Camaraderie in Asia: Khamenei, Xi and a US Mistake

  • Khamenei holds a strategic location in the global energy and trade routes.
  • After Trump’s withdrawal from JCPOA and the reimposition of sanctions, Chinese leaders got closer to Khamenei
  • Khamenei has kept a harsh tone against the West and China is key to minimise Iran’s isolation. 
Source: Wikipedia

Why is there camaraderie between Khamenei and Xi Jinping?

Answer: The starting point was Iran’s rich energy resources with Trump’s withdrawal from the 2015 Nuclear Deal with Iran.

The camaraderie between Khamenei and Chinese officials deepened thanks to Donald J. Trump. After complex and long negotiations, in 2015 JCPOA became a reality. This deal marked Iran’s reopening to the world since 1979, in exchange for limiting its nuclear development. Nevertheless, in 2018, Trump defended that the JCPOA gave Iran enough leverage to conduct “malign activities” in the region and thus, decided to withdraw from this deal and imposed harder economic sanctions on Iran.

On the 5th of March 2018, the International Atomic Energy Agency (IAEA) declared that Iran was implementing its nuclear-related commitments under the JCPOA. IAEA stated that Iran was subject to the world’s most robust nuclear verification regime”. Trump’s justifications for the withdrawal have been questioned, especially in Europe. For instance France, the UK, and Germany disapproved of this move and restarted the conversations with Tehran. Chinese president, Xi Jinping met Iran’s ex-president, Hassan Rouhani and stated the deal was “an important outcome of multilateralism”. 

Over time, China and Iran leveraged this moment to get closer on the energy, economy and military fields. This rapproachment deepened after the assassination of the General Soleimani, beloved by Iranian people and leaders. Soleimani was a key figure in Iran against US pressure. He was the pillar to train and equip chiite militias across the Middle East and created a Shia corridor towards the Mediterranean. 

And so, in 2021, China and Iran signed a 25-year Strategic Partnership and Tehran is a key piece in the Belt and Road Initiative (BRI)

Recently, Chinese Foreign Minister, Wang Yi received his Iranian counterpart and stated “China firmly opposes the illegal unilateral sanctions against Iran, opposes human rights, and opposes gross interference in the internal affairs of Iran and other regional countries”. Beijing has taken the lead, but what does Xi want from Iran?

What does Xi Jinping want?

Answer: energy resources of key ally in the Middle East that counters US presence and is a strategic piece for the Belt and Road Initiative. 

The year 1979 was a turning point for Beijing and Tehran. With the success of the Islamic Revolution, the US imposed their first sanctions and at the same time, Deng Xiaoping was implementing the first steps of the Economic Reform and oil supply was the key for Deng’s success.

Beijing has been highly dependent on its sea energy imports and Washington had full control over the west bank of the Persian Gulf, making its west part an “internal sea” for the United States. Xi Jinping fears that a full US control on this region could thwart Chinese global ascent.

Therefore, in the 1980s and early 1990s, Beijing began its foreign investment push and started to focus on infrastructure projects in Iran and have more clout in the Middle East. The US and China competition has only increased over time and Beijing deepened its ties with Iran.

China has kept a delicate equilibrium deepening its ties with Iran, while securing key energy resources and not angering Washington over Chinese companies in Iran. For instance, in 2011, the group Green Experts of Iran reported that Beijing and Tehran had signed an extensive deal that would give China exclusive rights to a significant amount of Iranian oil and natural gas fields through 2024.

Nevertheless, Xi Jinping has adopted a tougher voice to secure its geopolitical ambitions, keeping in mind the importance of energy resources for the Chinese economy. In 2013, Xi Jinping revealed in Kazakhstan the Belt and Road initiative and Iran plays a pivotal role.

Considering these factors, after the enactment of JCPOA in 2015, China moved quickly to avoid any western predominance on Iran. As a result, in 2016, Xi Jinping made a state visit to Iran. In this both leaders signed 17 agreements on economic and technological cooperation and Tehran’s membership at Shanghai Cooperation Organization (SCO).

Trump’s withdrawal from the JCPOA opened a careful gate for China. Iran joined the One Belt and Road Initiative in 2019. In 2021, as part of the BRI, Tehran and Beijing signed a 25-year Strategic Partnership. Xi Jinping has secured Iran’s energy resources and is a key partner of the ongoing nuclear talks. 

This deal also comes at the best moment for Xi.  In August 2021, near the Gwadar port in Pakistan, protests erupted against a severe shortage of water and electricity and a growing discontent with Chinese investments, especially the Gwadar port. This port is key to maritime Silk and Road. Therefore, Iran’s deal could be a potential alternative for Xi to the maritime Silk and Road initiative, a subranch of the Belt and Road initiative.

What does Khamenei want?

Answer: a key strategic ally that challenges US leadership and a strategic trade partner to minimize sanctions’ impact. 

First of all, we should not forget that Khamenei is both a religious authority and Iran’s head of state. Despite Iran’s nuclear programme’s continuation since the advent of the Islamic Republic, in 1979, in 2004, Khamenei issued a fatwah prohibiting the development of a nuclear weapon. 

Iran has learnt the lessons from Iraq in 2003 and Libya in 2011, which have further consolidated the relevance of having a strong army to keep Iran’s geopolitical importance in the region and thus, avoiding the regime’s downfall. Khamenei is anxious about the U.S. military presence in the Persian Gulf and having no capabilities to fight against the US on its own. Plus, Tehran is constrained by other regional powers, such as Saudi Arabia, Turkey, and Israel. And, unlike these countries, Iran lacks a powerful external ally.

China played a crucial role in starting up Iran’s indigenous military-industrial sector, greatly helping Iran’s military modernization efforts and assisted on Iran’s nuclear efforts. Beijing and Tehran signed a military agreement in November 2016 and in 2019, China, Iran and Russia inaugurated the “Maritime Security Belt” naval drills. These military ties deepened in 2021, when Iran and China finished a 25 year Strategic Partnership deal, specified on article 8.

Further, during the current negotiations in Vienna on Iran’s Nuclear Programme, Xi Jinping stated that it would not pressure Tehran to agree to US demands to revive the 2015 JCPOA. This provides an upperhand to both Iran and China.

In pair with this military approach, it is important to highlight the foreign and economic approach. Since Khamenei’s arrival to power, Iran has been put under four rounds of UN Security Council sanctions in addition to unilateral U.S. sanctions. These sanctions, especially in 2011 greatly damaged Iran’s economy and cut its ties with Japan, India and the EU, except with Russia and China.

The biggest impact of these sanctions are on the energy field and exportations. After, 2018 US withdrawal from the JCPOA, Tehran managed to keep a strong economic partner to modernize Iran’s economy and replace the Western vacuum. For instance, China agreed to develop the giant South Pars field, the construction of a $5 billion methanol plant in the Iranian city of Mahshahr. 

Within China and Iran’s 25-year agreement are $400 million of Chinese investment in Iran’s energy, commercial and transportation ties; it is key to highlight that Huawei, Chinese high-tech giant will have the monopoly, developing Iran’s 5G network, replacing its Swedish rival, Ericsson.

Recently, Tehran became a full member at the SCO, marking Iran’s first major regional bloc since the 1979 Islamic Revolution. SCO members do not recognise US unilateral sanctions. This last move not only will deepen Khamenei’s ties with Putin, Xi, but it gives leverage to keep its anti Western rhetoric and two important trade and military partners to challenge U.S. leadership in the Middle East.  

What is Khamenei doing?

Answer: modernizing Iran’s military and economic relief.

From the information we gathered, Khamenei is following the strategic ambiguity doctrine. He has said that 2015 uranium enrichment limits were breached, right now it is more than 60%. However, the Ayatollah has not specified if Iran holds nuclear weapons and what that would mean.

He has further leveraged China’s policy in the Middle East. This rapprochement with China confronts and increases pressure on European and US leaders to find and to change their strategic alliances regarding Iran. Additionally, this division could affect US strategic allies in the Middle East. Nevertheless, Iran’s economy has been harshly impacted by US sanctions and heavily impacted by the SARS-CoV-2 pandemic. Lastly, Khamenei obtained in 2021 a 25-year strategic agreement providing Chinese investment in the country and economic relief. 

Who is winning and what about you?

Answer: The People’s Republic of China.

Saudi Arabia emerged as China’s largest crude oil supplier and kept its leading position as of October 2021 and Iran sent 17.8 million tonnes of crude oil to China. Additionally, India entered into the Chabahar port agreement in 2016, but the reimposal of US sanctions has forced India to disconnect from Iran and weakened New Delhi’s geopolitical outreach. 

Furthermore, Iran’s inclusion in the Belt and Road Initiative will further enhance Xi’s regional leverage. Chinese clout in Iran has brought many divergences within the US. Joe Biden is trying to develop a closer approach towards Iran and this could weaken Washington’s alliances with the Gulf countries, and especially Israel.

What about us? The average person wins from new alliances and a new superpower in the Middle East. For instance, Chinese and Iranian citizens will likely benefit from all the Chinese new business, infrastructure projects. This new dynamic will likely force other states to get closer to Khamenei to counter China and thus, signing new agreements and cooperation areas. This potential strategy will provide us new opportunities.