unique-partnership-with-china/

[13] Slender Beijing-Tehran Agreement: More is Less, Despite Hype, 1 April 2021, The Arab Gulf Institute in Washington, https://agsiw.org/slender-beijing-tehran-agreement-more-is-less-despite-hype/

[14] China’s emerging partnership network: what, who, where, when and why. July 15 2019, International Trade, Politics and Development, https://www.emerald.com/insight/content/doi/10.1108/ITPD-05-2019-0004/full/html#sec002

[15] Foreign Ministry Spokesperson Hua Chunying’s Regular Press Conference on April 1, 2021, Ministry of Foreign Affairs of the PRC, fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/t1866323.shtml 

[16] Zarif Appears On Clubhouse Social Media To Explain Iran’s Pact With China, April 1 2021, Iran International, https://iranintl.com/en/world/zarif-appears-clubhouse-social-media-explain-iran%E2%80%99s-pact-china