Recent reports that China and Iran are pursuing a long-term, economic and security partnerships have set off alarm bells in the Trump administration. According to Iranian officials, the deal would massively expand Chinese investments in banking, telecommunications, ports, railways, and dozens of other projects in give-and-take for Tehran supplying Beijing with discounted oil for the next 25 years. The deal would also potentially include joint military training, exercises, counter-terrorism cooperation, intelligence sharing, and arms transfers to Iran.
There is reason to take some of the more breathless headlines with a grain of salt, as the document detailing the agreement is still only a draft, the Chinese government has not officially confirmed it, and Iran — though economically desperate — remains reluctant to compromise its autonomy by selling off key industries and further increasing its dependence on China. The negotiations over the current strategic partnership proposal go back to President Xi Jinping’s visit to Tehran in 2016, and if past pledges are anything to go by, Iran will likely never see the $400 billion in investment mentioned in the draft. Still, Trump officials and others are right to be seriously concerned. Even the partial implementation of a Chinese-Iranian strategic partnership would signal a major boom in the U.S. strategic competition with China and blow a hole in the administration’s “maximum pressure” campaign against Iran at the same time. And if Trump continues with his failing and flailing unilateral efforts to bring about regime change in Iran and allows the United States to slide into a new Cold War with China, he risks turning what is currently an aspirational Chinese-Iranian entanglement into a full-blown anti-American strategic partnership.
Close ties between Tehran and Beijing are neither new nor solely a function of U.S. policy. China has long been the biggest market for Iranian oil, for many years buying as much as 800,000 barrels per day. Bilateral trade between the two countries rose from almost nothing in the early 1990s to more than $50 billion in 2014. And since the 1980s, China has sold Iran weapons such as tanks, combat aircraft, strengthened personnel carriers, and a range of surface-to-air and anti-ship cruise missiles, including the advanced Silkworms that threaten shipping in the Gulf. Both countries are opponents of U.S. global leadership and share an interest in restraining American influence in the Middle East.
Even so, China has, until now at least, been broadly willing to limit its cooperation with Iran and support the U.S.-led international campaign to force Iran to curtail its nuclear program. As part of that campaign, from 2006 to 2015 China voted for and abided by seven U.N. Security Council resolutions that encompassed targeted economic sanctions, limitations on Iran’s ballistic missile development, and embargos on Iranian arms imports and exports. Beijing also helped to negotiate, voted for, and supported the 2015 nuclear deal that committed Iran never to seek nuclear weapons, obliged it to roll back and accept long-term restrictions on its nuclear program, and authorized an intrusive and indefinite verifications regime. Even after Trump unilaterally withdrew from that deal in 2018, China surprised many spectators and broadly respected U.S. “secondary” sanctions, reducing its purchases of Iranian oil to fewer than 200,000 barrels per day and cutting trade by more than 30 percent. So long as a comprehensive U.S.-Chinese trade deal — covering more than half a trillion dollars of bilateral commerce — was in play, Beijing was not going to risk undercutting it by defying U.S. sanctions and buying oil from Iran, especially with supply plentiful and prices historically low.
That arrangement — Iran constrained by the nuclear deal and under heavy economic pressure, with China’s acquiescence — may now be coming to an end. The prospects for a comprehensive U.S.-Chinese trade deal that were holding China back on Iran have nearly disappeared, and even Trump now admits he “doesn’t think about it” anymore. Instead, U.S.-Chinese relations are in free fall, with boom on the horizon. In the past three weeks alone, the United States has imposed sanctions on Chinese officials over Beijing’s repression of Muslim Uighurs in Xinjiang, begun to remove aspects of its special handling of Hong Kong in response to the new Chinese sanctuary law there, and directly challenged China’s maritime claims in the South China Sea. After unproductively courting and praising Xi for nearly three years, Trump now blames China for tens of thousands of COVID-19-related U.S. deaths — on July 14 he claimed the “ink wasn’t even dry” on the trade deal and “they hit us with the plague” — and is putting alleged “toughness” on China at the center of his re-election operation. As Beijing considers potential “counter-measures,” the strategic partnership with Iran, in some form, is likely to be high on its menu of options. A government spokesman’s understated confirmation that Beijing and Tehran “have been in communication on the development of bilateral relations” was clearly a shot across the bow to the United States.
China and Iran are both hostile powers that threaten their neighbors and mistreat their people, but if they go beyond their historic ties to develop a strategic partnership, Trump will have only himself to blame. By tearing up a nuclear deal that was working and launching unilateral sanctions against Iran in pursuit of wildly unrealistic goals, he should not be surprised if Tehran proves willing to sacrifice its independence and discount its oil to get an economic lifeline — and weapons – from Beijing. Iran is not eager to allow a foreign power like China to set up bases in Iran or take major stakes in key parts of the Iranian economy. That’s why the offered strategic partnership agreement has been criticized by strange bedfellows ranging from former president Mahmoud Ahmadinejad to the former shah’s son, Reza Pahlavi, who tweeted last week that it “plunders our natural resources and places foreign soldiers on our soil.” But when given no other option, the regime will do what it has to do to survive — including pursuing strategic alliances to balance the United States.
Similarly, by launching a unilateral trade war against China and then demonizing China to cover for his monumental failure to control the coronavirus, Trump should not be surprised if China responds by acting aggressively to undermine other important U.S. foreign policy goals. The art of diplomacy is to use all instruments of power — and the United States has many — to achieve ends commensurate with means. The Trump administration seems instead to have a knack for making far-reaching promises and demands and then lashing out and simply calling for “more pressure” when, unsurprisingly, its goals are not achieved.
Trump and his supporters will say they still have the tools available to deter China from associating with Iran, in the form, for example, of sanctions on Chinese firms that do business with or buy oil from Iran. But China can evade such measures by using or creating companies or subsidiaries that don’t do business in the United States anyway and so have nothing to lose from U.S. asset freezes, travel bans, or trade sanctions. China has been largely unwilling to do so while seeking to strike a trade deal with Trump, but with that now off the table the incentive for restraint will be reduced. And if Washington responds by sanctioning Chinese state entities, such as the Central Bank of China, it will have to be ready for China’s response, which could include retaliatory trade sanctions (of the sort already costing U.S. farmers billions of dollars), its own designations of U.S. officials or lawmakers, the refusal to buy growing amounts of U.S. debt (beyond the more than $1 trillion in Treasury bills it already holds), or other forms of retaliation, such as arms sales to Iran. Last month, when the United States claimed the right to extend a U.N. arms embargo on Iran, China rejected it out of hand and found support from all the other members of the Council thanks to U.S. unilateral withdrawal from the Iran nuclear deal.
If Trump is beaten in November, a U.S. administration led by former Vice President Joe Biden would have a chance to set the United States on a different course. As I wrote recently in War on the Rocks, an alternative approach toward China would consist of bolstering U.S. economic strength and unity at home; repairing ties with key allies around the world; re-establishing deterrence in East Asia; and re-opening a serious, clear-eyed dialogue with Beijing. On Iran, a Biden administration could, as Biden and his top advisers have said, return to the nuclear deal if Iran itself returned to full compliance, and then get started right away working with allies to contain Iran in the region and negotiate a follow-on arrangement to address unresolved issues including the duration of nuclear restrictions.
No single set of policies can fully resolve the many tough issues the United States faces with China and Iran, but these substitute approaches would have a far greater chance of containing both countries while avoiding trade wars, shooting wars, and nuclear proliferation in the coming years. The alternative is to continue along the path down which Trump has started, tracking unrealistic goals in both China and Iran based on the fantasy that U.S. pressure alone will force them to bow to whatsoever the United States demands. That seems to be a recipe not only for failing to achieve U.S. objectives in both China and Iran, but for driving them into each other’s arms, with no plan for what occurs next.