July 31, 2015

Why China likes the Iran deal

As members of Congress debate whether to back the deal over Iran's nuclear program, one source of support seems guaranteed -- China. It's one of the biggest winners in the agreement, with the lifting of sanctions as Iran pulls back key elements of its enrichment program set to allow Beijing to deepen its historic partnership with Tehran. While China is undoubtedly eyeing the potential economic benefits, Beijing also likely sees an opportunity to challenge U.S. influence in the Middle East.

China has been an important critic of Iran's nuclear weapons ambitions and a supporter of nuclear diplomacy. It is therefore likely to hold ranks with the United States and other international partners during the hard work and political turbulence involved in implementing the accord. And if Iran cheats, Beijing can be relied upon to at least join in a strong statement of condemnation -- and may go along with the reimposition of sanctions on Iran.

But China also sees an important strategic opportunity in a renewed relationship with Iran, and can be expected to expand its traditional friendship in four key areas: infrastructure development, energy, limited regional security cooperation and political cooperation to dilute U.S. influence in the region.

First, through its "One Belt, One Road" initiative, China aims to link itself with Eurasia and the Middle East through trillions of dollars in infrastructure investment. Sanctions-scarred Iran is in desperate need of new infrastructure and is keen to expand the flow of people and commerce across its borders.

Iran is an attractive target for such investment both economically and geopolitically, with its overland borders and proximity to key energy shipping routes. Such commerce will help China and Iran meet their reported target of $160 billion additional trade volume by 2024.

Second, as some of the only foreign energy companies left in Iran under the stranglehold of sanctions, Chinese energy giants are well-placed to invest in Iranian oil and gas development in a post-sanctions environment. The bilateral energy relationship isn't without disagreements and pique, and China will see real competition in Iran with technically superior European companies. However, Iran and China both have a stake in bolstering their ties in the energy arena. Doing sowill support the goals of both nations to diversify their energy partners, balance Saudi Arabia's oil market dominance and lock in strategic energy trade for the future.

Security cooperation between China and Iran will be a third important feature of their relationship in the post-sanctions era. Once-robust naval cooperation is showing signs of revival. On land, they will no doubt cooperate to try and stabilize Afghanistan following the withdrawal of U.S. and other coalition forces at the end of 2016. 

Both nations are deeply invested in preventing ISIS from gaining a foothold in Afghanistan -- Iran will not tolerate insurgents on its eastern border, while China fears the spread of radicalism to its restive Uyghur population in neighboring Xinjiang province. Indeed, Chinese President Xi Jinping has already pledged unprecedented security assistance to Afghanistan, and China has reportedly brokered peace talks between the Afghan government and the Taliban.

Unfortunately, the fourth renewed area of Sino-Iranian cooperation may be the expression and amplification of anti-Western, and especially anti-U.S., sentiment. With the nuclear impediment removed, China and Iran are likely to join forces diplomatically in criticizing the United States for its enduring focus on human rights and its international activism. Beijing may also seek to boost Iran's role in China-led multilateral institutions that do not include the United States, especially the Shanghai Cooperation Organization and the Asian Infrastructure Investment Bank.

True, some forms of China-Iran cooperation are positive for U.S. interests. For example, regional economic development, including in Iran, should be welcomed if it is done according to international best practices and lifts people out of poverty. Likewise, if China can, with Iran's help, contribute to Afghanistan's stability, so much the better.

Other forms of China-Iran cooperation, however, have the potential to do serious harm to U.S. policy in the Middle East and beyond. An Iran that is overly dependent on China will bolster Beijing's efforts to create alternative political forums that exclude Washington. Meanwhile, if the United States does not take a prominent role in Afghanistan's peaceful reconstruction and the development of Eurasia more broadly, it will cede influence in a pivotal region.

Ultimately, China's ties to Iran will become an important theater of future U.S.-China relations. The best way to balance China vis-à-vis Iran is to keep Sino-American interests in the Middle East constructive, not competitive. One way would be for the United States to consider sending its own companies into Iran to engage in commercial diplomacy. And it should also seek opportunities for regional security cooperation with China but channel it into inclusive multilateral frameworks. 

Taking such steps would help the United States promote stability in the region, solidify its leadership and ensure that China and Iran both see their respective strategic relationships with the United States as more important than the one that they have with each other.


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