Ever since Chinese President Xi Jinping’s January 22-23, 2016 visit to Tehran and the release of a joint statement following the signing of a comprehensive strategic partnership between the two countries, rumors have been swirling as the parties finalize the details as to what the partnership will encompass. What are the exact terms of the agreement? What are the Islamic Republic’s motives for committing itself to this partnership? And what are the prospects for its realization?
Open-source Persian language coverage of the partnership agreement draws on three main sources: Petroleum News’ September 3, 2019 report claiming China will invest $400 billion to develop Iran’s oil, gas, and transportation infrastructure; the alleged “final draft” of the 25-year partnership agreement, which, while it appears authentic, was released by various media outlets and not the Foreign Ministry itself; and domestic criticism of the agreement along with the government’s response to criticism, which has appeared principally in Parliament. While a survey of the sources to some extent clarifies the framework of the agreement and the Islamic Republic’s motives in committing itself to the partnership, the prospects for its realization may depend on factors outside the Islamic Republic’s influence.
Petroleum News’ report largely expands upon the January 23, 2016 joint statement but also purports to disclose “specifics” that it claims the Chinese and Iranian governments did not intend to disclose to the public. The report suggests China will invest $280 billion to develop Iran’s oil, gas, and petrochemical sectors and $120 billion to develop Iran’s transportation and manufacturing infrastructure. In return, among other privileges, China will receive a total discount of up to 32% on its purchases of Iranian oil, gas, and petrochemicals for 25 years. Quoting an unnamed Iranian source, the article also claims 5,000 Chinese security personnel will be deployed to Iran “to protect Chinese projects.” According to the report, the Islamic Republic, by committing itself to the partnership, is trying to secure Chinese diplomatic support for Iran in the United Nations Security Council, achieve external financing to develop its oil fields, and, perhaps most important, bypass U.S. economic sanctions. It is not possible to independently verify the information provided by Petroleum News, but the report has been widely distributed in Persian language media.
The 18-page long so-called “final draft” of the partnership agreement is dated “Khordad of 1399,” which can be anytime between May 21 and June 21, but first appeared on Iranian websites on July 7. Unlike the Petroleum News article, the document does not provide any information about the magnitude of Chinese investments in Iran. Nor is there mention of discounts or other privileges for the Chinese government. The document, however, provides a clear roadmap for how Iran will be integrated into China’s Belt and Road Initiative.
According to the document, Article 1 of the agreement defines it as a means of “developing strategic and comprehensive cooperation” in “bilateral, regional, and international relations.” Article 4 identifies oil, petrochemicals, renewable energy, and nonmilitary nuclear energy as fields of cooperation. Other areas include building highways, railroads, and shipping lines connecting Iran to China and cooperation in sectors such as finance and banking, tourism, and science. Appendix 2 Article B2, which covers regional cooperation, further discusses Iran’s natural gas exports to Pakistan and China, joint Iranian-Chinese energy projects in Iraq, participation of Chinese companies in Iran’s electricity exports to regional countries, and joint ventures in building electrical power plants in Pakistan, Afghanistan, Iraq, and Syria. The “final draft” document appears more authentic than the Petroleum News’ report as it resembles agreements China has made with other countries and no one in Iran has discredited it. However, on July 8, Foreign Ministry Spokesman Seyyed Abbas Mousavi insisted no document is valid until the finalization of negotiations with China.
Rumors and media speculation about the content of the 25-year partnership agreement, criticism of the agreement, and the government’s response to the criticism provide other insights into the issue. On March 20, 2019, Hojjat al-Islam Hassan Nowrouzi, a parliamentarian, warned the government of President Hassan Rouhani against plans for a “25-year lease of Kish Island to China.” Nowrouzi also accused the Rouhani government of “secretly selling fishing rights in southern waters to the Chinese and contemplating to do the same with the fishing rights in the Caspian Sea.” Former President Mahmoud Ahmadinejad on June 28, 2020 warned: “They are negotiating a 25-year agreement with a foreign country without letting anyone know about it.”
In the same line of argument, Mohammad-Hassan Asfari, a parliamentarian, on July 5, accused Rouhani and Foreign Minister Mohammad Javad Zarif of keeping the Parliament in the dark about the partnership agreement negotiations. On July 8, Mohammad-Reza Sabaghian, also a parliamentarian, further accused Rouhani of giving excessive concessions to China in the partnership agreement and likened it to the Joint Comprehensive Plan of Action: Iran gave excessive concessions but was rewarded with the United States withdrawing from the nuclear deal and reimposing sanctions. Attacking Zarif from a different angle, Mojtaba Zolnouri, another parliamentarian, on July 8, criticized Zarif for committing Iran to the JCPOA instead of pursuing bilateral economic agreements with China.
Defending the government’s policy in Parliament, Zarif urged the representatives to “pay attention to the global shift in power.” He continued: “We have the self-confidence to negotiate a 25-year strategic partnership agreement with China, … in which there are no hidden issues. When Mr. Xi and the supreme leader met to discuss strategic relations and the 25-year agreement, it was declared to the public. When I took the draft agreement to China, it was declared to the public and the same happened when China responded to the draft … We are still negotiating, but when we reach an agreement, we will also declare that [to the public].”
Zarif received support from the unlikely quarters of the Tasnim News Agency and Javannewspaper, both of which are mouthpieces of the Islamic Revolutionary Guard Corps. Traditional rival of the technocratic elites of the Islamic Republic, the support of the IRGC demonstrates the importance it attaches to the partnership agreement and its belief that the “final draft” document that has been released is genuine.
However, neither Zarif nor IRGC mouthpieces openly admitted why the Islamic Republic is compelled to orient itself toward China: In the face of the U.S. administration’s “maximum pressure” campaign, the Islamic Republic is turning toward China to secure its survival. But is China, which has hitherto abstained from overtly challenging Washington’s Iran policy, ready to invest billions in infrastructure development in Iran? Just as important, will the U.S. government continue the “maximum pressure” campaign after the November 3 presidential election? In this light, the Iran-China agreement appears as a framework for cooperation, realization of which depends on external factors over which Iran has no influence.
The views represented herein are the author's or speaker's own and do not necessarily reflect the views of AGSI, its staff, or its board of directors.
The fall of the Assad regime has not only reopened Syria to regional reintegration but also exposed the fragmented ambitions of Gulf powers seeking to shape its future.
In May, President Donald J. Trump embarked on a trip to the Gulf that signals a new era in U.S.-Gulf relations. AGSI's A New Gulf Partnership series explores the ways U.S. strategic relations with these countries are evolving and offers policy recommendations for the U.S. administration to maximize political and economic influence.
AGSI offers pragmatic, targeted policy recommendations for the Trump administration to maximize U.S. political and economic influence with the crucial emerging regional powers in the Gulf.
Iran’s supreme leader is facing a strategic dilemma in how to pursue diplomacy with the United States and project strength amid internal fracturing and ambiguity.
While any U.S.-Iran rapprochement could potentially ease sanctions on Iran, such a shift is poised to generate sharply divergent responses among U.S. allies.
Regardless of who prevails in November's presidential election, the next U.S. administration may contend with either a nuclear-armed or fragmented Iran.
On January 9, AGSIW hosted a virtual roundtable with its leadership and scholars as they looked ahead and assessed trends likely to shape the Gulf region and U.S. foreign policy during the coming year.
