Iran-China Deal Signals Clear Shift in Global Power Balance

Developing Just Leadership

Zafar Bangash

Ramadan 19, 1442 2021-05-01

Main Stories

by Zafar Bangash (Main Stories, Crescent International Vol. 50, No. 3, Ramadan, 1442)

While in the works since early 2016, the signing of the Iran-China deal on March 27 in Tehran was certainly influenced by US misconduct in Alaska a week earlier. Contrary to the agreed format of short opening statements before getting down to substantive discussions, the Americans launched into a diatribe against China. Beijing’s top diplomat, Yang Jiechi (accompanied by Foreign Minister Wang Yi), was in no mood to put up with American arrogance any more. He gave a proper dressing down to the Americans who were left shell-shocked. They sought refuge behind the excuse that the Chinese were “grand standing”.

Following the Alaska spat, the Chinese decided to move quickly to sign the $400 billion deal with Iran as a slap on America’s face. Spanning 25 years, it covers such areas as energy development (oil and gas), transportation, railway, ports, industry, mining, commerce, banking, security and space exploration. While Iran has resolutely defied America’s bullying, the Chinese too appear to have decided to not put up with the Americans’ crude behavior any more. In any case, the US is now a has-been superpower.

The agreement was signed by the two countries’ foreign ministers—Wang Yi (China) and Dr Muhammad Javad Zarif (Iran). By a happy coincidence, it also marked the 50th anniversary of the establishment of diplomatic relations between the two countries. As great civilizations, they have enjoyed historical continuity and cultural unity for millennia. The deal reaffirms this reality.

It would be simplistic to read it as merely an investment and trade agreement. These are important components of the deal but it also covers other areas. A Chinese commentator pointed to this: “As it stands, this deal will totally upend the prevailing geopolitical landscape in the West Asian region that has for so long been subject to US hegemony.”

While the full text of the agreement (called the Comprehensive Strategic Partnership) has not been made public, the joint statement said it signifies “a major agreement in all areas of bilateral relations and regional and international issues.” It added, “Currently the regional and international situation is experiencing deep and complex developments. Under such circumstances, the two sides emphasise the importance of cooperation between the developing countries on international affairs and are committed to joint efforts towards realisation of peace, stability and development in the region and the world at large.”

At the economic level, the deal highlights connectivity to promote trade while at the geostrategic level it marks a major shift in the global power balance. Hitherto, the three pillars of US hegemony were its soft-power appeal, military might and the dollar as world reserve currency. The horrors that the US perpetrated in Bagram, Abu Ghraib and Guantanamo Bay (still continuing) have exposed the ugly face of America.

Despite its massive military budget ($720 billion/year), the limits of US power have been exposed in Afghanistan, Iraq, Syria and Yemen. True, it has destroyed the infrastructure of these countries plus Libya, but the US war machine has failed to achieve its political or military objectives.

As for dollar hegemony, it is facing a serious challenge from the Chinese Yuan and a basket of other currencies. America’s multiple wars (Iraq alone cost $6 trillion), massive theft of money by the oligarchs and the virtual collapse of its healthcare system as exposed by the pandemic and its collapsing infrastructure have bankrupted the US.

Its debt stands at a staggering $27 trillion, exceeding its GDP of $21.433 trillion. If we add the $3.9 trillion that US President Joe Biden announced ($1.9 trillion to fight the pandemic and $2 trillion for infrastructure and family support payments), the US debt climbs to $30.9 trillion.

The West’s approach in general and the US in particular is based on plundering the resources of other countries. They resort to coercion, threats and wars. The Chinese approach is radically different. It has developed the win-win strategy for both investors and recipients. So far, there is no evidence to show that China wishes to colonize any of the countries where it has invested. At least 117 countries have joined China’s Belt and Road Initiative (BRI). It will ultimately invest more than $3 trillion in developing infrastructure in these countries.

Wang’s regional tour included Saudi Arabia, Turkey, Iran, UAE and Oman. At his meeting in Riyadh on March 24 with Saudi Crown Prince Mohammed bin Salman (MbS), Wang said China supports Saudi Arabia in safeguarding its sovereignty, national dignity, security and stability, and opposes interference in Saudi Arabia’s internal affairs under any pretext. Facing heat from the US over the murder of Jamal Khashoggi (although nothing meaningful will come out of it), MbS must have found Wang’s words music to his ears.

In contrast to Washington’s coercive tactics, Beijing advocates cooperation in its approach to relations with other countries. This was evident in Wang’s exclusive interview with the Saudi state-owned media outlet Al-Arabiya when he visited Riyadh.

He outlined Beijing’s approach to the region and urged regional countries to “break free from the shadows of big-power geopolitical rivalry and independently explore development paths suited to regional realities.” He called for resisting external pressure and interference, and “follow an inclusive and reconciliatory approach to build a security architecture that accommodates the legitimate concerns of all sides.”

In contrast to America’s “with us or against us” policy (somewhat modified since because of new ground realities), China advocates a “five-point initiative”. It calls for adherence to mutual respect (non-interference in internal affairs), equity and justice (respect for Palestinian and Iranian rights), non-proliferation (Middle East nuclear weapon free zone, although opposed by the US and Israel), collective security (proposal to hold in China a multilateral dialogue conference for regional security in the Persian Gulf), and development cooperation (BRI).

Iran has long called for a collective security arrangement for the Persian Gulf countries based on mutual respect. It has also demanded the withdrawal of all foreign forces from the region that only create instability. China has enthusiastically endorsed this Iranian proposal.

On the economic front, China is already Iran’s largest trading partner. In March, it imported an average of one million barrels/day, in open defiance and repudiation of unilateral US sanctions. China is reportedly further ramping up its imports of Iranian oil. With the development of new oil and gas fields through Chinese investment, and their export to China, it will greatly boost Iran’s purchasing power.

With a large, highly educated population (Iran has made great strides in many scientific fields), China-Iran cooperation will enable the Islamic Republic to realize its full potential as a great regional power. Together with Russia, Turkey and Pakistan, the region is set to become an economic powerhouse in the near future.

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