US withdrawal from JCPOA and impact on Iran
In the aftermath of the US withdrawal from the Joint Comprehensive Plan of Action JCPOA 2015/Iran nuclear deal – in 2018 — Iran’s proximity with Beijing and Moscow has grown significantly. One of the key cornerstones of the Tehran-Beijing relationship is the 25 year economic and strategic agreement signed in 2021 – referred to as “strategic cooperation pact”. Under this pact, China committed to investing $400 billion over 25 years in Iran’s oil and gas and infrastructure sector – in lieu of Iranian oil at discounted prices.
While the Biden Administration in its first few months sought to revive the Iran Nuclear deal, the vigorous opposition from not just Republicans, but some Democrats prevented the same. It would be pertinent to point out that Biden’s focus on reviving the Iran deal was cited as one of the key reasons for the downhill trajectory of US-Saudi relations until the Russia-Ukraine war – after which efforts were made by Washington to put the relationship back on track (US President, Joe Biden included Saudi Arabia in the itinerary of his Middle East visit in 2022). Iran’s enrichment of its nuclear program – to nearly weapons-grade levels — in violation of the terms and conditions of JCPOA 2015 and military support for Russia in the Russia-Ukraine war led to a further downhill trajectory. The US did turn a blind eye to oil imports from Iran in the aftermath of the Russia-Ukraine conflict — China has been buying large quantities of oil from Iran in recent years.
Iran-China-Russia Cooperation and De-Dollarization
Iran signing an agreement for the resumption of diplomatic relations –via an agreement brokered by Beijing – with Saudi Arabia, entering two China-dominated organizations – BRICS+ (January 2024) and SCO (July 2023) — as a member and one of the key proponents of de-dollarization, is another reiteration of it moving away from the western camp. While reiterating Iran’s support for the de-dollarization efforts of BRICS, Iranian President Ebrahim Raisi said: “The Islamic Republic of Iran very resolutely supports the successful endeavours of BRICS in line with de-dollarization from the trade and economic interactions between the members and also making use of local currencies.” In December 2023, Russia and Iran signed an agreement to trade in their local currencies instead of the US dollar.
Situation in the Middle East
As a result of the Middle East crisis which began in October 2023 and attacks on US military bases in Syria, Jordan and Iraq by Iranian proxies and attacks by Houthis on ships in the Red Sea, ties between the US and Iran have witnessed a further downward slope. Significantly, the US also asked China to step in and talk to Iran to stop the Houthis from attacking the Red Sea. While China is supposed to have spoken to Iran, it has only raised the issue of the safety of its own economic interests.
It would be important to point out that Former US President and likely Republican Presidential candidate in the 2024 presidential elections, Donald Trump blamed Biden’s relatively relaxed policy vis-à-vis Iran. Said Trump: “Joe Biden came in and gave Iran billions of dollars, which the Regime has used to spread bloodshed and carnage throughout the Middle East.”
Can Iran be totally dependent upon Russia and China?
A few points need to be borne in mind. First, Iran would be keeping a close watch on US-China engagement and the emphasis of both sides on keeping a manageable relationship. While speaking at the Munich Security Conference, US Vice President Kamala Harris said: “We have responsibly managed competition with China, standing up to Beijing when necessary and also working together when it serves our interest”.
Second, Russia also seems to be keen to reduce its strains with the West as was evident from Russian President, Vladimir Putin’s interview with Tucker Carlson. Putin referred to the expansion of North Atlantic Treaty Organisation (NATO) as being responsible for tensions between the West and Russia and also as one of the main causes of the Russia-Ukraine conflict. While a lot has been said about his personal rapport with former US President, Donald Trump, when asked who would be his preference for the next US President, he said Joe Biden saying that he was more predictable.
While Iran has moved closer to the Russia-China orbit, it realizes that it can not be excessively dependent upon either of the two countries. Excessive dependence upon any one country, or aligning with any camp, will not be viewed favourably in Iran.
Third, while China-Iran ties have grown, Beijing has been cautious regarding investments in Iran due to US sanctions (China’s investments in Saudi Arabia are far higher). Chinese investments in Iran are estimated at $185 million , ever since the signing of the 25 year accord between both countries. During Chinese President, Xi Jinping’s Tehran visit, in 2016, both countries had aimed to raise bilateral trade to $600 billion by 2026, while in 2023 it was actually less than $15 billion.
The above developments highlight the point, that while Iran has moved closer to the Russia-China orbit, it realizes that it can not be excessively dependent upon either of the two countries. Excessive dependence upon any one country, or aligning with any camp, will not be viewed favourably in Iran.
In conclusion, it remains to be seen how Iran deals with the geopolitical changes in the Middle East and beyond. While there are several challenges, there are numerous opportunities as well for Tehran in the changing world order. It is important for Tehran to navigate the current geopolitical maze by exhibiting flexibility, pragmatism and deftness.
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