The Iranian government believes it has found a way to make US sanctions against its country go nowhere. Tehran is planning a landmark agreement with China that will bring $ 400 billion of Chinese investment to the Islamic Republic over the next 25 years.

In return, Iran is to supply the People’s Republic, the world’s largest oil importer, with crude oil at particularly affordable prices. The deal would be a major setback for US efforts to economically bring Iran to its knees. Nevertheless, the contract is controversial in Iran. Opponents accuse the government of selling out national interests.

China has been expanding its role in the Middle East for some time. Beijing is concerned on the one hand with securing its own oil supply, and on the other with political and economic influence in a part of the world from which the traditional leading power of the United States is increasingly withdrawing.

As part of the major Chinese project on the “New Silk Road”, new markets are to be opened up in the region. In 2018 alone, China pledged $ 20 billion in loans to Middle East countries.

Five of the ten most successful technology companies in the Middle East are Chinese companies, the US think tank Middle East Institute recently reported.

Almost 100 joint projects are planned

The draft for the Iranian-Chinese basic agreement, however, overshadows all of China’s previous steps in the Middle East. According to Iranian Foreign Minister Javad Sarif, the idea for the contract came four years ago when Chinese President Xi Jinping visited Tehran.

Iran is rich in oil, but the source of income is drying up because of the Santkions.Photo: Fatemeh Bahrami / Anadolu Agency / dpa

According to media reports, the contract is now almost finished. Almost 100 joint projects are planned. This includes infrastructure projects such as airports, express train connections and subways as well as the establishment of a 5G network and the establishment of free trade zones, the “New York Times” recently reported.

These investments could guarantee economic development for Iran over the next two and a half decades.

China mainly needs oil from the Middle East to meet its huge needs. With an import of around ten million barrels of oil (159 liters each) per day, China imports more crude oil than any other country in the world.

Lots of oil, little export

The Islamic Republic has the fourth largest oil reserves worldwide, but is currently unable to sell much of it due to American sanctions. Before the US punitive measures were reintroduced two years ago, Iran exported around two million barrels of oil a day – today it is a maximum of 200,000.

However, China is currently adhering to US sanctions against Iran. It is unclear whether the agreement would change Beijing’s stance. China is striving not only for good relations with Iran, but also with other countries in the region. Some of them, like Saudi Arabia, are opponents of Iran.

Nevertheless: China could be the savior for Iran’s leadership in need. Washington’s sanctions and the corona pandemic have dealt yet another blow to the economy already struck by corruption and mismanagement. Hopes in Tehran that Europe could defy the US sanctions have been dashed.

Protests by the population and a series of alleged acts of sabotage against institutions in the Iranian nuclear industry, as well as military facilities and industrial plants, have also shaken the regime.

That is why the Iranian government is promoting the contract with China. Foreign Minister Sarif recently stressed in Parliament’s Foreign Affairs Committee in Tehran that the agreement was in the country’s interests.

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However, other politicians in Iran disagree. Former President Mahmoud Ahmadinejad, who is said to have ambitions to stand again in next year’s presidential election, called the treaty a secret deal to sell the state’s silverware behind the people’s backs.

Fathollah-Nejad, an expert at the University of Tübingen, said that many Iranians fear that the regime would stabilize with China’s help and would accept a sell-off of Iranian interests.

Criticism of the agreement also comes from the hardliners’ camp. “China is perceived as a not unproblematic actor.”