From phantasm to reality: the China-Iran deal
The writer is a Research Fellow at the Institute of Strategic Studies Islamabad. She is a LUMS and Warwick alumnus
Last year, an 18-page draft of an agreement between China and Iran, obtained by The New York Times caused much hullabaloo amidst a Covid-ridden world. But as time went by, conspicuous silence from the Chinese side led many to believe that the deal was nothing more than all noise and no substance from the Iranians.
However, on March 27, what was being dubbed as a phantasmic idea became reality when Chinese Foreign Minister Wang Yi and his Iranian counterpart Javad Zarif inked the document in a ceremony in Tehran.
Experts have stated that this contract is largely unchanged from the draft that was previously obtained, which called for $400 billion in investments in Iran spread over 25 years encompassing telecommunications (5G), infrastructure, banking, free trade zones as well as a vast expansion in military cooperation. In exchange, China will benefit from a steady and secure supply of discounted oil to cater to its ever-increasing needs.
Needless to say, the latest expansion of the multi-billion-dollar Belt and Road Initiative (BRI) will give relief to a downtrodden Iranian economy while providing China with a strong foothold in the Middle East. As a matter of course, the whole world watches the outcome with bated breath, and no one is more eager than the neighbour to both Iran and China — Pakistan.
For Pakistan the deal portends many benefits. Firstly, it will pave the way for increased border security, something which has amounted to much blame-game between Pakistan and Iran over the years. Even though both sides have been continuously engaged in addressing border issues through their Joint Border Commission and have formed a Rapid Reaction Force to counter threats from militants, there are still unaddressed issues such as human trafficking and smuggling. For China, increased security between Pakistan and Iran is a necessity for the successful implementation of the China-Pakistan Economic Corridor (CPEC) which is the BRI’s flagship project.
Secondly, Iran’s official inclusion into the BRI will be crucial in lessening Pakistan’s energy woes. The former has the capacity to export 3000MW of electricity to Pakistan at low rates. By the same token, the completion of the Iran-Pakistan (IP) Pipeline can now be expedited. In 2016, China Petroleum Pipeline Bureau (CPPB) stated its willingness to help complete the unexpended part of the IP from Gwadar to the Iranian border. Moreover, there are also plans of an LNG pipeline to China from Iran along the CPEC. Realisation of this project will have a number of advantages for all three countries.
Additional benefits to Pakistan from the Iran-China deal are a much-needed boost to Pak-Iran trade — the potential of which amounts to $5 billion. Moreover, Pakistan can benefit from another important component of the 25-year plan which is the proposed sharing of intelligence between Tehran and Beijing.
Palpably, the main question for many is will Gwadar Port’s significance in the BRI now diminish?
The answer is simple: no.
In the context of territorial position and utility, Gwadar has the upper hand. This is not to dismiss Chabahar’s significance in anyway. In fact, the two ports undeviatingly supplement each other and with a Memorandum of Understanding (MoU) of Sister Ports already in place, further convergence now seems more likely than ever. Moreover, one of the aspects of the China-Iran deal is better bilateral and regional involutions with all neighbouring countries which automatically highlights that both Gwadar and Chabahar will not be employed in any sweepstakes.
Unquestionably, the China-Iran deal is an affiliation having great consequences. In the same degree, a resilient trilateral permanence between China, Pakistan and Iran will bode well for the success of the entire region.
The ultimate question remains whether Pakistani leadership will capitalise on the opportunities it augurs in a timely manner.
Published in The Express Tribune, March 31st, 2021.
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