Iran’s emergence from pariah status may seem to coincide nicely with China’s push for One Belt One Road links through Asia. China is already Iran’s biggest trading partner, buying much of the 2 million barrels a day of the oil Iran currently exports – an amount likely to be increased by another million barrels over the next near as sanctions are eased and Iran can acquire needed technology.
During the period of Iran’s isolation, a situation largely induced by the stranglehold that Saudi and Israeli interests had over US policymakers, and know-nothing congressmen in Washington, China came to be a partner of Iran in many ways. It helped build infrastructure such as the Tehran subway and supplied technology which could no longer be acquired from the west.
One result has been that despite some hardship, Iran’s economy has continued to grow, even despite sanctions and the recently sharply falling oil price. For example, steel production now exceeds that in both Britain and France and car manufacturers produce 1.6 million units a year, albeit of somewhat dated designs.
Paris, Rome, Seoul, US Rush in
Yet it is not all clear that China is going to get the lion’s share of benefit from the lift in output that is expected to follow the easing of sanctions. No sooner had Xi Jinping been in Tehran than Iranian president Rouhani was signing huge deals in Paris and Rome and European oil giants were rushing to talk to the Iranians about investment and drilling technology issues. Apart from anything else, the Iranians need their help in oil and gas development of the fields which straddle Qatar and Iraq and are already being exploited across the borders.
Others rushing for new opportunities include the Koreans, who figure they can help raise Iran’s steel output and quality, and Japanese, Korean and European carmakers who already have some old tie-ups and want to expand the. The potential of this market of 80 million people is huge and could probably absorb a trebling of output within a decade.
Of the neighbors, similarly-sized Turkey is almost sure to benefit from faster growth in Iran. The two have mutual suspicions but trade is already large and Turkish companies which have shown their prowess in Russia and central Asia will be looking for opportunities. Russia on the other hand will probably lose rather more from Iran’s depressing impact on the oil price, and its increased competition as a gas supplier, than it will gain from other trade.
India on the other hand will be happy with developments. Having shrugged off US criticism of its gas pipeline deal with Iran, it too is hopeful of exploiting a history of good relations with the Islamic Republic – with which it is generally in agreement on Afghan issues.
Preachers of the Chinese road/belt idea often fail to take a close look at their maps.
For example, there is already a train route from China to Iran and on to Turkey via Iran. One was completed in 2014 with the Russian-run Kazakh railway extending through Turkmenistan to Gorgan on the Caspian.