Iran joining the BRI: An Opportunity for Pakistan

Author Name: Hassan Tahir      20 Sep 2020    

China, through the Belt and Road Initiative (BRI), is on course to reset the state’s bilateral ties. The most recent example is the news of Iran joining the BRI under an economic/security agreement worth $400 billion with China.

Iran’s economy is already squeezed owing to the stringent international sanctions invoked by the Trump administration after withdrawing from 2015 Iranian Nuclear Agreement formally known as the Joint Comprehensive Plan of Action (JCPOA) in May 2018. The end of sanction waivers on Iranian oil exports have significantly cut into a vital source of national revenue and the country is desperate for trade and foreign investment.

As of now, emerging details suggest that the ‘megadeal’ investment is likely to be spread over 25 years in telecommunications (5G), infrastructure, banking, free trade zones, and vast expansion in military cooperation, including intelligence sharing and weapons design.

Since US President Donald Trump abandoned the deal, Iran plunged into a deep recession. Skyrocketing inflation, plummeting oil export, unemployment and currency devaluation have significantly added to Tehran’s domestic challenges. The International Monetary Fund (IMF) indicated that Iran’s Gross Domestic Product (GDP) will decline by 9.5 percent in 2020, following a 4.8 percent contraction in 2019.

Under such circumstances, a Sino-Iran accord can give Tehran much needed breathing space for its economy and provide a bargaining cushion with the US. The recent US resolution calling for an extension of the arms embargo against Iran (set to expire in October this year) was overwhelmingly rejected by the United Nations Security Council (UNSC). Both China and Russia opposed Washington’s move which proved to be a diplomatic win for Tehran. Washington’s efforts of trying to corner Tehran has pushed it towards America’s rival camp.

On the other hand, Beijing’s brewing tensions with India and US have made it necessary for the Chinese to strengthen their relations with Tehran to secure alternative energy supply lines through the Indian Ocean in the wake of a possible Malacca blockade. Presently, almost 80 percent of Chinese oil imports come through the Malacca Strait. With the recent exclusion of India from the Chabahar rail project, the Chabahar and Gwadar ports will complement each other and help Beijing avoid its ‘Malacca Dilemma’. The US Department of Defense (DoD) has recently presented a detailed report on China’s military power. A chapter on Beijing’s economic policies notes that the China-Pakistan Economic Corridor (CPEC) projects focus on pipelines and port construction that would ‘decrease China’s reliance on transporting energy resources through strategic choke points, such as the Strait of Malacca.’

A budding Sino-Iranian relationship will also block New Delhi’s increasing foothold in Tehran. Islamabad, wary of Indian influence in its backyard, sees the Sino-Iran deal as mutually beneficial. India is long accused of fomenting unrest in Pakistan’s Balochistan province by supporting separatist insurgencies and of using Iranian territory for anti-Pakistan activities. In 2016, Pakistan’s intelligence agencies arrested a senior military officer Khulbushan Yadav, who later admitted being a RAW operative, running a network from the Chabahar Port. Similarly, in May this year, a series of militant attacks occurred near the border causing a number of casualties. This prompted a call by Pakistan’s Army Chief to his counterpart in Iran urging action against militant sanctuaries present on the Iranian side of the border. The Baluch Liberation Army (BLA) and United Baluch Army (UBA) subsequently claimed responsibility for the attacks. Both militant outfits are believed to be backed by RAW.

The China-Iran bilateral partnership will also increase reliance on Pakistan for trade. Previously, India was aiming to bypass Pakistan by establishing an alternative trade route through Chabahar. The road network passing through Pakistan linking Chinese Xinjiang province with Gwadar will earn revenue for the country’s exchequer in the form of transit fees and toll taxes.

The China factor in Pakistan Iran relations presents an opportunity to iron out long-pending bilateral security issues and work together for regional connectivity and peace. Specifically, the Iran-Pakistan gas pipeline which is stalled due to financial and security issues should be revived under this developing triangular relationship through energy cooperation and construction of pipelines to export Iranian oil and gas to China. This would also significantly help Pakistan’s growing energy demand.

 

Hassan Tahir is a researcher at the Centre for Aerospace and Security Studies (CASS). This article was first published in Daily NHT newspaper. He can be contacted at <hassanndu@gmail.com>

 

 

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