China, With $400 Billion Iran Deal, Could Deepen Influence in Mideast

The countries signed a sweeping pact on Saturday that calls for heavy Chinese investments in Iran over 25 years in exchange for oil — a step that could ease Iran’s international isolation.
By Farnaz Fassihi and Steven Lee Myers
Published March 27, 2021
Updated March 29, 2021, 8:31 a.m. ET
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China agreed to invest $400 billion in Iran over 25 years in exchange for a steady supply of oil to fuel its growing economy under a sweeping economic and security agreement signed on Saturday.

The deal could deepen China’s influence in the Middle East and undercut American efforts to keep Iran isolated. But it was not immediately clear how much of the agreement can be implemented while the U.S. dispute with Iran over its nuclear program remains unresolved.

President Biden has offered to resume negotiations with Iran over the 2015 nuclear accord that his predecessor, President Donald J. Trump, abrogated three years after it was signed. American officials say both countries can take synchonized steps to bring Iran into compliance with the terms of the agreement while the United States gradually lifts sanctions.

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Iran has refused to do so, and China has backed it up, demanding that the United States act first to revive the deal it broke by lifting unilateral sanctions that have suffocated the Iranian economy. China was one of five world powers that, along with the U.S., signed the 2015 nuclear agreement with Iran.

ImageAt the Grand Bazaar in Tehran in October.
At the Grand Bazaar in Tehran in October.Credit…Arash Khamooshi for The New York Times
The foreign ministers of the two countries, Javad Zarif and Wang Yi, signed the agreement during a ceremony at the foreign ministry in Tehran on Saturday, according to Iran’s semiofficial Fars News Agency. That capped a two-day visit by Mr. Wang that reflected China’s growing ambition to play a larger role in a region that has been a strategic preoccupation of the United States for decades.

“China firmly supports Iran in safeguarding its state sovereignty and national dignity,” Mr. Wang said in his meeting with President Hassan Rouhani, the Chinese foreign ministry reported. The United States, Mr. Wang said, should immediately rescind its sanctions on Iran and “remove its long arm of jurisdictional measures that have been aimed at China, among others.”

Iran did not make the details of the agreement public before the signing, nor did the Chinese government give specifics. But experts said it was largely unchanged from an 18-page draft obtained last year by The New York Times.

That draft detailed $400 billion of Chinese investments to be made in dozens of fields, including banking, telecommunications, ports, railways, health care and information technology, over the next 25 years. In exchange, China would receive a regular — and, according to an Iranian official and an oil trader, heavily discounted — supply of Iranian oil.

The draft also called for deepening military cooperation, including joint training and exercises, joint research and weapons development and intelligence-sharing.

A tanker carrying crude oil imported from Iran at the Port of Zhoushan, China, in 2018.
A tanker carrying crude oil imported from Iran at the Port of Zhoushan, China, in 2018.Credit…Imaginechina, via Associated Press
Iranian officials touted the agreement with Beijing — first proposed by China’s leader, Xi Jinping, during a 2016 visit — as a breakthrough. But it has been met with criticism inside Iran that the government could be giving too much away to China.

Hesamoddin Ashena, a top adviser to President Rouhani, called the deal “an example of a successful diplomacy” on Twitter, saying it was a sign of Iran’s power “to participate in coalitions, not to remain in isolation.” He called it “an important decree for long-term cooperation after long negotiations and joint work.”

A spokesman for Iran’s foreign ministry, Saeed Khatibzadeh, called the document a “complete road map” of relations for the next quarter century.

Mr. Wang has already visited Iran’s archrival, Saudi Arabia, as well as Turkey, and is scheduled to go to the United Arab Emirates, Bahrain and Oman in the days ahead. He has said that the region is at a crossroads and offered China’s help in resolving persistent disputes, including over Iran’s nuclear program.

China is even ready to play host to direct talks between the Israelis and the Palestinians, hinting that American dominance in the region has hindered peace and development.

In Iran, opinions about China’s expanding influence have been mixed.

After Mr. Xi first proposed the strategic agreement during his visit in 2016, negotiations to complete it moved slowly, at first. Iran had just reached its deal with the United States and other nations to ease economic sanctions in exchange for severe restrictions on its nuclear research activities, and European companies began flocking to Iran with investments and offers of joint partnerships to develop gas and oil fields.

Those opportunities evaporated after Mr. Trump withdrew the United States from the deal and imposed new sanctions that the Europeans feared could entangle them, forcing Iran to look east.

Ayatollah Ali Khamenei, Iran’s supreme leader, ordered a revival of talks with China, appointing a trusted conservative politician and former speaker of Parliament, Ali Larijani, as a special envoy.

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