China's Investment Interests in Iran White Paper

Excerpt from White Paper :

China's Interests in Iran

The following White Paper is an examination of the prospects and pitfalls for China in pursuing further economic opportunity through its investment in the future of Iran. As the two nations proceed with the explicit intention of further entwining prospects both economically and diplomatically, China must move forward with care and precision. As the discussion here will demonstrate, its opportunities and the level of commitment already pursued are quite ample, but it will also be necessary for China to take a more active role in helping to reign in some of Iran's behavioral excesses if it is to enjoy the benefits of this relationship. And quite to the point, it will also appear to be in the best interests of Iran to accommodate calls for a more moderate disposition in world affairs if it is to benefit from the opportunities presented by China. The mutuality of this opportunity underscores the endorsement here of a continued but measured path to economic intimicacy.

With great certainty, the process of globalization is revealing that there are considerable opportunities to be realized in China, whose economy has displayed a serious robustness and growth rate to be positively compared with any western boom. Thus, the capacity for economic expansion is significant even as the challenges to sound practice are heightened. To the point, an approach to economic capitalism which has been adapted to comply with cultural and political realities in China is evident and increasingly dominant on the front of statewide development. To the point, we do truly find that at this juncture in the proliferation of free trade, China has become a relatively open society with respect to consumer opportunities and options. This is at least true from an economic standpoint, where the formerly obstructive parameters of communist China have actually liberalized in consonance with much of the rest of the industrialized capitalist world. For the consumer, competitive expectations have emerged which denote both a distinct form of cultural patterning where purchasing power is concerned and an evermore flexible and motile retail industry as a whole. Thus, where capitalist enterprisers both global and domestic are concerned, China is flush with opportunities for economic expansion and the fundamental breaching of a new marketplace.

This casts a sharp contrast to the experiences of Iran on the world stage, which have seen it in a long-standing holding pattern of isolation from the west. The Islamic Republic of Iran, formed in its current state during the 1979 Islamic Revolution, is a nation which has long been at the center of the world's conflicts and complexities. At times a member of the international community enjoying favor for its provision of access to its wealth of natural resources, Iran has, since the time of its violent revolution operated under the auspices of a theocratic government which has routinely been condemned for widespread violations of human rights, international law and international treaty.

In the face of the War on Terror and global oil shortages, Iran's strategic significance has been highlighted by a number of developments on the global front in recent years. As an undercurrent of the war, there is a philosophical and cultural divide at play which is distinguished by Western Capitalism and Eastern tribalism. Western consumer excesses are at tactical and ideological odds with the Islamic impetus which governs much of life in the Middle East. The implications of these divides are numerous, with financial determinants playing a central role in the relationship between key nation-states in the Persian Gulf region and the world community. A matter which has been of central emphasis throughout the War on Terror and which is bearing perhaps the most significant pressure on the relationship between Iran and the global community is the potential ambition of the former to develop nuclear weapons against the behest of the latter. To the point, a consignee to the 1970 Treat for Non-Proliferation of Nuclear Weapons (NPT), Iran would be by its terms prohibited from using enriched uranium to pursue the construction of nuclear weaponry. And certainly, with the precedent which the U.S. had that very year set in Iraq, any indication that Iran was actively seeking a nuclear program could deeply imperil a nation in a troubled region. According to U.S. reports, "Iran failed to fulfill its obligations
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under Iran's NPT safeguards agreement according to reports issued in 2003 by the International Atomic Energy Agency. In November 2003, the IAEA Board of Governors deplored Iran's breaches of its obligations and urged compliance." (UN, 1)

This highlights a core set of issues for China, which has found trade with the western-sanctioned Iran to be quite lucrative. The interest of the Iranians in affordable production goods from China and the interest of the Chinese in importing from the vast wealth of oil in the Persian Gulf state has forged a relationship that both sides view as extremely beneficial. Thus, for the Chinese, the value of ensuring that Iran is able to remain focused on its economic imperatives denotes a motive for helping to prevent or broker through lapses in diplomacy.

To date, all evidence suggests that China plans to continue with efforts that it has seen as fruitful, with the opening of trade lines between the two states helping to establish a meaningful and potentially powerful tie between Asia and the Middle East. Given the long-standing interest of Western, European and Soviet powers in this region, it has become only appropriate for China to work from an already successful diplomatic relationship to a place of stable economic interdependence. Indeed, projections are that the relationship which is underway will continue a path of rapid development that truly got underway at the height of America's war in Iraq. It would be at this juncture that both parties would come to see a strategic, economic and even military imperative for improved relations, notably as a way to resist American imposition. Thus, in the ensuing years, the exchange practices between China and Iran would become normalized and intensified. In 2008, "Iran's Deputy Minister of Commerce Mehdi Ghazanfari said trade exchanges between Iran and China will exceed $25 billion this year, IRNA wrote." (IDN, 1) This is a significant development for both nations, which bears with it meaningful geopolitical implications to which China must be very sensitive. Its intention would hardly here be to antagonize those Western nations which have maintained badly severed relations with Iran. To the contrary, this reflects a differently oriented strategy approach to a state whose radical tendencies are a response to imposition and political defensiveness as much as to ideological militancy.

Thus, it will become increasingly apparent that the inevitability of the intensifying relationship precipitates a necessity for China to take a more active role in encouraging the opening of Iran to the world community. The scale of money invested in its oil resources in particular denotes that China has much to gain in the ability of Iran to realize without obstruction its fullest energy protection potential. To this point, "in mid-March, China signed a contract worth U.S.$3.2 billion with Iran to develop the South Pars Field underneath the Persian Gulf seabed, following a U.S.$1.76 billion agreement in January between the two countries for an exploration of an oilfield in western Iran." (CKO, 1) This indicates an interesting level of apparent trust developing between two nations which are frequently seen as closed off to the view of outsiders. The level of active participation which China is dedicating to the realization of Iranian commodities suggests that contrary to most other parties in the world community, China may well have some influence with Iran's policymaking.

This is particularly a useful distinction to make in light of the demonstration also rendered by this trade agreement of the apparent failure in the western strategy to squeeze Iran economically to a point of political and diplomatic concession. Sanctions have proven ineffective in changing Iranian orientation or policy, with its isolation generally only deepening as a result of the poverty, despair and uncertainty foisted upon the Iranian people by global exclusion from developmental opportunity. This not only points to an opening for investment from a power with the resources to realize such an infrastructural task such as China, but it also indicates a negative consequence to sanctioning that can only be counteracted through such investment. Again, another source reporting on the recent natural gas compact between the two nations perceives this as a direct statement of economic and ideological difference from the western forces which have isolated Iran. Here, "reporting from Beirut -- Iran announced a $3.2-billion natural gas deal with China on Saturday, a move that underscored the difficulty of using economic sanctions to pressure Tehran to bow to Washington's demands on its nuclear program." (Daragahi, 1)

This is to indicate that China's actions are not to be taken as an endorsement of those behaviors deemed by the world community to be in violation of nuclear policy or human rights policy. Instead, these are to be recognized as…

Sources Used in Documents:

Works Cited:

China Knowledge Online (CKO). (2009). Iran, China to strengthen energy cooperation. China Newswires.

Daraghi, B. (2009). Iran signs $3.2-billion natural gas deal with China. Los Angeles Times. Online at,0,4516210.story?track=rss

Hiro, D. (2005). Iran's Nuclear Ambitions. The Nation. Online at

ICS. (2003). History: The Islamic Revolution of 1979. Iran Chamber Society. Online at

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