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No, Iran and China Haven’t Suddenly Become BFFs

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Iranian Foreign Minister Mohammad Javad Zarif (R) greets his Chinese counterpart Wang Yi, in the capital Tehran, on March 27, 2021
Iranian Foreign Minister Mohammad Javad Zarif (R) greets his Chinese counterpart Wang Yi, in the capital Tehran, late MarchCredit: STR - AFP

There’s nothing like a sign that Iran and China are cozying up to set off alarm bells in Jerusalem and Washington.

Iran is regarded as a regional troublemaker bent on becoming a nuclear threat. China is a rising economic power that America sees as its chief global rival; Israel sees it as a friend and wants to grow closer to it, if America will let it. No one wants to see Iran and China combining forces.

That explains the sometimes hysterical reactions that followed the announcement by Iran and China on Saturday that they had reached a multifaceted agreement covering economic, military and political ties.

Warnings were issued about a new axis of evil in the making and about Beijing and Tehran seeing down U.S. sanctions and challenging American influence in the region. All this paranoia was enabled by a statement containing only the barest details of the agreement and by a stream of alleged leaks and speculation. The New York Times and others spoke without any basis about $400 billion of Chinese investment in Iran over 25 years. In Iran, there’s been talk about China buying oil at heavily discounted prices and about islands and ports being put under Chinese control.

At the end of the day, it is hard to separate the real from the rumored, but you can conclude a lot by looking at the big picture.

The Chinese way

Perhaps China has suddenly abandoned its Middle East policy of many years standing in order to throw its lot with Iran. But doesn’t seem likely. China’s Middle East policy has worked well and, if Beijing were to jettison it and pick a regional BFF, Tehran isn’t likely to be its choice.

China’s goal is to be friend and trading partner to everyone. That’s no mean feat in a part of the world where everyone is at loggerheads. One way China has pulled it off is by avoiding military entanglements, or favoring one country over another, or by attempting to negotiate peace deals (a sure way to make enemies).

Last week we saw the Chinese Way in action. Foreign Minister Wang Yi signed the agreement with Iran on the Tehran leg of a six-nation tour that included Saudi Arabia, Turkey, the United Arab Emirates, Oman and Bahrain. That not only shows you how China can shake hands with each member of a motley crew like this; it also indicates that the Iranian accord is of little consequence – it’s just another item on Wang’s itinerary, unworthy of something as grand as President Xi Jinping’s signature.

Of course, China wants to boost economic ties with Iran, just as it does with Iran’s foes, not least Israel. In that context, there’s no reason not to do the leadership in Tehran a little favor by signing a vague and aspirational agreement.

But Iran is not an especially important economic partner for China nor is there any sign it will be for the foreseeable future.

As shown in a study published last September by the Wilson Center, Iran has attracted less Chinese trade, investment and construction contracts than other countries in the region. Chinese exports to Iran rose close to 17% a year on average in the 2004-2018 period, but that was about the rate of increase for exports to Iran’s neighbors. In any case, they started falling after 2014. China has been accused of massive sanctions-busting by continuing to buy Iran oil, but the fact is its imports have plunged since Trump canceled the last waivers.

China often pledges big investment dollars, but many of these commitments are never realized. The bottom line is that over the last decade Iran has received far less foreign direct investment from China than Saudi Arabia or even the UAE. The $400 billion figure that has been tossed about stretches believability.

Meanwhile, there are any number of reasons why Beijing isn’t likely to be making big, strategic deals with Iran. For one, it would violate its friend-of-everyone strategy, jeopardizing trade and investment ties with Gulf Arab countries. Another is that it would put China in direct opposition to U.S. sanctions policy regarding Iran, which for now is showing little sign of being substantially eased anytime soon. China doesn’t like the sanctions, but it’s shown little appetite for risking bigger economic interests in order to defy it.

On paper, Iran and China should be natural candidates for the “deep, multi-layer and full-fledged” partnership like the one that Iran’s Foreign Ministry says is reflected in last week’s agreement.

But in the real world, with its policy of confrontation with the U.S. and its complicated domestic politics, Iran is a notoriously unreliable supplier of oil. Iran is a big country in terms of population and potential, but it is a relatively small market for Chinese goods (in fact smaller than Belgium’s even before sanctions set in). From Beijing’s point of view, there’s no logic doing it any special favors.

That’s something Israel should remember as we navigate the Beijing-Washington rivalry.

China is arguably the world’s No 2 economic power and may very well be No. 1 one day. The Chinese admire Israeli technology (although probably less than we imagine) and are interested in doing business with us. But for them, business is business; they have no interest in the multifaceted relationship Israel has with America.

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