Tehran Sacrifices India Ties to Win Chinese Partnership

In the last few days, Tehran and Beijing have made substantial progress towards an economic and military partnership just short of a formal alliance. While Iran stands to gain much from closer ties with China, the price has been steep. Joint economic ventures with India have been scrapped, future oil sales to China will be heavily discounted, and Tehran has gone quiet about Beijing’s failure to pay past oil debts. Nevertheless, it appears that a new diplomatic axis may be dawning in the Far East.


Last week, Iranian Transport and Urban Development Minister Mohammad Eslami personally attended the first track laying in a new projected 628 km rail line intended to connect the city of Zahedan, capital of Iran’s Baluchistan province, with Chabahar along the Gulf. High hopes had been pinned on the $1.6 billion project, signed during the 2016 visit of Indian Prime Minister Narendra Modi to Tehran, which heralded the rise of Chabahar as a commercial hub and promised a spur to development in perennially restive Baluchistan. Yet Tehran abruptly called off the project at the eleventh hour, citing delays from the Indian government in dispensing funds. 

International observers believe another factor is at work: the People’s Republic of China. According to the New York Times, Beijing and Tehran have recently concluded two years’ negotiations over a joint partnership that promises to vastly increase Chinese investment, and influence, in Iran. The agreement would vastly expand China’s influence in Iran’s financial, telecommunications, and transportation sectors, as well as provide for dozens of other projects. In exchange, China would receive a regular and heavily discounted supply of Iranian oil for the next 25 years.


With its opening words, the agreement hails “two ancient Asian cultures, two partners in the sectors of trade, economy, politics, culture and security with a similar outlook and many mutual bilateral and multilateral interests will consider one another strategic partners.”  Beyond rhetorical flourish and economic partnership, it also signals deepening military cooperation, potentially giving China its first major foothold in the Middle East. Although the finalized details have yet to be released, the leaked version describes joint military training and exercises, extensive intelligence and research sharing, as well as weapons development, in an effort to engage “the lopsided battle with terrorism, drug and human trafficking and cross-border crimes.”

This latter point has proven to be a bone of contention within Iran, as news of the Sino-Iranian agreement leaked.  Some Iranian critics have gone so far as to call it "a colonial contract" and compare it to the 1828 Treaty of Turkmenchai with Russia. Others have expressed incredulity that China stands poised to make hundreds of billions in new investments in Iran when it appears unable to service its existing oil debts. As former reformist lawmaker Mahmoud Sadeqi put it: "Somebody should ask the other party to our 25-year pact why doesn't it pay its debts to us," referring to China’s large and growing debt of oil payments in arrears, now estimated at nearly $30 billion.

In the coming days, Iranian activists are expected to orchestrate protests in front of the Chinese Embassy in Tehran], while demonstrations are also being planned by Iranian diaspora groups in front of various Iranian embassies abroad. Activists on social media say a protest gathering in front of the Chinese Embassy in Tehran has been scheduled for later on Friday. Demonstrations are also planned online, to be held in front of Iranian embassies in various countries.


It is certainly true that talk of a new Chinese-Iranian alliance is premature. It could well be that the Iranian-Indian railroad was in fact cancelled over quotidian financial delinquencies. Likewise, it is possible that the state of the Iranian economy, otherwise isolated and hemorrhaging from Western sanctions, has forced Tehran to inflate the true significance of its agreement with Beijing in order to show its public some light at the end of the tunnel. And yet, as Washington’s ire is increasingly felt in both Tehran and Beijing in the era of COVID-19, one cannot preclude the possibility that today’s rapprochement is the shape of things to come.