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\u003cp\u003eA number of recent visits to China by high-level Iranian officials have aroused speculation that Tehran is seeking to realign its policy priorities in favour of Asia. While a ‘look East’ strategy could undoubtedly allow Tehran to unlock its economic potential, it also poses serious challenges, not least in the context of US secondary sanctions and a similar drive by Saudi Arabia to nurture an advantageous relationship with China.\u003c/p\u003e\n\u003cp\u003eIn the last few weeks, Iran’s top officials have engaged in numerous visits to Beijing, with the aim of furthering economic and strategic ties. These include a visit in late February by a high-level delegation led by Iran’s parliamentary speaker, Ali Larijani, along with Foreign Minister Mohammad Javad Zarif and Oil Minister Bijan Zangeneh, as well as a visit by Minister of Economic Affairs and Finance Farhad Dejpasand in mid-March. Whether these were indeed planned as part of a shift towards the east, given the frustration and disappointment of slow progress with European counterparts, or whether they were intended to ‘build trust’ as Muhammad bin Salman of Saudi Arabia embarked on his own visit and diplomatic drive is still unclear. They were most likely a combination of both.\u003c/p\u003e\n\u003cp\u003eThis would not be the first time that Iran has chosen to give greater priority to its relationships with key eastern partners. Larijani personally sponsored a ‘look East’ initiative in 2005, at a time when Iran’s nuclear negotiations with Europe had seemingly reached an impasse. Larjiani leveraged Iran’s strategic relationship with China to bolster Iran’s position in the negotiations. Nurturing t\u003cspan style=\u0022color: black;\u0022\u003ehis relationship has been a key diplomatic objective for the Islamic Republic ever since then, with members of its political elite asserting that the two countries share the same mistrust of Western imperialism and the ‘US-led hegemonic order’.\u003c/span\u003e\u003c/p\u003e\n\u003ch3\u003eEconomic dynamics\u003c/h3\u003e\n\u003cp\u003eWhile some internal opponents and dissidents have criticised this rapprochement, it is clear that, for better or worse, the two countries’ economies are already largely intertwined.\u003c/p\u003e\n\u003cp\u003eIran was China\u0027s fourth-largest \u003ca href=\u0022https://www.al-monitor.com/pulse/originals/2019/01/iran-china-energy-cooperation-nioc-sinopec-sanctions.html\u0022\u003esupplier\u003c/a\u003e of oil and China was the top buyer of Iranian oil in 2018. But as the US moved to re-impose sanctions in November 2018, the value of Chinese imports of Iranian oil \u003ca href=\u0022https://www.bourseandbazaar.com/research-1/2018/1/11/special-report-on-china-iran-trade-under-sanctions\u0022\u003efell\u003c/a\u003e to US$628 million in October from US$1.78 billion in August. Imports did recover to US$1.06 billion in December – this was down to a US waiver scheme under which China and a handful of other nations are permitted to keep importing limited amounts of Iranian oil. (The intention behind the scheme is to limit Iran’s oil revenue, while averting the risk of an oil-price spike.) Nonetheless, the \u003ca href=\u0022https://en.radiofarda.com/a/ira-high-level-delegation-in-china-zarif-larijani/29782479.html\u0022\u003epresence\u003c/a\u003e of Zangeneh, the oil minister, on this trip is a clear indication that trade and especially oil sales to China remain a priority for Iran.\u003c/p\u003e\n\u003cp\u003eThere are some \u003ca href=\u0022https://en.mehrnews.com/news/142590/Chinese-CNPC-has-done-nothing-for-South-Pars-Phase-11-after-Total\u0022\u003eexpectations\u003c/a\u003e in Tehran that China could play a leading role in the further development of Iranian oil and gas resources. A decade ago, Iran gave an ultimatum to Total and Shell to complete phases 11 and 13 of South Pars, the largest gas field in the world. Uncertain that such a deal would ever come to fruition, Iran \u003ca href=\u0022https://www.reuters.com/article/iran-shell-total-idUSDAH43456620080414\u0022\u003esignalled\u003c/a\u003e that it was more likely that Asian companies, and not European ones, would ultimately develop the field. Neither deal materialised at the time, but the JCPOA paved the way for the signing of a new contract to develop South Pars in July 2017 with France’s Total, China’s CNPC International and Iran’s Petropars, a of NIOC.\u003c/p\u003e\n\u003cp\u003eChina’s state-owned oil company CNPC had a 30% stake in the US$4.8bn deal, but Total, which held a 50.1% interest, \u003ca href=\u0022https://www.bbc.com/news/business-44147814\u0022\u003ewithdrew\u003c/a\u003e in 2018 as the threat of renewed US sanctions loomed large. In November 2018, it was \u003ca href=\u0022https://www.cnbc.com/2018/11/26/iran-says-china-cnpc-replacing-france-total-in-gas-project.html\u0022\u003eannounced\u003c/a\u003e that CNPC would replace Total, but CNPC in turn \u003ca href=\u0022https://www.reuters.com/article/us-china-iran-gas-sanctions/cnpc-suspends-investment-in-irans-south-pars-after-u-s-pressure-sources-idUSKBN1OB0RU\u0022\u003esuspended\u003c/a\u003e its new deal in December, again as a result of US pressure.\u003c/p\u003e\n\u003cp\u003eIt remains to be seen whether the recent visits by the Iranian delegations will have successfully revived phase 11 of the South Pars gas field project with CNPC at the helm. Before departing to China, Zangeneh \u003ca href=\u0022https://en.mehrnews.com/news/142590/Chinese-CNPC-has-done-nothing-for-South-Pars-Phase-11-after-Total\u0022\u003eexpressed\u003c/a\u003e his dissatisfaction that CPNC ‘had not done anything’ since the November announcement. Since then, there have been ongoing negotiations between Tehran and China on \u003ca href=\u0022https://oilprice.com/Latest-Energy-News/World-News/Iran-To-Boost-South-Pars-Gas-Output-Via-4-New-Phases.html\u0022\u003eresuming\u003c/a\u003e\u003cspan style=\u0022color: black;\u0022\u003e the work, but the future of the project is uncertain.\u003c/span\u003e\u003c/p\u003e\n\u003cp\u003eSince 2012, China has been Iran’s primary source of industrial machinery and equipment. These transactions have been facilitated by China’s Bank of Kunlun, which was nominated as the country’s main official channel for trade with Iran, in order to bypass US secondary sanctions before the JCPOA. Recently, the bank has said it is \u003ca href=\u0022https://www.bourseandbazaar.com/articles/2018/10/31/china-unexpectedlygambles-on-european-spv-to-sustain-iran-trade\u0022\u003esuspending\u003c/a\u003e any Iran-related business that might jeopardise the main financial channels of China–Iran trade. Chinese exports \u003ca href=\u0022https://www.bourseandbazaar.com/research-1/2018/1/11/special-report-on-china-iran-trade-under-sanctions\u0022\u003efell\u003c/a\u003e by nearly 70% between October and December 2018 , a level not seen since 2013. This trend will endanger Iranian industry, as it relies heavily on imports of Chinese machinery and equipment.\u003c/p\u003e\n\u003cp\u003eBeijing is engaged in a careful balancing act when it comes to Iran. It is opposed to the concept of a nuclear-armed Iran and to any measures taken by Tehran that might jeopardise the free flow of oil through the Strait of Hormuz or the Bab el-Mandeb. Beijing is helping to preserve the JCPOA, while negotiating with the Trump administration to defend its economic interests both in Iran and globally. But Chinese economic interests in trade with Iran have \u003ca href=\u0022https://www.iiss.org/blogs/analysis/2018/07/china-save-iran-nuclear-deal\u0022\u003elimited impact\u003c/a\u003e on its strategic calculus and should China face a dilemma, it is unlikely that it would choose its trade with Iran over its \u003ca href=\u0022https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china\u0022\u003e\u003cspan style=\u0022color: #69a9e3;\u0022\u003eUS$650bn \u003c/span\u003e\u003c/a\u003e annual trade with the US. \u003c/p\u003e\n\u003ch3\u003ePolitical dynamics \u003c/h3\u003e\n\u003cp\u003e The Iranian search for bilateral partnerships with China is part of a broader project to integrate into Asian regional organisations, such as the Shanghai Cooperation Organization and ASEAN. Until now, this Iranian strategy has only been partly successful. \u003c/p\u003e\n\u003cp\u003e Iran secured observer status in the SCO in 2005, but it is not yet a full member, mainly because Beijing is reluctant to transform the SCO into an anti-US regional organisation. China’s mainly economic interests in Iran do not provide a basis to believe that it will be compelled to invest politically. Leaked diplomatic \u003ca href=\u0022https://www.nytimes.com/2018/12/18/us/politics/european-diplomats-cables-hacked.html\u0022\u003ecables\u003c/a\u003e published by the New York Times, for example, reveal that during a working lunch at the EU–China summit in July, Chinese Premier Li Keqiang said that China would ‘not act unilaterally’ to mitigate the re-imposition of US sanctions on Iran.\u003c/p\u003e\n\u003cp\u003eThe partnership between Iran and Chin a should not be interpreted as predominantly anti-Western, but instead as a manifestation of China’s desire to be seen to be acting independently on the international stage. This explains China’s resilience in the face of US economic and political pressures aimed at thwarting its cooperation with Iran.\u003c/p\u003e\n\u003cp\u003eIran’s eastward-leaning foreign policy faces competition from Saudi Arabia. Its foreign relations have previously centred mostly on the US, but now the kingdom is extending its presence and influence in the region, specifically Russia and China. Recent \u003ca href=\u0022https://www.al-monitor.com/pulse/originals/2019/02/russia-saudis-iran-oil-opec.html\u0022\u003ereports\u003c/a\u003e of a Russia–Saudi oil pact, for example, highlight the tensions Iran faces. Similarly, as many observers have noted, Larjiani’s visit to China may have represented a ‘trust-building’ effort by Chinese officials to reassure Iran prior to a visit from MBS later that same week. \u003c/p\u003e\n\u003cp\u003eIf Iran is to build a sustainable economic future for itself, its ‘look East’ policy will need to be a clear priority. But given the risks of Iran being undercut by Saudi and the fact that China’s interests are merely economic, looking to the east alone will not be enough. Turning away from Europe and towards the east failed to live up to its promise in 2005 and today such an approach would be even more difficult and counterproductive in light of the competitive environment it finds itself in. \u003c/p\u003e\n\u003cp\u003eFor Iran to be able to save the JCPOA, it will need to pursue a policy that best combines European partnership with Russia and China rather than a pivot towards the east. By working together with the remaining parties to the JCPOA, Tehran can pursue a broader \u003ca href=\u0022https://www.iiss.org/blogs/survival-blog/2019/02/iran-new-narrative\u0022\u003eEurasian strategy\u003c/a\u003e that could recast the vision of the JCPOA itself – beyond a nuclear agreement, with an economic and security agreement that bolsters a Eurasian partnership without the US. \u003c/p\u003e","className":"richtext reading--content font-secondary"}), document.getElementById("react_3II1YIxaUW8yxPi2MDJEA"))});
\u003cp\u003e\u003cspan\u003eNurturing a closer relationship with China has long been an objective for Iran, and recent ministerial visits to Beijing suggest that it is being given greater policy emphasis. However, the challenges to this initiative are considerable, explain Mahsa Rouhi and Cl\u0026eacute;ment Therme.\u003c/span\u003e\u003c/p\u003e
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