Implications of China-Iran deal

Letter June 07, 2021
The world of international politics is experiencing a tectonic shift


The world of international politics is experiencing a tectonic shift. China is proving to be the biggest threat to the US hegemony. It is challenging the US in each and every sector. And now it has also engaged itself in the Middle East by securing a 25-year comprehensive strategic partnership with Iran.

The New York Times published a leaked 18-page agreement last year which stated that China would be investing $400 billion in Iran. The investment will be in the sectors of energy, ports, railways, cybersecurity, transportation and joint ventures for weapon design and development. Secondly, a joint bank will also be established that will help the Iranian economy. In return, China will receive heavily discounted Iranian oil and gas for the next 25 years. Now, this deal has far-reaching implications.

To start with, this 25-year partnership will have strategic and economic implications on New Delhi-Tehran relations. India has already agreed to invest millions of dollars in port and railway infrastructure of Iran and has committed $13.2 billion in its union budget. It had also agreed to build Chabahar-Zahedan rail route which could not be materialised due to the US sanctions on Iran. The Biden administration is showing little interest in relaxing the sanctions because of which India will not be able to honour its commitment. It is here that China will take its place.

The deal will also serve to improve relations between Tehran and Islamabad. Gawadar and Chabahar can be declared as sister ports and increase trade influx. According to an MoU, signed between Pakistan and Iran in April 2021, both sides have agreed to establish ‘Border Markets’ along the border signed. These will not only enhance bilateral trade but it will also provide economic opportunities and sustenance to people residing in the border areas.

This deal has the ability to facilitate trade among Pakistan, Turkey, Iran, Azerbaijan and China. In short, it is a win-win situation for Pakistan. The implications will reverberate all the way to the US who, at the moment, struggles to maintain its control in the Middle East.

Omar Shahkar


Published in The Express Tribune, June 8th, 2021.

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