Posts Tagged ‘iran’

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)

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A new post for a new outlet – this time for the British political magazine Spectator’s website drawing together impressions on some recent travel through the heart of Eurasia. Rather than the title suggests, it is about more than just Russia. Look forward to hearing feedback and to be writing more on these themes. This aside, spoke to the Financial Times about the China-US clash and the growing pressure on Huawei which was subsequently picked up by Silicon.

How the West failed to bring Russia into line

28 November 2018 | 5:15 PM

Moscow does not feel like a city under siege. Cracking jokes about Novichok, Muscovites are sanguine about the conflict they are currently in the midst of with the west. Rather, a sense of hardening has settled in, with most presuming the current deep freeze with the UK and west is permanent and adjusting their realities accordingly. There is little evidence that our action is having the desired effect; instead a new geopolitical alignment is settling in – something that is only confirmed by further visits to other Eurasian capitals and conversations with officials and experts from other powers like China or Iran. The longer it grows, the deeper and more permanent it becomes. Rather than a new Cold War, we are entering into a moment of clearer multipolar hostility.

Having recently returned from a two week trip which included stops in Moscow and Astana, Kazakhstan, one thing is certain: winter is bitterly cold in the heart of Eurasia. But while a simple narrative would translate this weather as chill wind welcoming in the new Cold War, this misses the broader and more nuanced picture which is visible from both of these capitals. These reflect a shift which is taking place at the heart of the Eurasian continent and with which we need to rapidly engage or miss out on one of the major geopolitical changes of our times.

The narrative starts in Moscow where there is little evidence of relenting in the face of western pressure. Russian officials and experts continue to advance lines which show little admission of defeat or culpability in recent events in Salisbury or the Hague. The closest they will get to admission is to say that such intelligence operations are more properly handled behind closed doors. More often than not, blame is apportioned to UK officials who are accused of stirring up trouble in an attempt to distract from Brexit. 

Such cynical conspiracy theories are par the course in Russia. But what is interesting is that they are accompanied by a strong sense of confidence. Economic indicators are not wonderful (but when have they been in Russia? And at the moment they are to some degree buoyed by rising energy prices), but there is little evidence of this having major effect on the public. On the one hand this is evidence of our consistent inability to comprehend Russian willingness to endure hardship. But it is also the reality of a sanctions regime that is not delivering what we might be hoping. The Russian agricultural industry has undergone a sweeping revival in response to the sanctions regime, while Russian defence contractors are doing a Machiavellian job of selling the same military hardware to both sides of a number of conflicts around the world. And Moscow’s rich natural resource wealth continues to attract not only booming Asian markets, but our own western firms that are locked into long-term projects on the ground.

But the confidence this has engendered goes deeper than this. Moscow now sees itself as an integral player in numerous conflicts around the world. In part this is self-generated relevance through insertion into existing conflicts to give the leaders more cards to play. But it is also seen grudgingly in the Eurasian heartland as the constant expression of Moscow’s behaviour. Here Russia is seen as frustrating, but a consistently significant player than cannot be ignored. Iranian experts will point out Moscow’s ability to talk to everyone around the table, while Chinese experts will spend the time to pay respect to a power that, when asked privately, they describe as their inferior in many different ways. 

Caught in between, Central Asian powers can increasingly see that their geopolitical narrative is shifting from Moscow to Beijing, but they nonetheless continue to speak Russian as their lingua franca and acknowledge the importance of their relationships with the Kremlin. Shortly before my stop in Astana, the capital hosted a meeting of the Collective Security Treaty Organization (CSTO), a Russian-driven institutional response to Nato which continues to be one of the most coherent non-Nato Eurasian security institutions. People in Astana wondered about whether the exercise was a show of strength for the audience in Moscow, a display to pushback on encroaching Chinese influence or more simply a way of showing non-CSTO member Uzbekistan of the value of joining. There was very little evidence of any of the messaging being targeted at the West; they have started to stop caring about us.

More significant than Russian influence, however, is China’s growing footprint in what Victorian geographer Halford Mackinder described as the ‘geopolitical pivot’ of Eurasia. The story in itself is not new – we have been hearing about Belt and Roads through the Eurasian heartland for some time – but this has now been accentuated by a sharpening trade war between Washington and Beijing.

In London and Washington, the interpretation of this clash is of an attempt by the new US administration to better respond to China’s vertiginous rise. Sat in the Eurasian heartland the view is very different. As president Nazarbayev of Kazakhstan put it in Astana, as the ‘counter-globalisation movement’ was building, China proffered its Belt and Road Initiative, proposing an opportunity built on connectivity. China is funding opportunities in his country and his neighbours, and they see the potential that this offers them. We may see debt traps and corruption, but they see the potential opportunity and like the connectivity narrative. The West in contrast is using economic relationships as weapons; it seeks to impose sanctions to coerce behavioural change in Eurasian powers like Russia and Iran.

The problem is that these weapons are becoming less effective: new industries emerge within countries to fulfil needs that can no longer be met by imports, for example, while parallel financial systems also quickly emerge. In Tehran, people now talk of using Renminbi to process payments; in Russia people are increasingly using Chinese payment systems, and Beijing continues to establish independent systems that are able to circumvent sanctions while continuing their economic relationship with the United States and the west. This, of course, is very much a ‘having cake and eating it’ approach. And even in pro-American European capitals, leaders talk of trying to find ways of circumventing sanctions with Iran. The system is clearly not working but is fostering a permanent change at the heart of the Eurasian continent.

It is not a done deal. We still hold a great many cards. Many prominent figures still seek to send their children to our colleges and schools. They all love to visit our historical capitals and enjoy the open and comfortable lifestyle we take for granted. As one oligarch put it to the Financial Times, ‘a new world order is obviously better than the current one. But no one here is a big fan of the Chinese life.’ People are waiting for the west to wake up, but the longer we take, the more permanent the shift will be. Mackinder was right in capturing the importance of the Eurasian heartland for global power – currently it seems it is leaders in Moscow and Beijing who are paying attention to his lessons.

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.

My latest in a series from the Expo for the Interpreter, this time looking at the Iranian pavilion. There was actually a lot more to tell about the pavilion which I didn’t have space to include – it is a very crowded (with stuff) and colorful place and is amongst the better ones I have seen from the perspective of introducing people to the nation and showing off the country. More in this series is forthcoming, and I will likely be making trips back to the Expo, so let me know through the new contact page if there are any you are particularly interested in.

Around the Shanghai Expo: Iran pavilion

by Raffaello Pantucci – 6 July 2010 9:37AM

Raffaello Pantucci is a Visiting Scholar at the Shanghai Academy of Social Sciences, where he is working on an EU-funded project on EU-China relations.

Unlike its baffling neighboring pavilion (North Korea), the Iranian pavilion at the Shanghai World Expo is actually quite effective in providing a potted introduction to the nation.

Often, when talking to Chinese waiting to go to pavilions, they have no clear idea of which nation they are going to see or where it is, geographically. But outside the Iranian pavilion, the first thing to welcome the visitor is a map of Eurasia showing both where Iran lies in respect to China, and highlighting the various Silk Roads that linked the two in ages gone past.

Once inside, the visitor is greeted by a smiling picture of President Ahmadinejad with this rather cryptic (but no doubt well-meaning) message:

Empathy, justice and compassion are the main features of “Better city,” where a “Better life” is meant not just through “being with each other” but through “being for each other.” Such a view results into pure life, real prosperity, and human excellence in an “ideal city” filled with love, devotion and understanding and builds the human security and dignity based on faith, knowledge and wisdom. The human outlook in such a city is “being divine.”

A smiling and waving picture of Ayatollah Khamenei and a rather more grim Ayatollah Khomeini surround the entrance to the exclusive ‘guangxi’ room sponsored by the Iran-China Chamber of Commerce and Industries.

Oddly, there were not that many Persians wandering around.

The day I was there, the stalls were manned by Chinese – both the ones selling objects and the ones promoting the nation. The girl running the stand promoting inward investment in Iran was a Physics student at a local university who, while battling with a costume which looked out straight out of Aladdin, told me that most of the people who had expressed an interest in investing were Southeast Asians.

The heart of the space is a giant fountain, in the middle of which is a raised platform with a couple of seats and a standing microphone on it. I did not stick around long enough to see a show, but I understood that musicians occasionally perform.

Within the body of the room are a series of models which show off a variety of Iranian hydrocarbon fields and related extraction machinery. Most popular was the selection of Iranian home-grown machinery. None of it seemed nuclear (though mine is an untrained eye); instead there was medical equipment, an inkless finger print machine and, most popular of all, an electronic harp which had lasers instead of strings.

The Chinese visitors were particularly entranced by this and more generally seemed quite entertained by the colorful atmosphere of the place. Unlike its neighbor to the West (DPRK), this pavilion likely provided a pretty good introduction to the nation.