US moves by to squeeze the Iranian economy through stringent sanctions have caused concern in Asia, where the Islamic Republic is often regarded as a key strategic player. But as Edward Thicknesse reports, Iran has discovered its confronation with the United States has helped it make friends with America’s rivals
The US State Department claims it has hit Iran hard by the use of sanctions, aimed at preventing the country from developing nuclear weapons. Secretary of State Mike Pompeo recently told the United Nations that the measures are removing 2.7 million barrels of Iranian oil from the global market on a daily basis.
As a result, Iran’s economy is mired in recession and inflation is at nearly 50 percent. But the impact has been partly offset by China, which has defied US sanctions to continue tapping into Iranian oil and thus emerged as one of Iran’s closest allies.
A fifth of the world’s oil passes through the Strait of Hormuz, which, combined with Iran’s enormous natural resources, makes the country vital to the region’s economy. Iran is also the meeting point of two of the largest infrastructure projects in history – China’s Belt and Road Initiative and the International North-South Transport Corridor – whilst its ports provide crucial access to the sea for the majority of Central Asia.
The fallout from the United States’ withdrawal from 2015’s JCPOA nuclear deal has split international opinion. European countries believe there should be more time for negotiation and are seeking to trade with Iran without provoking retaliation from the US. And many of Iran’s neighbours in Central Asia are keen to keep working closely with it at a diplomatic and economic level.
For nations such as Turkmenistan and Afghanistan, Iran is family. The shared legacy of Persian heritage runs deep, binding people together across borders through common languages and ethnic origins.
‘For years and years, regardless of the government, be it the kings or presidents, Iran and Afghanistan have always called each other brothers,’ says Meena Baktash, Head of the BBC Afghan Service.
The open door policy towards refugees fleeing the Soviet and Taliban regimes undoubtedly contributed to this relationship; indeed, so keen has the Afghan government been to maintain good terms that, according to Mr Baktash, they have even turned a blind eye to claims of covert Iranian support for the Taliban’s activities in Afghanistan.
Mr Baktash says that ‘landlocked countries are always looking for other ways to connect to the world’ and thus the access to Iran’s Chabahar and Bandar Abbas ports which are enabled by stable relations is a crucial lifeline to the rest of the world.
The Ashgabat Agreement, signed by the governments of Iran, Kazakhstan, Uzbekistan, Turkmenistan, Pakistan and India, demonstrates this. The so-called Lapis Lazuli project aims to enhance transport and trade links between Central Asia and the Persian Gulf through the creation of an immense transit network.
The China factor
For Central Asia, cash, in the form of foreign investment, is king, and the readiest supply of this comes from China. Xi Jinping’s flagship foreign policy, the Belt and Road Initiative, has generated enormous investment into the region, with Iran a major beneficiary.
For example, China is financing the 926-km Tehran to Mashhad railway through loans of $1.5bn, whilst overall trade between the countries exceeded $35bn in 2018. China’songoingimports of Iranian oil, in defiance of the US, is also providing some relief for its economy.
For Pepe Escobar, journalist and author at the Asian Times, ‘Russia and China cannot allow Iran to be strangled. Iran boasts fabulous energy reserves, a huge internal market and is a frontline state fighting complex networks of opium, weapons and jihadi smuggling – all key concerns for SCO member states’.
Omid Kalahar, Visiting Research Scholar at George Mason University, Virginia, agrees. Iran’s transport links are ‘the best route to reach the market in Central Asia and the Caucuses, and, if Iran fails, it is unlikely that China’s Silk Road will benefit in the short and medium term’.
For the Russian President Vladimir Putin, Iran is a key player in the game of rivalry with the United States. Russia and Iran have developed an extensive strategic partnership, which has culminated in their coalition in the Syrian civil war. For Famil Ismailov, News Editor at the BBC Russian Service, Iran, as with Syria before it, gives Putin ‘the chance to demonstrate that he is a big global player, which is exactly what he always wanted as president’.
Russia might perceive the US as withdrawing from the Middle East under President Trump but Iran remains high on the agenda of this administration. As Secretary of State Mike Pompeo told the UN: ‘The Islamic Republic of Iran and its proxies continue to foment terror and unrest in Iraq, Lebanon, Syria, and Yemen with devastating humanitarian consequences.’
And the US Special Representative for Iran, Brian Hook, says that the sanctions imposed by the US have had a big impact on Iran’s defence spending. He claims that Iran’s military budget went down ten percent during the first year of the Trump administration and 28 percent during the second year.
‘We are telling Iran that it is not acceptable to provide lethal assistance on a regular basis to terrorist organizations,’ Mr Hook told reporters during a recent visit to London.
Friends and enemies: Iran, it seems, has no shortage of either.
Edward Thicknesse is an Account Manager at Strategy International in London