Thursday June 30, 2022

Geopolitical implications

July 19, 2020

The news of the Iran-China strategic partnership agreement and Tehran’s decision to drop India from the 628-kilometer Chabahar-Zahedan rail project has kicked up a geopolitical storm.

Despite their near-simultaneous coincidence, these two developments are unrelated. However, in the context of the US-China new cold war and the India-China border dispute in the Himalayan region, they provide valuable insights into new geopolitical realignments in Asia with far-reaching implications for the region and beyond. US President Donald Trump’s maximum pressure campaign and crippling economic sanctions have pushed Iran into China’s arms.

The negotiations on the Iran-China deal worth $400 billion kicked off during President Xi Jinping’s 2016 visit to Tehran. Not formalized yet, the preliminary details of the agreement indicate that China has pledged $250 billion in Iran’s energy sector and another $150 billion in infrastructural development which includes road, rail and port construction, among others. This is part of President Xi’s ambitious Belt and Road Initiative (BRI). In return, Beijing would get subsidised oil from Tehran for the next twenty-five years.

Concurrently, Iran inaugurated the tracklaying process on the Chabahar-Zahedan railway project on July 7, which will be extended to Zaranj in Afghanistan, without India’s involvement citing funding delays. Tehran hopes to complete the project by March 2022. This is a major setback to the Indian plan of creating an alternative trade route to Afghanistan and Central Asia to bypass Pakistan and offset the Chinese-operated Gwadar port.

India and Russia took Iran’s presence in their joint North-South Transport Corridor (NSTC) for granted. The NSTC was supposed to advance the goal of Eurasian connectivity in which Iran had a key transit role. Despite overhyping the NSTC, India’s main objective was to keep Iran away from the BRI and Tehran-Islamabad ties on the slow boil. On its part, Moscow’s approach to the NSTC was conditional to New Delhi’s reciprocity and tangible investment.

Iran sensed Indian lip service to the rail project last year when New Delhi discontinued the oil purchase on the US pressure and further strengthened its military-strategic ties with its arch-foe, Israel. Furthermore, Tel Aviv’s repeated attempts to coax New Delhi to participate in the purported Trans Arabian Corridor with itself and other Middle Eastern rival states of Iran prompted the course-correction in Tehran. Iran’s deafening silence during the China-India border dispute is indicative of Tehran’s drift away from New Delhi. In any case, in light of the above developments, the NSTC is practically shelved now.

A part of the China-Iran strategic agreement involves developing several ports, including Jask-e-Bandar situated east of the Strait of Hormuz. This is significant since, for the first time in the world’s strategic history, Beijing would have leverage over one of the seven key choke points in the world. This can potentially undermine US naval dominance in the Middle East which is continuously shifting its marine assets to the Pacific. A foothold in Jask would not only allow China to monitor the US Navy’s Fifth Fleet headquartered in Bahrain but together with a presence in Gwadar and Djibouti ports, it would augment Chinese presence in the Indian Ocean Region.

Furthermore, Iranian President Hassan Rouhani’s plan to operationalise its oil installation along the Gulf of Oman by 2021 includes expanding its existing south-north gas pipelines with a dedicated oil line. The 1,000-kilometer-long oil line will run along Iran’s southern coast from Busher to Jask. If materialised, this would allow Iran to increase its energy production while freeing its hands to close the Strait of Hormuz without losing its ability to export oil and corresponding profits. Iran’s potential capability to disrupt the waterway, the transit route of the world’s 20 percent oil supplies, is a real deterrent tool in the Middle East against its rivals.

The Iran-China comprehensive agreement is equally crucial for Beijing in the context of the expected US withdrawal from Afghanistan. After 9/11, Indian political and economic influence grew in Afghanistan under the US security umbrella. Since the February deal between the US and the Taliban in Doha, Indian influence has been shrinking in Afghanistan. With the US exit from Afghanistan, Indian influence will minimise further.

Despite Washington’s prodding, Delhi has been ambivalent about opening contacts with the Taliban. Quite to the contrary, China has simultaneously engaged with Kabul and the Taliban, predisposing it ahead of the US withdrawal not only to secure its economic investments and interests in Afghanistan but undercut those of India. This also gives China an edge to potentially connect post-US Afghanistan in the BRI framework.

Iran’s inclusion in the BRI framework is good news for Pakistan at many levels. First, China’s involvement in Iran would further open up the strategic space for Pakistan in the region while potentially weakening or eliminating the political and security challenges. Second, the China factor would also be helpful in improving Iran-Pakistan relations, assist in pacifying the insurgency in Balochistan which, by extension, will mitigate the security threats to CPEC. Third, due to Chinese presence, the Chabahar and Gwadar ports would be complementing instead of competing with each other. Interestingly, despite Indian varying narratives, Iran has always referred to Gwadar and Chabahar as “sister ports.” Finally, Indian ouster from Iran also means the transit trade from Afghanistan and Central Asia would continue through Pakistani ports.

Pakistan will have to overcome its internal governance and security challenges to optimally benefit from what is appearing to be a favourable geopolitical environment since 9/11.

The writer is a research fellow at the S Rajaratnam School of International Studies, Singapore.