Iran in the Red Dragon’s claws

Politics Materials 5 December 2017 16:45 (UTC +04:00)
Iran in the Red Dragon’s claws

Baku, Azerbaijan, Dec. 5

By Azer Ahmadbayli – Trend:

While the US is contemplating how to stop the political expansion of Iran in the Middle East through new harsh measures, and Europe is waiting hesitantly for granting funds under the safeguard of Iranian Government, China demonstrates a clear example of the so-called soft power by investing billions in Iran's economy and opening new industrial enterprises there.

As Reuters reported on November 30 with reference to Iranian state news agency IRNA, the China Development Bank signed a memorandum of understanding for $15 billion with Iranian side.

The bank itself declined to comment, in line with many foreign investors and banks, including from China, who were reluctant to discuss their activities in Iran. The websites of banks and companies often carry little or no information on their Iran operations.

Isn’t it the famous Deng Xiaoping’s principle, implemented in real life, who said in his time: “Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.”

Iran will never agree to provide state guarantees for foreign investments. On the contrary, Iran’s policy is to fasten as much of foreign business to itself as possible, so that if sanctions are imposed, it will be backed by an army of angry business companies putting pressure on their governments with demands not to join in on the sanctions.

Meanwhile, China has a unique approach to the whole situation.

During the period of international sanctions, when Iranian market stayed untapped particularly in terms of foreign investments, China has become the top trade partner of the Islamic Republic.

Its share of Iran's global trade expanded from 20 percent in 2010 to 31 percent in 2016, CRS INSIGHT notes.

Trade turnover between Iran and China made $30.4 billion in ten months of 2017, which rose by 22 percent compared to the same period of 2016, the latest data from the Chinese Customs Administration says.

China's exports to Iran in the mentioned period made $14.937 billion, 15 percent more year-on-year, while its imports from Iran amounted to $15.462 billion worth of goods, a 29 percent rise.

What is the reason behind China’s strong presence in the Iranian market? How the large scaled cooperation between Iran and China would impact the Islamic Republic?

Iran is utterly interested in fueling its economy here and now, without any delay, whereas China has such an opportunity and is ready to make it happen. To some extent, Iran still remains an untapped market with a number of unoccupied niches, and China has every possible goods Iran could need - from solar panels to prayer rugs. Chinese technologies are not considered as good as the Western ones, but, once introduced, they will transform the ground for the development of Iranian economy in a Chinese manner. After ten years of the Chinese presence there will be almost no need in western technologies.

For China to have a close trade partner and hence a loyal political power in the very center of the Middle East – a region that has traditionally been under the US influence and protection - is a real prize.

Is China beware of possible sanctions? It seems that it doesn’t. If new sanctions are imposed they are unlikely to be more powerful than the previous ones. China managed to trade with Iran at harder times and will do it again.

Iran, for its part, in addition to China’s multibillion investments and technologies, keeps holding good political leverage in its confrontation with Washington, as China is a member of UN Security Council.