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China and Iran sign $400-bn 25-year oil deal

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Wang Yi, China's foreign minister, and his Iranian counterpart Mohammad Javad Zarif bump elbows during the signing of a 25-year cooperation agreement in May 2021. File photo: Reuters.

(ATF) Iran and China signed a 25-year ‘strategic cooperation pact” on Saturday March 27 under which Beijing has agreed to invest $400 billion in the Middle Eastern nation over the next quarter of a century in exchange for a ‘stable supply of oil’.

Negotiations on the economic and security agreement, which could ease Iran’s international isolation, were launched five years ago and are the latest expansion of Beijing’s flagship Belt and Road Initiative. But few details about the deal have been released.

China is Iran’s leading trade partner and was one of the biggest buyers of Iranian oil before former US president Donald Trump reimposed sweeping unilateral sanctions in 2018 after abandoning a multilateral nuclear agreement with Tehran.

On Saturday China’s Foreign Minister Wang Yi held talks with his Iranian counterpart Mohammad Javad Zarif in Tehran before signing the ‘comprehensive strategic partnership’. 

A joint statement issued by the two countries said the long-term plan aimed to tap the potential for cooperation between the two countries in the economic, humanities and other fields. 

Zarif said Iran attached great importance to relations with China and strengthening cooperation with China was a strategic choice his country had made. The signing of the plan would inject new impetus to further strengthen mutually beneficial cooperation between the two countries. 

“Iran thanks China for its firm support for Iran’s opposition to ‘illegal unilateral sanctions’ by the United States. Iran also opposes unreasonable pressure on China by some Western forces and will resolutely stand with China. Iran looks forward to participating in the Beijing Winter Olympics and will resist any attempts to disrupt the Winter Olympics.”

Iranian National Television carried a live broadcast of the meeting between Wang Yi and Zarif and the signing of the cooperation plan. Iranian Foreign Ministry spokesman Khatibzad said in an interview that the signing of the plan showed that the strategic relationship between Iran and China had entered a new stage.

According to Huangqiu.com, the plan further includes Iran in China’s One Belt One Road Initiative and is expected to include Chinese investment in energy and infrastructure fields in Iran. Khatibzad said the plan was a “road map” for cooperation in trade, economy and transportation, especially in the private sector.

Iran is seen as a big market with huge potential, as it has a population of more than 80 million. In recent years, the trade volume between Iran and China has been about US$20 billion a year. That figure is down from close to $52 billion in 2014, due to the drop in oil prices and the unilateral withdrawal of the US from the JPCOA nuclear agreement and sanctions imposed on Iran in 2018.

The Iranian Islamic Student News Agency reported that the most important facet of the plan is expanding ties between the two countries in trade and economic matters. Iran should have signed and implemented such a deal with China long ago, it said. 

Although China and Iran have not announced the specific content of the cooperation agreement, there has been speculation that it will increase China’s influence in the Middle East and weaken the United States’ bid to isolate Iran. Wang’s visit to Tehran is a reflection of China’s growing ambitions – Beijing hopes to play a greater role in the Middle East, which has been the centre of US strategic focus for decades. 

Chinese diplomacy in action

Before his trip to Tehran, Wang Yi visited Saudi Arabia and Turkey. And shortly after signing the deal, he flew out to the United Arab Emirates. He was also due to visit Bahrain and Oman. 

While the United States and other nations have raised the “human rights issue in Xinjiang” in an attempt to suppress China, Islamic countries in the Middle East had mainly expressed support, Chinese media outlets said. For example, Turkish Foreign Minister Cavusoglu stated in his talks with Wang Yi that Turkey abides by the One-China principle and is committed to further enhancing the Turkey-China strategic relationship and will not take part in anti-China actions. This showed the hypocrisy of a few Western countries using the banner of ‘human rights’ to suppress China, Huangqiu.com said.

The website Middle East Online stated that the intensive visits of Chinese foreign ministers to six countries in the Middle East highlighted that the traditional relationship between China and Middle Eastern countries is more important in the current environment, and the cooperation between the two is of great significance to world security. The article said that under pressure from Western countries, China’s diplomacy is taking the initiative and actions to break the hostility and ‘siege’ of Western countries led by the United States. 

While new US President Joe Biden has sought to reinvigorate ties with allies in Europe and Asia in recent weeks, China is undertaking reciprocal efforts.

As well as Wang Yi’s visit to the Middle East, Chinese Defence Minister Wei Fenghe is in southern Europe – on a visit to Hungary, Serbia, Greece, and North Macedonia from March 24 to 31.

During his visit to Serbia on Friday March 26, Wei Fenghe made a special trip to pay tribute to the martyrs at the site of the bombed Chinese embassy in Yugoslavia. He emphasized that the Chinese people would never forget this period of history, referring to the US bombing in May 1999, which killed three Chinese journalists.

“The Chinese military will never allow such a history to repeat itself. We are fully capable and determined to defend national sovereignty, security, and development interests,” the minister was quoted as saying.


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Chris Gill

With over 30 years reporting on China, Gill offers a daily digest of what is happening in the PRC.


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