How China might undo Saudi plans for Iran?

How China might undo Saudi plans for Iran?

Salman Rafi Sheikh,
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The recent Saudi bid to increase its economic and political influence in South Asia (Pakistan and India) is, as I pointed out in my previous stories for SAM, largely informed not just by the imperative of a Saudi economic expansion across Asia and avoid economic doom, but also by the objective of snatching Iran’s share of oil market in this part of the world. This is partly one reason why the Saudis are keen to build oil refineries and petrochemical complexes in Pakistan, India and even China. With most of the oil in these refineries coming from Saudi Arabia, these establishments will mean a major blow to the flow of Iranian oil in countries like India and China; hence, Iran’s counter-diplomacy.

As such, just when Saudi Arabia’s MBS was going to visit Pakistan and then India and China, Iran’s Parliament speaker Ali Larijani and their foreign minister were in China where they discussed the future prospects of China-Iran relations. Importantly enough, Larijani stressed Iran’s willingness to become a full partner in China’s Belt & Road initiative (BRI).

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While for China, Iran’s participation in BRI is a welcome news; for Saudi Arabia, Iran’s participation in BRI will let Iran compete the Saudis in Asia on a much bigger scale than might be the case without Iran’s formal participation in BRI.

Iran, as it stands, is standing to become a key territorial link between China and Central Asia and Europe via Turkey, enabling China to construct a new geography of trade across Eurasia.

This explains the stress that both Chinese and Iranian officials laid on calling their relations “strategic” rather than just economic. The Chinese officials were quoted as saying, “I would like to take this opportunity to have this in-depth strategic communication with my old friend to deepen the strategic trust between our two countries and to ensure fresh progress of the bilateral comprehensive and strategic partnership.” Zarif, Iran’s foreign minister, was equally emphatic when he said “Our relationship with China is very valuable to us. We consider the comprehensive strategic partnership between Iran and China as one of our most important relations.”

What this strategic partnership between Iran and China means is that the Saudis might never be able to hijack Iranian markets; for, Iran geographically lies on China’s Silk Roads that emerge from Urumqi in western China and continues to Tehran, where it would eventually continue northwest through Turkey into Europe. This geographical reality cannot change and nor can the Silk route itself or the trade that this route is promising to bring.

Besides it, rail lines within Iran are connecting it with Central Asia like never before. For example the Chinese funded project of the electrification of the Tehran-Mashhad line will reduce commute time between two of Iran’s big cities from 12 hours to about 6 hours, linking Tehran with Iran’s second-largest city, Mashhad, in the east near its border with Turkmenistan and completing just under a third of the proposed BRI line required to link Tehran to western China.

The route that is being built via Iran is likely to become one of the biggest hubs of trade and economics in the region wherein the volume of bi-lateral trade only between China and Iran would be US$600 billion a year. Although this figure might change due to the newly imposed U.S. sanctions and China’s cautious approach whereby it doesn’t really want to provoke the U.S. into any more of ‘sanction mode’ vis-à-vis big Chinese companies, it still shows that Iran’s possibilities of trade and economics are widening far and wide.

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For Iran, therefore, the rail line connections it is developing are certainly going to be the life-line of its economy after its oil exports. It explains why the Iranian leadership is paying so much attention to rail networks those that connect it to China’s BRI.

Only this week, Iran’s President Hassan Rouhani visited Iran’s bucolic Gilan Province, strolling in a forest and pushing economic development that will link Iran’s strategic northern province with railways and economic corridors to Azerbaijan and via Kazakhstan to China.

This again is a part of Iranian plan to integrate itself deeply with the emerging geographies of trade and commerce in the region in a way as to equip itself with the right economic tools to cope with U.S. sanctions and deal with prospective increasing Saudi economic presence in the region, eyeing Iranian oil markets.

As such, while China would remain open to economic ties with the Saudis, there is little gainsaying that the Saudi hopes of gaining a stronghold and undo its bi-lateral ties with Iran are too far-fetched to materialise in this scenario of ever deepening intra and inter-state and regional territorial connectivity.

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