In July of 2020, news had spread of a $400 billion dollar deal between Iran and China which would enhance the economic and security cooperation between the two countries. The New York Times was given details about the agreement and drafted an 18 page report detailing investments in Iranian sectors.
The announcement was unprecedented, but the deal has been in the works as far back as 2016 when Xi Jinping visited Iran in 2016 But this sort of agreement should not be a surprise since partnership between the two countries dates back millennia when the Persian and Chinese empires would trade via the Silk Road.
The finalization of this agreement could not have presented itself at a more crucial time as the ‘Maximum Pressure’ campaign instituted by the Trump administration is taking its toll on the Iranian economy and hampered its ability to effectively tackle Covid-19 in the country.
While the present administration in the U.S. maintains that the sanctions does not target sectors pertaining to medicine, it does target its financial institutions – making it harder for Tehran to gain access to the international financial system.
Though this deal is still in the works and the details have yet to be finalized, the New York Times’s report indicates that there will be investments on China’s parts on Iran’s energy sector and other much needed areas of development in exchange for a ‘discounted’ price of Iranian oil – though Foreign Minister Zarif has denied such claims and it is highly unlikely that Iran would ever agree to a deal with out a proper cost benefit analysis.
The partnership also extends into other areas, such as military training, research, and intelligence sharing. But more importantly, this deal is the economic support that Iran needs for a number of reasons.
As previously mentioned, this partnership is exactly what Iran needs to buffer the effects of the maximum pressure campaign from Washington. A vital economic lifeline in a period where any western interaction with Iran will be met with sanctions from the States – which is not a fear for Beijing.
The draft of the deal also hints at a number of different projects that Iran could only benefit from with Chinese assistance. So far, this deal includes mentions of airports, high speed railways and subways, along with free trade zones in northwestern Iran. Proposals for a 5G infrastructure network are also mentioned in the New York Times Report.
China is also the worlds leading consumer of energy which means that they will not offer a deal to the Iranians that is not at all beneficial to them as well. Even though China still imports oil from Saudi Arabia, Iran is a vital investment strategy for the Belt and Road Initiative harkoning back to the days of the silk road.