Iran's Strategic Agreement with China Is a Fruit, not an Alternative, of the JCPOA

The news about Tehran’s decision to enter into a 25-year strategic cooperation withBeijing have been the talk of the day in Iran. Critics are worried that it will push Tehran into the influence zone of China and impose unfair terms and conditions on the country, while its proponents see it as wise move, particularly in the light of Donald Trump’s maximum pressure and increasing economic hardship. Kaveh Afrasiabi, US-based political scientist, supports the agreement, and unlike many of the conservative analysts in Iran, views it not as alternative to an allegedly ‘failed’ nuclear deal (JCPOA) but a fruit of the favorable environment created by the 2015 nuclear deal. Following is IRD’s interview with Professor Afrasiabi:

“Turn towards East” has been a constant in foreign affairs analysis of Iran’s diplomatic approach during the recent years. Should we see Iran’s strategic agreement with China, if materialized, as part of this strategy?

This agreement has been in the making since January 2016, when the Chinese President Xi Jinping visited Tehran. He subsequently had a meeting on the sidelines of Shanghai Cooperation Council summit with President Hassan Rouhani. At that time, there were talks of a long-term agreement between Iran and China at multiple economic and non-economic dimensions. The timing of this agreement and its organization right after the implementation in January 2016 signifies an important factor which has been overlooked in Iran, particularly by those against the JCPOA.

If finalized and put into operation by both sides, the agreement would represent a turning point in Iran’s relations with China and a whole new chapter in Iran’s foreign policy, prioritizing relations with the East, in light of sanctions by the United States and the significant non-cooperation with Iran in the terms of JCPOA by the other western governments, particularly the Europeans. Regarding this, what is important to emphasize is that the agreement transpires within the JCPOA framework. The legal structure is framed by JCPOA which is why it is initiated with Xi Jinping visit to Iran after JCPOA in 2016, because the JCPOA, which is respected by China, calls for normalization of Iran’s foreign trade. President Xi in his trip to Iran signed a number of MOUs amounting to some 600 billion dollars of trade with Iran in course of the next ten years.

What happened is that Americans introduced obstacles and China is trying to make up for lost ground. JCPOA critics, some of whom we heard from during parliament speech of Foreign Minister Zarif, and who are critics of JCPOA fail to recognize the importance of JCPOA with China’s decision to promote trade with Iran. When JCPOA did not exist, China was cooperating with international sanctions regime against Iran. But with resolution 2231, China and Russia turned that on and showed growing willingness to cooperate, particularly China. Some Chinese companies have been sanctioned and there have been tensions between China and the US because of this. This is not risk free proposition for China. There are mutual benefits and side effects which we should consider.

As any other agreement,tThe devil is in the details. The agreement is yet to be fully publicly displayed, nevertheless the general framework that we have seen is a tremendous forward step in terms of highlighting the imminent collapse the economic blockade against Iran by the United States. This agreement can torpedo American sanctions. We have seen from Bolton’s new book that Secretary of the Treasury Steven Mnuchin is even concerned about sanctions longevity and compliance by others.

We should not look at this agreement through Manichean lens -- it will stimulate other nations to defy sanctions and engage with Iran and is thus the harbinger of a post-sanction Iran promised in JCPOA.

China’s bold initiative in agreeing with this strategic agreement is a death knell for the United States sanctions regime. Even NY Times called it a major setback for Trump and maximum pressure strategy against Iran. It is hardly surprising that the United States propaganda machine are working to demonize this agreement and rally support against it, which hopefully will not succeed. This agreement has a number of dimensions such as dedollarization and use of national currencies in favor of both Iran and China vis-à-vis financial hegemony of the US. It also calls for banking relations between Iran and China at high standards.

Some criticism are invalid. They argue that this is a non-balanced agreement and Iran will be flooded with low quality Chinese goods. The truth is that China produces high quality goods too, and if some merchants in Iran pocket money by importing the cheapest good and jacking up prices, you shouldn’t blames the Chinese. We need good gatekeepers for standard Chinese imports to Iran. The customs system cam set up a mechanism for quality-monitoring of imported goods from China then that potential problem can be addressed.

I think that there are some legitimate concerns about Chinese delivering the goods: back in 2012 we saw China backed away from energy investment projects. More recently, after CNPC (China National Petroleum Corporation) took over from Total in Phase 11 of South Pars, afterwards they suspended operations because of US sanctions. Is China now ready to participate to modernize ailing energy sector? Hopefully that will be the case because Iran needs substantial investment in energy sector.

As a result of the United States sanctions, Iran is facing dire economic situation, and this great economic leeway by the potential agreement represents a major setback by the United States sanctions regime that hopefully will make it fall like a house of cards, and then other countries may follow.

Although bilateral in nature, it promotes multilateralism. In other words, it does not preclude Iran’s cooperation with other countries. There is no exclusivity provision in the agreement contrary to voices from abroad, or any monopoly provisions that would prevent Iran from looking towards western government, just as President Rouhan8i did after visit with President Xi, by going to European countries and signing agreements worth 100 billion dollars.

In our most recent book on Trump and Iran, we have examined the nature of these agreements which were unfortunately nullified because of illegal sanctions on Iran. The agreement with China spurs European countries to disregard the US sanctions and engage more forcefully in trade and economic relations with Iran.

There are talks about a military and intelligence supplement to the agreement. Do you see this as beneficial to Iran’s national interests?

Absolutely. We must be on guard about incessant propaganda by Western, Israeli, or Arab sources rattled by the news of agreement trying to poison the environment with labelling and allegations. We must not fall into that trap. In today’s complex interdependent world the issue of energy security is very paramount, particularly for China. If Iran is being considered on a long-term base as a source of energy security for China, inevitably this also causes to be the importance of providing the necessary security environment so that thriving energy relations and transactions between the two countries can transpire.

I am in favor of Iran-China military cooperation and I think because of unlawful sanctions, there have been illegal restrictions on Iran’s right to purchase military goods. Hopefully, all the current attempts by the US to torpedo resolution 2231 to lift ban on Iran’s arms trades by October in 2020 will not succeed and Iran lives in a dangerous neighborhood and needs to do whatever necessary to secure it borders and have a tranquil regional environment. This calls for closer cooperation on military and security affairs between Iran and China.

Some Iranian analysts are skeptical of the agreement because of its unfavorable timing. They argue that Iran is not in a powerful situation in terms of economy and international situation, and signing this contract will give the Chinese the upper hand. Do you agree with this viewpoint?

I don’t agree with this argument because it ignores very important intervening variable factors. Iran is under harsh, unjustified and illegal American and you might say Western sanctions. So if another country, be it China or anyone else, agrees to come forward with regard to American bullying, threats and sanctions, this serves our interests.

These critics indirectly and unknowingly setup artificial barriers. follow the logic: at what point is it proper for Iran to engage in such an agreement? When it has the same level of power with China? Iran is examining its situation right know and looking for an exit strategy from sanctions regime and this agreement creates a way out. There are certainly gives and takes in every deal. These same critics ignore the fact China will inevitably incur some cost as well, raising American wrath for entering such agreement with Iran which the United States is trying to bring to its knees. It is mutually beneficial agreement serving both sides. As I said, the devil is in the details: if Iranian traders are not allowed to flood Iran’s market with low-quality Chinese goods, and so on this could be a very good economic agreement that could uplift Iran’s economy and serve Iran’s energy sector.

We cannot sit idly by and let Qatar drain the shared South Pars gas field. We should rejuvenate Phase 11 which the French Total stepped out of, and CNPC stopped operation in. That is one example of where time is of essence. We cannot wait 20-30 years for Qatar to take share. And same goes with share oil wells with Iraq. Iran’s energy sector should be revitalized as soon as possible and China’s willingness to make substantial investment in Iran’s energy sector should be welcomed.

Did the failure of JCPOA project prompt Iran to pursue an agreement with China?

I disagree with phrasing of this question. JCPOA was critical for development of the agreement. Without the nuclear deal, China would not be a signatory to this agreement. China is officially Iran’s the sole buyer of Iran’s oil. Instead of talking about JCPOA failures, we should talks about its merits. It has altered the international environment, and encourage China, for the sake of its road and belt initiative which facilitates access to European landmass. This agreement is a delayed implementation of provision of JCPOA on normalizing external capital. Again it is important for critics of JCPOA to recognize the organic connection that exists between JCPOA and the agreement with the Chinese. If this agreement is finalized then China will likely join the European SPV on Iran as well.

China has been among countries which winded down their economic relations with Iran after Trump withdrew JCPOA. Is there a guarantee that China will remained committed to a likely strategic agreement?

We are at the preliminary phase of this deal and a final analysis has to await the conclusion of the agreement by both sides, so only tentative conclusions are warranted at the moment. As a political scientist, I follow a process-oriented approach to international affairs. In my opinion, President Xi has had a learning process, mainly, negative with regard to Trump administration. There is growing tension and signs of a new Cold War which in turn provides an opportunity for Iran to utilize China’s resources to undermine American sanctions against itself. There is growing symbiosis regarding regional and international issues and American hostilities. This changing geopolitical calculus is reflected in the growing Chinese willingness to get closer to Iran and to form a basis for strategic long-term partnership which as I said and I agree sets the interests of both side.