Professor Henry Srebrnik

Professor Henry Srebrnik

Monday, October 20, 2014

China and Iran Increase Economic Ties

Henry Srebrnik, [Summerside, PEI] Journal Pioneer

On Sept. 20, for the first time in history, two Chinese warships docked at Iran’s principal naval port of Bandar Abbas, in the strategic Strait of Hormuz, the gateway for at least 20 per cent of the world’s oil and gas shipments.

They took part in four days of joint naval exercises. One of the vessels, the Changchun, was a guided-missile destroyer.

A Chinese fleet commander, Rear Admiral Huang Xinjian, remarked that the visit was intended to “deepen mutual understanding, and to enhance exchanges between our two countries’ navies,” according to the New York Times.

This should not really come as a surprise, given China’s ever growing presence in international affairs, which is now reaching the Middle East. As Walter Russell Mead noted in his article “The Return of Geopolitics,” in the May-June 2014 issue of Foreign Affairs, “China, Iran, and Russia never bought into the geopolitical settlement that followed the Cold War, and they are making increasingly forceful attempts to overturn it.”

In November 2013, immediately after the announcement that Iran had reached an interim deal with Western negotiators concerning its nuclear program, China’s former ambassador to Tehran, Hua Liming, greeted it favourably. China is a member of the P5+1, the five permanent UN Security Council members plus Germany, who have been in talks with Iran in an attempt to broker a nuclear agreement.

Why was he pleased?  Perhaps because he thinks that Iran’s program has reached a stage where it will be impossible to prevent the country from becoming a nuclear power.

And China has helped make this possible. With regularity, officials in Asia have confiscated shipments of equipment and materials sold by Chinese state enterprises to Iranian companies in contravention of international treaties and UN rules, including components and parts for nuclear weapons.

For example, in 2005, seven Chinese firms were suspected of selling nuclear weapons technology and all seven had sanctions placed upon them. They were banned from trading with the United States for two years.

China has also enabled Tehran to withstand pressure from the international community. China is the biggest purchaser of Iranian oil, surreptitiously evading American sanctions by paying in gold and in Chinese currency. Iran uses much of the profit to buy Chinese products.

And when Western countries imposed sanctions against Iran due to concerns over its nuclear program, Chinese oil companies were able to win bids for developing large oil fields in Iran. So the negotiations over the Iran nuclear issue have ensured desirable results for China.

China has now emerged as Iran’s top trading partner, and trade between Tehran and Beijing totaled $40 billion in 2013. Chinese firms are investing in various sectors in Iran, including steel, mines, transportation, agriculture, oil, gas, and the petrochemical industry.

China and Iran have had more frequent interactions recently. Iran’s president Hassan Rouhani held in-depth meetings with Chinese President Xi Jinping at the Shanghai Cooperation Organization Summit in May.

They announced they would promote cooperation in all fields to a new high. Xi stressed that China is willing to continue its efforts for an early, comprehensive and proper settlement of the Iranian nuclear issue.

This past April, Iranian Deputy Foreign Minister Morteza Sarmadi met with outgoing Chinese Ambassador Yu Hongyang, to confer about stronger economic ties, the semi-official Iranian Fars News Agency reported.

“China attaches a lot of importance to the reinforcement of ties with Iran as an important and trustworthy partner,” Yu stated. “There are vast potentials for continuing the upward trend of the two countries’ ties in all the various fields,” he added.

These high-level exchanges demonstrate Iran’s approval of China’s position on the Iranian nuclear issue.

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