China-Iran 25-year ‘Strategic Pact’

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Recently, China and Iran signed a 25-year “Strategic Cooperation Pact”.

Background

• The partnership was first proposed by China’s leader, Xi Jinping, during a visit to Iran in 2016.
• The agreement comes amid a major push from China to back Iran which is under the weight of U.S sanctions.
  • Earlier, China and Russia called for the U.S. to “unconditionally return to the Joint Comprehensive Plan of Action (JCPOA) as soon as possible and revoke the unilateral sanctions against Iran”.
  • Chinese and U.S. officials also held talks on the Iran nuclear deal and “new changes in the Iranian nuclear situation.

Key Highlights

• The investment and security pact would vastly extend China’s influence in the Middle East, throwing Iran an economic lifeline and creating new flashpoints with the United States.

• It would expand Chinese presence in banking, telecommunications, ports, railways and dozens of other projects.
  • This will give Beijing a bigger foothold in Iran and also make China an important decision-maker in the region.
•  In exchange, China would receive a heavily discounted supply of Iranian oil over the next 25 years

• This pact’ can be very effective in deepening” relations and would establish a blueprint for “reciprocal investments in the fields of transport, ports, energy, industry and services.”
• China’s multi-country Eurasian infrastructure projects, under the umbrella of the Belt and Road Initiative (BRI), are now being extended to Iran.

Concerns for India

• India has repeatedly conveyed its concerns regarding the US sanctions on Iran.
  • Iran happens to be the third-largest energy supplier to India and the sanctions have blocked these supplies, adding to a spurt in the oil prices and throwing the trade balance off the track.
• Iran also happens to be the entry point for India for trade with the Central Asian countries where India’s geographical approach is limited.
• With the increasing presence of China in Iran, India has been concerned about the strategic stakes of the Chabahar port project.
  • The port is close to Gwadar port in Pakistan, which is being developed by China as part of its China-Pakistan Economic Corridor that links it to the Indian Ocean through BRI.
  • The access to the Chabahar port may prove strategically important for India.

• Chinese closer ties with oil producers can bring governance and energy security issues for India.
• Presently India finds itself caught in the geopolitical rivalry between the US & China over Iran.

Way Forward

• India must try to remain politically engaged with Iran for a better appreciation of each other’s sensitivities and compulsions and mutual interests.
•  It is extremely important for India to take the lead in creating an institutional structure with Iran and Afghanistan and seriously pursue the Turkmenistan–Afghanistan–Pakistan–India (TAPI) gas pipeline project to ensure energy security.
• India must have balanced diplomatic relations with the US and Iran.

Source :TH