China emerges a major winner from Iran nuclear deal

Emanuele Scimia says the lifting of sanctions will not only benefit Chinese trade, but also pave the way for Beijing's geopolitical advances as it pushes its Silk Road vision

PUBLISHED : Monday, 20 July, 2015, 4:33pm
UPDATED : Monday, 20 July, 2015, 4:33pm

The protagonists of the multilateral deal on the limitation of Iranian nuclear activities are repeating as a mantra that there are no clear winners and losers from the talks. In their reasoning, this means they reached an acceptable result for all parties involved in the process. Yet it must be said that even if the official diplomatic narrative does not depict China as a winner at the negotiating table regarding Iran's nuclear future, facts attest that Beijing will probably be one of the principal beneficiaries of the agreement.

Iran and the P5+1 group of world powers - the United States, China, Russia, Britain and France plus Germany - signed last Tuesday a long-expected deal to degrade Tehran's sensitive nuclear programme in exchange for the lifting of damaging sanctions that the United Nations, United States and European Union had imposed on Tehran over the past years in an effort to halt its uranium enrichment.

The gradual relief of sanctions on the Iranian regime could pave the way for Beijing's geopolitical advances in the Middle East and the Persian Gulf. That fits in with a much bigger picture of China trying to promote its Silk Road economic belt and Maritime Silk Road project, a proposed land- and sea-based transport system that aims to connect China with Western Europe.

China was Iran's largest commercial partner in 2013, with a combined trade worth about €30 billion (HK$252 billion), according to the International Monetary Fund. These numbers are likely to increase after the Iranian market becomes more accessible, particularly in the energy sector.

Chinese capital will ultimately tie Iran to Beijing's economic clout and geopolitical design for the Eurasian space

China is one of the largest importers of Iranian crude and condensate, the US Energy Information Administration reports. Despite the regime of sanctions, Chinese state-run companies such as China Petroleum and Chemical Corporation (Sinopec) and China National Petroleum Corporation are still participating in upstream projects in Iran, exploring and developing some Iranian oil fields. After the financial and economic restrictions on Tehran are lifted, Beijing could invest in energy infrastructure in the country to secure further flows of raw materials for its gigantic industrial complex, as well as for its growing market of final consumers - and all of this against a backdrop of declining oil and gas prices.

Chinese capital will ultimately tie Iran to Beijing's economic clout and geopolitical design for the Eurasian space. A case in point is Beijing's interest in the China-Pakistan Economic Corridor - which should connect to the two Silk Roads, and then another connection using the planned Iran-Pakistan gas pipeline. The building of its Pakistani section has been delayed, notably because of pressures from the US and Saudi Arabia. But in April, Beijing pledged help for its construction.

In the end, the deal on the Iranian nuclear programme could serve as a cornerstone of stability in the region spanning Iran, Pakistan and Afghanistan, which is central to China's Silk Road strategy. It is a multilateral pillar adding to the diplomatic moves that Beijing is conducting on its own, such as its attempts at brokering, with the involvement of Pakistan's leadership, a peace agreement between the Afghan government and the Taliban leadership.

It is worth noting that the apparent resolution of the crisis does pose challenges for China as well. The Washington-Tehran tug of war in the past 10 years over the supposed military nature of the Iranian nuclear programme benefited Beijing, as it forced the US to concentrate more diplomatic, military and economic resources on the Middle East, and less on other geopolitical theatres such as the Pacific Rim.

Now that Iran will be gradually legitimised within the international system of relations, the US may refocus on its much-trumpeted rebalancing/pivot to Asia-Pacific. However, apart from this "unintended consequence", it seems China's gains from the agreement on Tehran's nuclear capability far outweigh its losses, at least in the immediate future.

Emanuele Scimia is an independent journalist and foreign policy analyst