Posts Tagged ‘China-iran’

And finally in this catch-up blast, a longer op-ed for the South China Morning Post looking at some of the recent machinations between China and Iran. Had a few comments back that this was an obvious point to make, but it feels like it needs to be all considered against the broader backdrop of China’s growing influence and power in its own backyard. More on this topic to come.

All of these posts aside, spoke to the Sunday Times about Chinese investment and influence in Ireland, spoke to CNBC about China-Russia (which was translated into Hungarian), The National about the far right in Germany, to Samaa TV about ISIS in Khorasan, to The National again about bounties being put on ISIS leaders heads, an old interview was used again in this fantastic Portuguese piece in Sabato by Nuno Tiago Pinto about important Portuguese foreign fighter Nero Saraiva who lived for a while in the UK, an earlier comment to the Telegraph about Hamza bin Laden’s death was picked up again, and another earlier piece in the Sunday Times was picked up by VoA.

Why Iran has got China wrong: Beijing will follow its own playbook in countering the US-led West

  • While regional players like Iran seek to bring China into the conversation as an ally, Beijing continues to rely on the rhetoric of non-interference
  • China is focused single-mindedly on its own interests and set to get stronger as a result

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The first-ever Chinese goods train to Iran arrives in Tehran on February 15, 2016, after a 14-day journey hailed as a revival of the Silk Raod under China’s Belt and Road Initiative. China is emerging as the central power in its immediate and expanding neighbourhood, while the West tears at itself and old alliances. Photo: EPA

Buried among last week’s news of confrontation with Iran was a story that China was on the cusp of investing US$400 billion into the country’s hydrocarbon industry. This was followed late in the week by the news that Iran was going to be joining China and Russia in new naval exercises, an announcement that came a week after the Iranian Armed Forces Chief of Staff, Major General Mohammad Baqeri, visited a naval base in Shanghai.

The clear suggestion was that Iran was showing it had a strong ally in Beijing. The axis of convenience against the West was bringing Tehran firmly into its bosom.

Yet, in the face of all of this noise from Iran, Beijing was largely silent. A foreign ministry spokesman denied any knowledge when confronted with a question about the investment during a regular press briefing. The Chinese commentariat seemed mostly focused on downplaying Iran’s role in the strike on the Abqaiq and Khurais facilities in Saudi Arabia, and President Xi Jinping had a phone call with King Salman.

Reported in similar terms by both the Saudi and Chinese state media (the Belt and Road was only mentioned in Xinhua’s read-out and the Saudi statement was far more aggressive), the phone call was a decorative effort highlighting the importance of the bilateral relationship and China’s desire for events not to escalate.

And, while Beijing seemed eager to not engage, Iranian sources appeared to deny the existence of the supersized investment. On Friday, an interview emerged with the head of money and capital markets at the Tehran Chamber of Commerce stating that he had not heard anything about it.

Furthermore, Iran’s oil minister Bijan Namdar Zanganeh denied the rumours, bluntly saying, “I have not heard such a thing.” In fact, the discussion in Tehran at the moment around China is about how long the Bank of Kunlun will be able to continue to be a lifeline of sorts for the country.

Owned mostly by the China National Petroleum Corporation, the bank is a Xinjiang institution that has long served as a conduit for financial relations between China and Iran. As the rest of the world severed its links to Tehran, Kunlun has kept a connection going. The bank has faced some pressure, falling into the US Treasury Department’s sights, leading the bank to try to downplay its relations for fear of damaging repercussions for parent institution CNPC.

The result has been a paring back of financial relations between the bank and Iran, with the maintenance of only a few lines of credit focused specifically on non-sanctioned goods.

Rather, the Iranian announcements have the ring of similarity to previous announcements to have emerged from Moscow, as its relations with the West went downhill.

Back in 2014, as the West’s condemnation of Russia’s redrawing of Ukraine’s borders reached fever pitch, President Vladimir Putin headed to Shanghai where he oversaw the signing alongside President Xi of a US$400 billion energy deal between China and Russia. The deal was one which had been announced and signed a few times before, but it landed in Shanghai at a convenient moment for the Russian leader.

Again, this was not a moment without some irritation for Beijing. While China never condemned Russia’s actions in Ukraine, it was not best pleased, keeping its comments sparse. China is not keen on major disruptions to international affairs, like the attack in Saudi Arabia, especially ones which might have repercussions for Beijing.

The precedent that Russia set in redrawing borders in Ukraine was not one that China wanted widely adopted –
fearing the loss of its own restive regions. And disruptions to international energy supplies result in higher prices, something China could do without.

The question, then, is whether China is hostage to disruptive powers like Iran and Russia, or whether Beijing is, in fact, gaining the upper hand.

To better understand this, it is important to note another event over the weekend that ties the three countries together – the Taliban negotiating team’s visit to Beijing after stops in Moscow and Tehran.

Organised after the dramatic failure of the American-led talks, the whistle-stop regional tour appears to be an effort by the Taliban to understand better where things now stand. With Afghan elections around the corner and the conflict showing little evidence of concluding, all three surrounding powers have begun to worry about how they will manage the long-term instability with which Afghanistan seems cursed.

From China’s perspective, however, this is all reflective of the fact that everyone appears to want to show that Beijing is on their side. In each of these situations, the regional players have all sought to bring China into the conversation and show that Beijing is backing them.

China is judicious in avoiding apportioning blame, and at best uses the opportunity to make digs at the United States. The net result is that China emerges as the central power in its immediate and expanding neighbourhood, while the West tears at itself and old alliances.

For Beijing, there is some danger in assuming this position. First, it reinforces the image of China as the central power in a new axis of convenience against the US-led West. And second, it places China in a position of potential responsibility between some of the world’s most intractable conflicts.

Yet, it is equally possible that Beijing has factored both of these realities in and is actually happy to bolster alliances against the US.

In terms of China’s unavoidable responsibilities, this is something that has been on the cards for some time, and yet Beijing has yet to really demonstrate a requirement to have to step in.

Instead, China continues to call on the rhetoric of non-interference to simply let things play themselves out, focused single-mindedly on its own interests. Rather than taking on the activist West at its own game, China appears to be crafting its own playbook.

And while Tehran may think that it is hustling Beijing into showing its hand in its favour, the reality is that it is China that is most likely to emerge strengthened from this geopolitical dance.

Raffaello Pantucci is director of international security studies at the Royal United Services Institute in London

Belatedly posting a piece for the Financial Times excellent Beyond BRICS blog which focuses on the reality of the Chinese relationship with Iran and Russia. More complicated than is often assumed. A topic that I would like to focus on more in the future, both in terms of the reality and complexity of China’s relations with Iran and Russia, as well as broader Eurasian geopolitics. On that particular note, please check back into the China in Central Asia website which  I am hoping to awaken soon.

Separately, spoke to the Guardian about the UK’s disengagement and desistance programme, to the BBC about the extreme right wing, to the LA Times about a Uighur fighting extradition from Turkey, to De Trouw about the role of mainstream political discourse in dragging the extreme right forwards, to AFP about ISIS (which was translated into Spanish), to the Independent about a plot that was uncovered to target Europe by some Sunday Times reporters, and finally a Press Association interview was used in the MetroDaily Star, and Al Banaba. Beyond this, my recent Observer piece was picked up and translated in digest into Spanish by El Mundo.

Russia and Iran cannot always count on China

In response to US sanctions, Beijing’s own interests come first

Presidents Vladimir Putin and Xi Jinping at a friendly ice hockey match between Russian and Chinese youth teams in Taijin last year © Getty

Beijing is seen by some as the financial backstop that countries can call on to bail them out when they fall foul of US displeasure and face sanctions. Yet a close examination of the cases of Russia and Iran instead shows that China is reactive to US sanctions policy, to the detriment of its supposed strategic allies.

This reflects the attractiveness of the US market, the reach of extraterritorial sanctions and the independence of some Chinese institutions from Beijing’s geopolitical interests.

It also highlights the existence of fissures between powers that are often painted as members of an anti-western alliance. They may talk with the rhetoric of allies, but their relationships are more complicated. Understanding how this will play out will be key for policymakers seeking to navigate today’s dangerous waters.

At a geostrategic level, China, Russia and Iran appear to be in lockstep. Yet notwithstanding their proximity, expressed in public shows of affection between their leaders (in particular between presidents Xi Jinping and Vladimir Putin), the reality is that there are deep tensions in Beijing’s bilateral relationships with Moscow and Tehran. Nowhere are these expressed more substantially than in the economic sphere, where Russia and Iran have consistently been disappointed by the willingness of Chinese entities and institutions to invest in their countries.

Most recently, China has been hesitant in its support of Russia’s de-dollarisation policy, through a cross-border system of bilateral settlements, for fear of angering the US. The two powers failed to conclude an agreement as planned by the end of last year, with one Russian source close to the talks telling Kommersant: “From Washington’s standpoint, China’s agreement with Russia would look like it was helping Moscow evade sanctions.”

This came after reports that Moscow was ready to bet heavily on China, diversifying its foreign reserves so that 15 per cent ($67bn) were held in renminbi, leaving the Russian central bank with a quarter of the world’s renminbi holdings. This was after it had sold about $100bn of its US dollar reserves while purchasing $44bn worth of renminbi in the second quarter of 2018.

The two countries already settle 14 per cent of bilateral payments in renminbi and 7 to 8 per cent in roubles, but were seeking to increase this, and to enshrine cross-border use of the Chinese Union Pay and Russian Mir credit card systems in each other’s countries.

A similar story can be seen in Tehran, where eagerness by authorities to use Beijing to circumvent a newly hardening US sanctions policy has been met with hesitation by Chinese institutions.

This was most publicly expressed in December, when it emerged that Kunlun Bank, which is majority owned by China National Petroleum Corp, was only going to clear Iranian payments, in full compliance with US sanctions policy, until the end of April, when China’s “significant reduction exemption” for the import of Iranian oil expires. Cutting this major lifeline for the Iranian economy was believed to be the product of CNPC’s concerns about the impact of its Iranian activities on its interests in the US.

Tehran has also seen a drop in imports from China, with an analysis by Bourse & Bazaar suggesting a 70 per cent drop from October to December last year after two months of tightened US sanctions. Like Moscow, Tehran has sought to increase the volume of transactions in local currencies but its central bank does not publish the composition of its foreign reserves, so it is not clear whether this has changed.

Frustration can also be seen in the supposed benefits that Russia and Iran have sought through investments under the Belt and Road Initiative, Beijing’s global infrastructure programme.

When Total, the French oil company, withdrew from Iran’s South Pars gasfield in response to President Donald Trump’s overturning of the agreement to lift sanctions on Iran, CNPC initially stepped forward. But it has not developed the field it at the pace Tehran had hoped, and reports this year suggested CNPC may have suspended its activities. The Financial Times has reported that Iran’s Revolutionary Guards are ready to take its place.

Similarly, Ali Akbar Salehi, head of Iran’s Atomic Energy Organization, expressed concern that Chinese developers were taking their time in redesigning the Arak heavy water reactor according to the terms laid out in the 2015 nuclear deal. He attributed this to fears of US sanctions.

While it is hard to draw a straight line between US sanctions and Chinese reticence, it is also clear that Moscow does not always find Beijing a useful infrastructure partner. In reported comments in December about the Moscow-Kazan High Speed Rail (HSR) train line, Anton Siluanov, deputy prime minister and finance minister, said he did not see the line’s economic benefits and questioned its viability. The project was proposed and signed in 2015 when China was on a global HSR push, and questions always hung over its practicability (and indeed of other HSR projects around the world). Its seeming jettisoning reflects the reality that not all Chinese infrastructure projects work out, even in countries that are supposedly strategic allies of Beijing.

There are a number of explanations for these trends. First; Chinese banks, companies and other institutions may sometimes act in ways that contradict Beijing’s view, driven by specific concerns of their own. The assumption that all of China works in lockstep to advance Beijing’s geopolitical world view does not always match up with facts on the ground. It may be hard to divine whether a Chinese institution is responding to sanctions pressure, fear of losing access to the US market or some central Beijing command, but their behaviour does not always match policy declarations.

Second, Chinese institutions drive hard bargains. In the context of Iran and Russia, China is the funder and their local counterparts the supplicants. This puts Chinese institutions in the driving seat — something they are aware of and will exploit. Commenting on Beijing’s reticence to sign a bilateral memorandum with Moscow, one source told Kommersant that in addition to concerns about the US, “China needs time to tweak the final document more to its benefit”.

Third, countries like Iran and Russia are fearful of becoming overly dependent on Beijing. They realise that opening too much to China risks flooding local markets and potentially curtailing their own development.

In Tehran, the government has gone further, with reports of authorities advising against buying Chinese goods because it amounted to “exporting jobs”.

It is clear that China’s alliance with Russia and Iran is more complicated than sometimes realised. It is also clear that US sanctions continue to have a deterrent effect on Chinese institutions.

Yet it is hard to project such complications into the future. While Beijing may have tensions with Moscow and Tehran, the three continue to be willing to support each other at a geopolitical level. If the aggression with which US economic sanctions are employed continues, alternative global economic structures will develop.

Their beginnings are already visible. Moscow is taking the firmest steps in this direction through its de-dollarisation policy. Tehran may find itself obliged to follow if it is unable to find a way out of its current impasse.

While it is clear that US sanctions may have an effect on their economies, it is not clear that they are generating the change in behaviour that Washington desires. In this context, Beijing will sense an opportunity.

This article has been modified since publication to correct the statement on Iran’s imports from China, previously stated as exports to China.

Raffaello Pantucci is director of International Security Studies at the Royal United Services Institute (Rusi)

And now another (very short piece) for the South China Morning Post, this time looking at the implications to Russia of the opening up of Iran and what this means for the Silk Road Economic Belt vision.

China’s new silk road is designed to cut Russia out of Eurasian trade

Raffaello Pantucci says the ‘One Belt, One Road’ trade initiative is likely to sideline Moscow and give Beijing the upper hand in their awkward relationship

PUBLISHED : Tuesday, 16 February, 2016, 2:00pm
UPDATED : Tuesday, 16 February, 2016, 2:00pm

China Tehran train

The first Chinese cargo train, following Iran-China efforts to revive the Silk Road, arrives in Tehran on February 15. The 32-container train arrived after a 14-day journey from northwestern China. Photo: EPA

President Xi Jinping’s ( 習近平 ) visit to Tehran – the first by a foreign leader since the lifting of sanctions – highlights the potential centrality of Iran to China’s broader regional foreign policy. The opening up of Iran, a country in which China has long maintained substantial interests, means Xi’s “One Belt, One Road” vision can now go cleanly across Eurasia without ever going through Russia. Moscow can be cut out.

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Iranian President Hassan Rouhani (left) shakes hands with President Xi Jinping in Tehran in January. Photo: Reuters

Visiting Tashkent, one can see the ancient routes laid out by the Timurid empire that constituted the ancient silk road. Rather than track through Russia, most would go below the Caspian and Black seas to reach Turkey and Europe. An iron silk road has been established that will track the old silk routes

Soon after Xi visited Tehran, a train laden with goods left Yiwu, Zhejiang province (浙江), headed to Tehran following this route. On February 10, it crossed the border from Turkmenistan and arrived in Iran this week. The Ukrainian minister of infrastructure announced at the same time that, by the end of the month, a direct rail line would open between Ukraine and China, cutting across Georgia, Azerbaijan, the Caspian Sea and Kazakhstan. An iron silk road has been established that will track the old silk routes.

Train carriage Tehran China

The first Chinese cargo train arrives in Tehran after passing through Kazakhstan and Turkmenistan. Photo: EPA

Moscow has long been an awkward partner for Beijing and the question of how Russia fits into the belt and road vision was always unclear. Some incorrectly saw the Eurasian Economic Union as an effort by Moscow to push back on China’s dominance in Central Asia. This misinterprets both powers’ interests: Moscow is aiming to recreate a former space of control, while China is building trade corridors. For China, the existence of a common economic space with a single tariff barrier from its borders to the edges of Europe is a benefit to trade.

Putin and XJP Sochi

Russian President Vladimir Putin (right) and Xi Jinping meet in the Russian Black Sea resort of Sochi. Photo: AFP

The reality is that cutting a path across Russia is a long rail route that is only going to be attractive to high-value small objects which are still fairly limited in production volume in Xinjiang – and can now instead go along the route to Ukraine. Mass-produced, high-volume goods for which China is famous are much better placed going by sea to Europe. Unless, that is, the ultimate market is in the heart of the Eurasian continent. And this is where the route across Iran is interesting – connecting China’s markets directly to the bustling bazaars of the Middle East.

In paving an iron silk road, China is gradually reducing Moscow’s importance. This will further strengthen Beijing’s hand in their bilateral relationship and reduce Russia’s power on the international stage. Isolated by the West and increasingly sidelined by China, Moscow’s decline will only be highlighted by the opening of these new routes across Eurasia.

Raffaello Pantucci is director of international security studies at the Royal United Services Institute

A slight sideways step for me, though if you read it you will see there is some links to other stuff I have done, this is a paper commissioned by the Europe-China Research and Advice Network (ECRAN), an EU vehicle that funds research on China for European policymakers. I have written other papers for them in the past. This one was written late last year and focuses on China’s relations with the Middle East in the wake of the ‘Arab Spring’ and looks in particular at the cases of Libya, Syria, Egypt and Iran. The full paper can be found behind this link. I have pasted the introduction below.

Beyond this, I spoke to the Financial Times about jihadists in Syria and potential blowback in Europe, and to Bloomberg about Boko Haram.

Short Term Policy Brief 79

China and the Middle East

November 2013

Author: Raffaello Pantucci

Introduction

What are China’s key strategic interests in the Middle East and what is the status of its relations with key countries in the region?

During his opening speech at the first China-Arab Expo (an event that had been upgraded from the previous Ningxia International Investment and Trade Fair and the China-Arab States Economic and Trade Forum), Yu Zhengsheng, Standing Committee of the Politburo member and fourth most powerful man in China, highlighted trade and energy as the two main pillars of Chinese-Arab cooperation.Delivered in September 2013, this speech crystallized a policy which has been abundantly clear for some time with China and the Middle East, where the policy priority and focusis on securing energy and developing trade partnerships, while remaining as detached as possible from the intransigent regional politics.

As prominent Qinghua academic in international affairs Yan Xuetong has put it, ‘China can strengthen cooperation economically with countries in the Middle East, but politically, it had better stick with declaring its stand…the complexity of the Middle East politics is far beyond our comprehension.’ With ample domestic turmoil and local difficulties to manage, Chinese
leaders have little appetite to be dragged into a region that has challenged western policymakers’ capabilities for decades.

Nevertheless, events in the wake of the Arab Spring have challenged China in a number of different ways, forcing it to re-evaluate long-held positions and think more deeply about the implications of its growing international footprint. Questions around citizen security were highlighted in the wake of the rushed evacuation of some 35,860 nationals as Libya collapsed, while the decision to abstain from the vote to impose a no-fly zone meant that resolution 1973 was passed. This led to questions about this possibly being a signal that Beijing might be adapting its position on Responsibility to Protect– something it had previously treated as anathema to its sacred ‘non-interference’ principle in international affairs. Particularly raised during the Libya crisis, both issues have hung heavy both over China’s considerations of other aspects of the fall-out from the Arab Spring in the broader Middle East. It remains, however, unclear that they have signalled a dramatic shift, rather than a course adjustment that means such issues are now a higher priority for Beijing policymakers.

Adjacent to these considerations are other larger questions about China’s geopolitical position. For example, the hawkish line often advanced that the current conflict in Syria is part of a larger trajectory of regime change that flows from Damascus, through Tehran to Moscow and Beijing is one that resonates amongst a certain (predominantly nationalist and military) community. This perspective is one that is echoed in Moscow, and is often touted as a reason why the two vote in lock-step with regards to the events of the Arab Spring, Syria and Iran. Chinese foreign policy thinkers who adhere to this perspective often see the world through a binary US versus China lens. For them, the Middle East is an ideological battleground where the US is seeking to upturn the table in favor of a new chaotic order that it controls, and one that will ultimately undermine Chinese national interests. Found amongst academics at prominent think tanks like CASS, it is unclear the degree to which such perspectives dominate senior levels of Chinese foreign policy thinking.

At the same time, China continues to be concerned about the spread of jihadist ideas (with little clear understanding of what motivates them or nurtures their growth) and the possibility that these might filter back into the Xinjiang autonomous region of northwest China still dominated by the Muslim Uighur ethnic group. There have been reports that Chinese nationals – both Uighur and non-Uighur – have participated in the fighting in Syria, and China has grown concerned by the growing appearance of jihadist videos and materials during investigations into violence in Xinjiang from the unrest there in July 2009 until today. China has also increasingly featured as a potential target in a growing array of jihadist material. Most recently, al Shabaab’s al Kataib media published a video in which they discussed the Uighur’s plight, while in May 2013 (though likely produced substantially before his reported death in December 2012) al Qaeda ideologue Abu Zaid al-Kuwaiti released a video through the Turkestan Islamic Party’s media wing, Islam Awazi, in which he provided ‘advice for the Muslims of East Turkestan.’ For China, the potential danger of becoming too involved in Middle Eastern politics is that the eyes of violent Islamists who have thus far focused on the west, might eventually turn to China and portray it as a target– a situation Beijing has thus far managed to avoid thanks to careful diplomacy and the fact that Islamists remain focused on the west as the principle ‘far enemy’. However, Beijing’s concerns remain heightened in the wake of a number of incidents. For example, the suicide attack in Tiananmen Square Beijing in early November 2013 was linked to a Uighur Muslim protester, and was subsequently praised, but not claimed, in a video by TIP. That particular incident came in the wake of110 detentions in Xinjiang of people accused of ‘disseminating religious extremism and material. Highlighting the ongoing violence in the province, in December there was another incident at a police station in Bachu County outside Kashgar that led to 11 deaths (the same county saw 21 killed in another incident in April 2013). All of these examples help underline how nervous the central leadership in Beijing are about this issue.

But these worrying local concerns remain secondary to more large-scale energy concerns, something that reflects a long-standing pragmatism in Chinese foreign policy towards the Middle East. Back in 1994, leader Jiang Zemin highlighted that China should oppose ‘hegemony’ by helping dissident states in the Middle East like Iran, but at the same time should ensure that international stability remains sound in order to facilitate China’s ongoing growth and development. This approach is one that resonates today, where, for example, China is clearly supportive of Moscow’s approach towards Syria and Iran through
measures in the UNSC, but at the same time takes a secondary seat to Russia’s willingness to take a more prominent position in making its point.

For example, in the wake of the use of chemical weapons in Ghouta, east Damascus, Syria on August 21, 2013, the Russian government took the lead in countering the western push to define this as the red line that justified intervention against the Assad regime and instead worked to develop a way for Syria to give up its chemical weapons. Russia’s public interventions culminated in an opinion editorial in the New York Times on September 11, 2013 by President Vladimir Putin. In contrast, throughout this period China made regular statements through the Foreign Ministry, but avoided much further publicity. At the regular MFA briefings, Hong Lei offered support for the Russian efforts: ‘the Russian proposal offers an important opportunity to ease the current tension and properly address the international community’s concerns about Syria’s chemical weapons.’ They later offered Chinese experts to participate in the disarmament assurance group, but otherwise remained relatively low profile. China is publicly supportive of Russia’s positions on Syria, but is not as eager to attract the sort of confrontation that Russia seems to prefer. This Quietist approach to foreign policy is something that can be found across China’s foreign policy agenda.Ultimately, China does not seek to upset the international order that is allowing it to slowly grow into the world’s largest power.

This brief paper touches upon Syria, Egypt, Libya and Iran. This is not a comprehensive overview of China’s relations in the region, but highlights the priority ones as requested by ECRAN. Amongst the important relationships omitted, China continues to be willing to cultivate close relationships with both Israeli and Palestinian authorities, but beyond proposing general suggestions about peace processes, has not engaged in the minutiae of the conversation (nor is it likely to want to). On Iraq, China has profited quite effectively from the toppling of the old regime to get its firms in to develop Iraqi fields (something it has been able to do in part thanks to western firms’ concerns about going in to the country), while Saudi Arabia remains one of China’s biggest energy partners, notwithstanding the mute background of Saudi-style wahhabbist ideology slowly filtering in through Gulf money into Xinjiang. Thus far, Chinese officials have not chosen to acknowledge this linkage too publicly, although some academics discuss the growing spread of such ideas and suggest Saudi Arabia as one of the possible origins. None of these relationships currently seem in any sort of dramatic shift and therefore are placed to one side.