How the China-Iran economic and security deal endangers India’s strategic interests in the Middle East

The deal, which throws Iran a vital lifeline and gives China access to Iran’s hydrocarbon reserves, imperils India’s strategic stake in the Chabahar port project

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Chinese President Xi Jinping is welcomed to the presidential palace in Tehran by Iranian President Hassan Rowhani on January 23, 2016. The foundations for the China-Iran trade and military deal were laid during this visit. Photo: EPA

Published: 10:30am, 29 Jul 2020Updated: 10:55am, 29 Jul 2020

The announcement of a spectacular economic and security partnership deal between China and Iran – the foundation of which was laid during Chinese President Xi Jinping’s visit to Iran in 2016 – has set off alarm bells around the world, including in New Delhi and Washington.

An 18-page draft agreement spells out an outlay of Chinese investments worth US$400 billion into the Iranian economy over 25 years. Of this, US$280 billion will be funnelled into the oil and gas sector and the remaining US$120 billion into other core sectors including banking, telecommunications, ports and railways. In return, China will get a steady supply of Iranian oil at a heavily discounted rate for 25 years.

The deal serves both countries well. Iran’s sanctions-stifled economy, reeling under the US’ “maximum pressure” policy over its nuclear programme, is in desperate need of resuscitation. And the deal throws it a vital lifeline.

For China, facing international opprobrium over its aggressive political and military manoeuvres – pushing further into the South China Sea to the alarm of littoral states, tightening control over Hong Kong, and taking on India in Ladakh in the high Himalayas – the deal with Iran is an opportunity to establish a firm foothold in the Middle East.

Iran’s vast military and hydrocarbon reserves will be a valuable asset to Beijing, in that they can help fuel its expansionist global projects. Both countries are also on the same page in their zeal to shake up a US-centric international order. Viewed in this light, the deal cocks a snook at Western – specifically American – economic and geopolitical might.

The Soroush oilfields in the Persian Gulf are one of the largest in Iran. The China-Iran oil deal offers Beijing a hefty discount on oil purchases. Photo: Reuters

How the China-Iran economic and security deal endangers India’s strategic interests in the Middle East

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} The deal, which throws Iran a vital lifeline and gives China access to Iran’s hydrocarbon reserves, imperils India’s strategic stake in the Chabahar port project

The deal, which throws Iran a vital lifeline and gives China access to Iran’s hydrocarbon reserves, imperils India’s strategic stake in the Chabahar port project