China and the Iran crisis

China and the Iran crisis

Theme: China is a party involved in the Iran crisis, both as a leading buyer and investor in the energy sector being developed by Iran and as a permanent member of the United Nations Security Council, which could once again, in the same way as Iraq, find itself left on the sidelines by the players in a deeper conflict. In recent weeks, the crisis has taken a greater hold, while Beijing maintains a conciliatory and pragmatic attitude, which has allowed it not to lose ground in the Persian Gulf, beyond the freezing of a number of contracts. But the region is no longer what it was, and the cautious calls for Chinese diplomacy conceal a concern for the significant interests invested in Iran during the past five years as part of a far-reaching geopolitical strategy.

Summary: This analysis is intended, first of all, to describe the dimension of Beijing’s current interests in Iran. Secondly, it analyses the likely measures to be adopted by China in accordance with those interests given the current scenario. Finally, it discusses Teheran’s strategic significance for Beijing, beyond its status as a major emerging commercial partner.


China’s Position
The latest challenge posed by Iran, which boasted on 11 April of already being a nuclear power, was met by Zhongnanhai (the Chinese leaders’ residential and decision-making centre) with an umpteenth call for verification and agreement within the framework of the International Atomic Energy Agency (IAEA), for the imposition of no sanctions and for no recourse to be made to the use of force –or to the threat of using it–. This position was reaffirmed on 18 April at the meeting of the five permanent members of the Security Council, plus Germany, held in Moscow. This is consistent with its previous attitudes and, specifically, with that of last March, when China expressed its opposition to the idea of imposing a term of between two weeks and one month, perhaps renewable, to dismantle the nuclear programme.

Wang Guangya, China’s ambassador to the United Nations and currently President of the Security Council, repeated on 12 April that no threat against Iran ‘would be of any use in the present circumstances’. Hours later, Beijing announced that Cui Tiankai, Deputy Foreign Minister and a specialist on non-proliferation, had been sent to the Iranian capital and that his mission included talks in Moscow between the 14th and 18th of April.

During the past twenty-five years, Beijing has completed its approach to the Middle East and is now in an unbeatable position in the area. Without attaining the potential for mediation of the EU or Russia, Beijing has traditionally had a wide-ranging non-interventionist stance in relation to both the Arab and Muslim countries and Israel, and is now, therefore, a power with its own particular prestige, although this is also ultimately due to the low profile it has maintained in past crises.

In the present crisis, in none of its recent declarations has Beijing announced that it will use its veto to halt the promotion in the Council of probable US resolutions to bring pressure to bear on Teheran. And, for the time being, neither has it made any significant declarations on the much-discussed possibility in recent weeks of hypothetical evaluations by the Pentagon on launching an attack with tactical nuclear weapons against Iranian bunkers where components for atomic use are stored.

Chinese interests are well advanced in Iran. China imports around 13% of its oil from Iran and forecasts point to a spectacular expansion of its interests. In November 2004, both countries signed a pre-agreement in Beijing worth more than 100,000 million dollars whereby the Chinese state-owned company Sinopec would purchase 250 million tonnes of liquefied natural gas over a period of more than twenty-five years and would prospect in the Yadavaran oil field, from which 150,000 barrels of oil per day will be exported to China. The pre-agreement, entered into as a memorandum of understanding, foresees annual sales of 10 million tonnes of liquefied natural gas and implies a significant investment in the expansion of the Iranian oil tanker fleet. In addition, it includes Chinese participation in projects such as the laying of pipelines and the petrochemicals and gas industry, and encompasses the supply of materials for the electricity industry in the city of Arak, to the south-east of Teheran, and participation in the services sector. It also includes the construction of a number of new lines for the Teheran underground, the second of which has been commissioned to Norinco, a leading company in the Chinese military and industrial complex.

That deal, projected as a preliminary to additional agreements, would have been completed in March of this year, as recently advanced by Caijing, China’s financial magazine. Or now, according to other sources, ie, before a foreseeably serious consideration of sanctions and military threats against Iran, led by Washington.

One project that is already in force is that signed last January, worth more than 30 million dollars, for the operational maintenance of the Alborz oil platform in the Caspian Sea, which will allow Iran to prospect in deeper waters, deepening China’s involvement in Caspian affairs.

At the same time, there is another significant recent agreement, which materialised a few weeks after the invasion of Iraq, in 2003. Beijing then opened an automobile plant which now enables it to manufacture 30,000 automobiles per year, with the trademark Chery (a name similar to Chevy). This is China’s first transnational car factory, and it has been viewed with suspicion by General Motors, which until recently claimed that the Chery was merely an imitation of one of its own models.

Similarly, as could not be otherwise, Washington protested to Beijing over the presumed supply to Iran of missile technology and dual-purpose equipment for chemical weapons and, in the past decade, even imposed sanctions on companies from China and other countries which had sold the technology to Iran, including subsidiaries of Norinco.

Likely Ways Ahead for Beijing in Iran
Diplomatic relations between China and Iran date back to their establishment in 1971, but commercial ties were formed a few months after the Communist regime of Mao Zedong was established. In both dimensions, ties with Teheran predate the relations maintained by Beijing with several of its Asian neighbours.

As a new player in the global scenario, China is now daring to act in areas where its prime interests run very high risks. In this particular give-and-take between the US and Iran, Zhongnanhai knows that Washington is aware of a China whose perspectives for energy provision cannot be diminished for the benefit of their interconnected economies. And because, additionally, an attack, occupation or change of regime in Iran would not necessarily lead to a reinforcement of the American hegemony of the petrodollar. Should it occur, an abrupt change in Iran would not leave room for any kind of shared management among the permanent members of the Security Council. This is not a realistic option because it contains two flammable absurdities. First, because Iran or the generic al-Qaeda network could coincide there and harbour disjointed but effective plans to obstruct part of the oil production of the Persian Gulf. And secondly, because in the event that an attack or a change of regime were to succeed to a certain degree, then China, forced by events, would find itself obliged to seem interested in reinforcing its immediate interests, ie, its energy supply: a pernicious image for its long-term plans. Should it attack Iran, neither would the US be supported by world public opinion –the allied governments are another matter–, and we could inevitably expect unforeseen retaliatory attacks.

Zhongnanhai, with its ‘peaceful rise’ theory, underlines that it needs a stable environment which will enable it receive a relatively calm supply of natural resources and the development of trade in the Gulf region in order to make its long-term internal development policies predictable and consistent. This does not mean that a degree of conflict is against its interests. Indeed, it benefited from the conflict now taking place in Iraq as it has attenuated the firm policy of containment adopted by the US in the Asia-Pacific area at the beginning of 2001.

In an interview with China Daily in March, the former US Secretary of State and an influential member of international oil circles, Zbigniew Brzezinski, advocated a strategic Sino-US dialogue encompassing the Middle East and the Persian Gulf. There is no evidence that this perceptive triangular view will be adopted by the United States, even though the crisis with Iran was addressed at the recent summit held this month between Bush and Hu. Beijing can only trust in the good judgment of Washington, although it could also resort, in a more unsettling way than ever, to the threat of withdrawing a proportion of its stake in US Treasury Bonds and slightly decrease its own dollar reserves. The Iran crisis would therefore provide the clearest evidence of the differences between the most immediate means at the disposal of China and the United States respectively: on the one hand, commercial diplomacy and financial means that the digital era has made more rapidly transferable and malleable and, on the other, plans for a “transforming diplomacy” (Condoleezza Rice dixit) backed by a ubiquitous military power.

The conflict in Iraq –which is far from being even half-way through– will probably produce as many fatal victims and injured as the Hiroshima bomb, and a loss of US prestige in the Middle East, the extent of which, it is now obvious, was not even reached by the war in Vietnam in Asia as a whole. Furthermore, on this occasion, unlike Vietnam, Washington cannot rely on the factor of another power for its withdrawal, as it then relied on the Chinese card. Apparently, China’s leaders, headed by Hu Jintao, expect the existence of an Iran with nuclear power for civil use and are seemingly aware of the eventual possibility of an atomic device in the hands of Teheran. In view of which it could be possible to coexist, and trust in a new realism, typical until now of states with nuclear power but who have not used it for military purposes following World War II. In short, this is the path followed by China since 1964, when Mao Zedong obtained an atomic weapon and gradually evolved from a position contrary to the existing world order. Zhongnanhai also seems to understand the North Korean case in this way.

A Broader Geopolitical Vision
In September 1993, the US Navy intercepted the Chinese cargo ship Yin He in the Persian Gulf, which it accused of carrying weapons of mass destruction for Iran. It was searched in a Saudi Arabian port by the Saudi authorities, with the help of US technicians, but no evidence was found to support the accusation. This incident is remembered by Chinese diplomats, who to this day are unable to represent a power capable of deploying a fleet to ensure its supply line opposite the coasts of the world’s main source of energy. But as to ports of embarkation, Teheran’s strategic preferences are today heavily weighted in favour of China. In November 2004, the Iranian Oil Minister, Bijan Zanganeh, told China Business Weekly that Iran wished to favour it as a partner, to the express detriment of Japan –16% of whose energy supply depends on Iran and which is an ally of the US–, as its main importer of hydrocarbons.

For Zhongnanhai, Iran is more than just another State in the Persian Gulf. To its relative demographic significance and its colossal resources, it adds, among other elements, a controversial diplomacy but which distracts the attention of the US in its zeal to contain China, because Teheran has managed to project spheres of influence –both directly and indirectly, towards the Middle East, the East and Central Asia– which pose a challenge to Washington. Equally instrumental for the Chinese were the tense relations between Iran and the Taliban in Afghanistan who, allied with al-Qaeda, attracted radical Islamists from other parts of the world, including a faction of Chinese Uigurs from the province of Xinjiang. It should also be borne in mind that Teheran came close to a military confrontation with the Afghanistan of Mullah Omar.

Similarly, Iran’s projection towards Central Asia is also important for China, given Teheran’s interest in becoming an additional option for the export of hydrocarbons from the Caspian Sea and from the Gulf northwards. In short, the growing coincidence of Iran with China and Russia is exemplified by comments suggesting the imminent entry of Iran, Pakistan, India and Mongolia in the Shanghai Organisation for Cooperation (SOC), which plans to hold a top-level meeting on 15 June. The inclusion of these four countries, which at present are only observers, has not been ruled out, according to its Secretary General, Chinese ambassador Zhang Deguan, at a press conference in Beijing last January.

China’s vision of multipolarity is being projected towards the Caspian Sea and the Persian Gulf, which to Americans eyes are its evident Achilles’ heel. With the Asia-Pacific region on sounder geopolitical pillars and free of conflict, from China’s point of view there only remains Iran for the US to complete a vast hegemonic deployment in the Gulf which will, in theory, assure it of an unheard of capacity to influence regional affairs and energy-related matters in the Asia-Pacific area and enable it to cut through the Iranian shield behind which Beijing and Moscow are manifestly converging and to which both Pakistan and India are looking with interest.

In parallel, given the uncertainty surrounding the energy issue, China is being pushed towards Africa and particularly towards Latin America. In the latter there is a significant political distancing from the US and Beijing –almost at the same time as it did in Iran– committed almost 100 billion dollars in future investments in 2004, a key year for its global strategy of a ‘peaceful rise’. The 2004 agreement signed by China and Kazakhstan –members of the SOC and potential partners of Iran in the organisation– for the final development of an oil pipeline from the Caspian Sea eastwards, also ties in here. The possibilities are also open for Iranian pipelines to connect with China via the Eurasian interior.

In the long term, in the event that a denser network of oil and gas pipelines is interlinked, to which should be added the Asian Highway sponsored with various levels of commitment by some thirty countries in the macro-region, a Persian Gulf well integrated with the rest of Eurasia would also be at stake in the Iranian Crisis. A gigantic space with an infrastructure which would offer more efficient intercontinental trading and more compact security alignments, although potentially dominated by the SOC. India is keeping a close watch on the scenario. Hence, the evident interest of the Bush Administration in moving closer to New Delhi and diverting its interest in Iranian energy through Pakistan. In short, to distance it from the geopolitics of Eurasian integration, while at the same time exercising a ‘transforming diplomacy’ in the mega-continent’s South-West. After all, it is no accident that a number of Chinese and Russian strategists, according to the analyst Kaveh L. Afrasiabi, a professor at Teheran University, believe that for years Iran has been on the front line of the post-Cold War.

Conclusions: The Iran crisis, whose geopolitical implications are unparalleled, affects the Asia-Pacific region. Should difficulties arise in the supply of hydrocarbons to China and Japan, which are competing for a privileged position in Iran, their already tense bilateral relations would be aggravated at the points that most divide them because of the energy issue, not only in the Persian Gulf, but also in Siberia and in the China Sea.

An armed conflict with in Iran or a change in regime sponsored from outside would affect the agreements signed there by Beijing. But this time Zhongnanhai would be able to negotiate given the novelty of US dependence on Chinese financial support.

In parallel, an open crisis would lead to the reinforcement of the ties between Beijing and various energy-rich regions, such as Latin America, where the emergence of another –not yet fully defined– scenario for competition between China and the US would be inevitable. At the same time, a possible US entanglement in Iran, as occurred in Iraq, would be of no use to Beijing, something which should be borne in mind regarding affairs in the Middle East, in the line marked out by Brzezinski.

Meanwhile, Beijing is clinging to international Law, a framework of which it is neither a founder nor a contributor of doctrine and which, nevertheless, is very much in its interest. But for this to be of use to China –and to the international community– its diplomacy must become even more active and imaginative than in its mediation with North Korea. It must avail itself of all its privileged channels for dialogue with the two parties, seeking the appropriate language to connect with the messianic, theocratic or visionary perspectives of the world, which are believed and utilitarianly manipulated in this crisis. China should probably have greater success with Iran, where it has to convince President Ahmadineyad to lower the tone of his delirious rhetoric and start thinking of the prospects for an improved standard of living for the Iranian people in a more integrated and prosperous Eurasia. In short, convince Teheran that this can only be achieved in this world.

Augusto Soto
Professor at the Centre of International and Intercultural Studies of the Universidad Autónoma de Barcelona