Iran-China economic deal victory for those nations, major defeat for U.S.

Iran-China economic deal victory for those nations, major defeat for U.S.

Representatives of China and Iran discuss ground breaking, massing economic agreement (Photo: Iranian government website)

WASHINGTON — Iran and China have quietly drafted a sweeping economic and security partnership that would vastly extend China’s influence in the Middle East, throw Iran an economic lifeline, and create new tensions with the U.S.

The 25-year agreement will give Iran a way around US sanctions and give China huge access to the Middle East and the critical waterway chokepoints. It also permits Beijing to jump over Indian and Pakistan to spread its homogeny.

Critically, it is also a huge economic counter to U.S. efforts to isolate Iran economically and politically — and gives China a pathway into, among other places, Iraq.

The draft of the road map, known as the Sino-Iranian Comprehensive Strategic Partnership, was approved by the administration of President Hassan Rouhani in June but just announced this week.

According to reports, the $280 to $400 billion Chinese investment under the deal will be in Iran’s oil, gas and transport sectors, with Beijing enjoying a 32% discount in crude purchases along with two-year payment breaks. The deal will also grant the Chinese government a significant presence in a wide variety of other projects from security and telecom infrastructure to health and tourism.

Some reports say the plan will give China permission to dispatch up to 5,000 troops to protect its interests in Iran as well as significant control over Iranian islands in the country’s southern business hubs. Those are routes close to where U.S. ships and those of other nations patrol to keep oil routes open.

Experts said the benefits are clear for Iran at the cost of the U.S. They include Iran having guaranteed oil exports despite U.S. sanctions; the Iranian economy de-dollarizes faster; Iran’s ability to withstand U.S. sanctions pressure rises dramatically; Iran and Iraq, by extension, integrate into China’s One Belt, One Road project; Saudi Arabia’s position as a leader of the oil-producing world is weakened, and China acquires a major strategic and economic alliance with a scientifically sophisticated nation.

As for Iran, China will also build infrastructure, including hydrocarbon infrastructure. Some of its projects will be green, such as a 560-mile electrified rail link between Tehran and the eastern holy city of Mashhad. Earlier this year, Iran and Iraq announced that rail line would go into Iraq, increasing Tehran’s influence and control in Baghdad.

China hopes to link its northwest to Central Asia and Europe through new high-speed rail links, of which Iran will be a node.

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