As talks between Iran, the U.S. and other world powers to revive the 2015 nuclear deal continue, the Islamic Republic is trying to strengthen ties with China, Russia and other nations that could help it get around American sanctions that are battering its economy.
Iranian Foreign Minister
met his Chinese counterpart on Friday to discuss a wide-ranging economic and security cooperation agreement signed between the two countries in Tehran early last year, among other issues, according to his ministry. Implementing the 25-year agreement to boost trade and the nuclear talks in Vienna, of which China is a part, are high on the agenda, an Iranian official said.
China became a vital economic lifeline for Iran after the Trump administration withdrew the U.S. from the multilateral nuclear accord in 2018 and reimposed sanctions on Tehran.
Last year, China imported at least 590,000 barrels of oil a day on average from Iran, the highest level since the sanctions were brought back, according to Paris-based commodity-data provider Kpler. Beijing doesn’t disclose how much oil it imports from Tehran.
Also this week, Iranian Foreign Ministry spokesman Saeed Khatibzadeh said President
would visit Russia soon. The two countries are expected to sign a 20-year cooperation agreement to boost trade and military ties during the visit, he added.
However, what remains unclear is how much China and Russia are prepared to risk for Iran while U.S. sanctions remain in place.
Both countries are part of the talks in Vienna to salvage the nuclear accord. And while both are being courted by Iran, they are also being pressed by Washington to raise the pressure on Iran to compromise and reach an agreement to restore the 2015 agreement soon. Western officials say because of Iran’s nuclear work, time is running out to salvage the deal.
U.S. officials have started to step up sanctions enforcement and said that could in future mean targeting additional Chinese firms and people with sanctions. Both Russia and China don’t want Iran to develop a nuclear weapon and China in particular is vulnerable to conflict and fresh instability in the Middle East, its main energy supplier.
Iran has big hopes when it comes to China, according to Diako Hosseini, a political analyst and former director at the Center for Strategic Studies, an Iranian think tank affiliated with the presidential office. “But if Iran remains under heavy U.S. sanctions, Chinese companies would be unwilling to work with Iran as it could affect them in other parts of the world,” he said.
Negotiations to salvage the 2015 deal, which lifted most international sanctions on Tehran in exchange for strict but temporary restrictions on its nuclear program, resumed in late December after stalling in 2021 despite months of talks.
Iran’s new negotiating team, which has joined the talks since Mr. Raisi took office in August, have ramped up their conditions for a return to the deal, according to Western diplomats. Diplomats say that with Iran’s nuclear program advancing, the negotiations are only now getting back to the key issues that were on the table under the previous government.
Meanwhile, Iran is also looking to strike deals with several countries in Asia and elsewhere to swap its oil and gas for products it needs, which Iranian officials say would allow it to bypass the U.S. sanctions.
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Last month, Iran signed an agreement with Sri Lanka under which the South Asian country would pay off its oil-import dues to Iran via exports of tea and some other items. In November, Iran signed a similar deal with Pakistan to swap its gas for rice. Iranian officials said they are also negotiating with Turkish companies to build homes in the Persian Gulf country in exchange for oil and gas.
In contrast with his predecessor,
whose government aimed to boost Western investment in Iran, Mr. Raisi has said he is eager to build ties outside of the West and is looking at countries such as China and Russia as longer-term partners to sell its oil and buy weapons. The move has for years been encouraged by Iranian Supreme Leader
who has the final say on the country’s foreign policy, including the nuclear deal.
“Mr. Raisi’s administration has a specific focus on the East,” Maj. Gen. Mohammad Bagheri, the chief of staff of Iran’s armed forces, said on a recent visit to Moscow.
But those ties have come at a high cost for Iran. The terms for deals between Iran and China often tend to be more favorable for the latter, say businessmen in Tehran, many of whom complain that they have little choice when Beijing often sells low-quality products to them. Many of Tehran’s barter arrangements also eventually collapse under the threat of sanctions.
“Unfortunately cash is still king, and if you can’t show it, you can’t expect real bargaining power,” said Mostafa Pakzad, the Tehran-based head of Pakzad & Co., which advises foreign companies trading with Iran.
Still, it appears that Iran’s recent efforts are at least bringing in vital foreign currency—for now. The value of goods transiting through its borders from mostly Asian nations rose to $33 billion, a 45% increase, in the eight months to November 2021, according to the latest numbers released by Iran’s customs department.
A State Department spokesperson, while declining to comment on Iran’s barter deals, said that the U.S. is enforcing its sanctions on Iran. “We will of course address any effort at sanctions evasion,” the spokesperson said.
Meanwhile, amid rising global oil prices, China is boosting its shipments of cheap Iran crude. On Thursday, Mr. Raisi said Iran’s oil exports—of which Beijing is the biggest recipient—had risen 40% since he took office in August, a figure consistent with independent estimates. In turn, Beijing’s sales to Tehran, which includes critical goods such as spare auto parts and medicine, jumped to almost $1 billion in November 2021, its highest since April 2019, according to Chinese customs data.
—Aresu Eqbali and Laurence Norman contributed to this article.
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