The People’s Republic of China and the Islamic Republic of Iran have signed a 25-year strategic agreement on the 27th of March, 2021. The Foreign Ministers of the two countries signed the agreement during the Chinese Minister Wang Yi’s visit to Tehran.
Chinese Foreign Minister Wang said during the ceremony that the Chinese-Iranian relations will be “permanent and strategic”, according to press reports. Chinese Global Times quoted Wang saying that “comprehensive cooperation signed by the two sides on Saturday will map out an overall blueprint for boosting the China-Iran comprehensive strategic partnership, which will not only benefit the two peoples, but also make China-Iran contributions to maintaining regional and world peace.”
The Iranian Foreign Minister commented via twitter, “Excellent exchange on expansion of global, regional and bilateral cooperation in the context of our comprehensive strategic partnership, culminated in the signing of a historic 25-year strategic roadmap.”
The signature of the agreement fell upon the 50th anniversary of the start of diplomatic relations between Iran and China. But what is the content of this “comprehensive strategic agreement”?
The agreement signed on past Saturday has not been made public. But there are still several hints to its content. First of all, the agreement is signed for 25 years, i.e., a long-term cooperation independent from current developments. Secondly, it is titled “comprehensive”, meaning to cover various fields. And thirdly, it is the concretization of what was 5 years ago a “statement”.
Joint bilateral statement of 2016
In January 2016, during Chinese President Xi’s visit to Iran, a “Joint Statement on Comprehensive Strategic Partnership” was signed, which past Saturday was carried further to the agreement. Thus, the statement is the first and most concrete hint to the content.
The statement can be read in offical english translation here.
The joint statement carries 5 chapters named domains, consisting of “political”, “executive cooperation”, “human and cultural”, “Judiciary, security and defense” and “regional and international domain”.
Political, economic and security cooperation
Having underlined that Iran and China have “a thousand years old history of bilateral ties”, the statement confirms that two countries “regard each other as important strategic partners”, which establish annual ministerial meetings, expand relations between central and provincial governments, enhance cooperation between “legislative bodies and parliaments”, and “strongly support each other regarding (…) independence, national sovereignty and territorial integrity.”
In point A-6, the statement calls to “consultations and discussions aimed at concluding a bilateral 25-year Comprehensive Cooperation Agreement”, focused on “economic potentials” and “energy, infrastructure, industry and technology.”
Possible cooperation fields are further specified in the statement as “expanding cooperation and mutual investments in various areas including transportation, railway, ports, energy, industry, commerce and services.”
Paragraph B-8 of the 2016 statement demands for cooperation in areas such as “fossil fuels, new and renewable energies, security of demand and supply as well as transfer and transportation of fossil fuels, and the Chinese side shall consider financing and investing in the up- and downstream projects of the energy industries in Iran”.
The statement is indeed comprehensive, as demonstrates paragraph B-9: Here, cooperation is planned for a great range of areas, such as: “economy, banking, mutual investment, financing, mining, transportation, communications, space, manufacturing industries, developing of ports, upgrading and expansion of railway networks, express railway systems, agriculture, water resources, protection of environment, food security, fighting desertification, water desalination, use of nuclear energy for peaceful purposes and renewable energies”.
Besides economic cooperation focusing on energy trade, investment and cultural cooperation, the statement also aims to “upgrade the level of cooperation of the Armed Forces (…) in the fields of human resource training, fighting terrorism and exchange of information, as well as equipment and technology”.
The current agreement has not been made public, but commentators place a trade of oil versus investment at its center. Qian Feng, Director of the Research Department of the National Strategy Institute at Tsinghua University, comments in the Chinese Global Times that “for China, the largest oil importer in the world, the agreement can help ensure steady oil supply over the coming 25 years. The agreement is also expected to facilitate Chinese investments in Iran’s banking, telecommunication, ports and railway sectors. China would also help develop free trade zone in Iran and build infrastructure for 5G networks.”
Drafts of the agreement
“The draft of the document, which was penned as the result of cooperation from different institutions in Iran, has been exchanged 4 times between Tehran and Beijing in the last 5 years, and finally, in February 2021, the Chinese side cast its final verdict on the matter and gave it the green light”, writes Mohammad Mehdi Rahimi on Iranian Mehr News Agency.
Western press used former drafts to report on the course of agreement, claiming these were “leaked”. Officials of both countries continuously denied these reports, though.
400 billion $ Chinese investment in Iran?
Simon Watkins reported in Petroleum Economist in an article published in September 2019 that the accord would lead to a Chinese investment of 400 billion $ in Iran, 280 billion $ for developing Iran’s oil, gas and petrochemical sectors and 120 billion $ investment in upgrading the transport and manufacturing infrastructure.
In exchange for guaranteed oil exports to a preferential price from Iran to China, Beijing committed to invest in order to raise Iranian production in the South Pars Gas field and the West Karoun fields. China National Petroleum Corporation (CNPC) has already taken over the French Total’s share in the fields.
The New York Times also reports that China will invest 400 billion $, in different articles published since Summer 2020. The newspaper bases its report on an 18-page draft of the agreement, which reportedly has not changed in essence during negotiations.
These investments are directed towards dozens of oil and gas fields, banking, telecommunications, ports, railways, health care, information technology, according to the NYT. The newspaper refers to nearly 100 projects cited in the agreement, including the establishment of a 5G telecommunications network and support for better control over the cyberspace.
Infrastructure investment: airports, railways, subways, ports
The draft agreement also includes construction of airports, high-speed railways and subways as well as ports, reports the NYT. The newspaper reports that China would invest into the port of Jask, a strategic position just outside the Strait of Hormuz.
The agreement also proposes to establish three distinct free trade zones in northwestern Iran, on the Persian Gulf coast and on the Qeshm island right at the Strait of Hormuz. It is noteworthy that the article of Watkins also reported that up to 5.000 Chinese security personnel might be employed to protect Chinese investment.
In accordance with the Presidential statement of 2016, the NYT also reports of Chinese-Iranian military cooperation, including joint training and exercises, joint research and weapons development and intelligence sharing.
But once again, authorities of both Iran and China have declined to comment on the content of the agreement. Chinese Foreign Ministry Spokesperson Zhao Lijian declared, “The plan focuses on tapping the potentials in economic and cultural cooperation and charting course for long-term cooperation. It neither includes any quantitative, specific contracts and goals nor targets any third party, and will provide a general framework for China-Iran cooperation going forward.”
“Just a road map”
The Spokesperson of the Iranian Government, Ali Rabei said, “this document is just a roadmap and does not contain any obligations for the parties.”
Rabei added that all treaties prepared on basis of the agreement will be presented to the Iranian parliament for approval.
The 25-year-Iranian-Chinese agreement follows a prolonged 10-year Iranian-Russia Agreement. And even though details still may need to be cleared, the agreement shows that the US policy of isolating Iran is failing and displays growing political, economic, and military integration between Asian countries.