China and Iran begin finalizing oil-for-investment deal

Iranian President Ebrahim Raisi begins three-day visit to CHINA, is the main trading partner of the Islamic Republic. The main goal is to complete the work on the agreement,

Top level visit

On Tuesday, February 14, Iranian President Ebrahim Raisi's three-day visit to China started. According to the Iranian media, this is the first visit of an Iranian leader to China in almost 20 years, which has been given the highest protocol status of a state one. Raisi arrived at the invitation of Chinese President Xi Jinping, and from their talks at the Great Hall of the People in Beijing, the program for the stay of the Iranian delegation, which included the HEAD of the Iranian Central Bank Mohammad-Reza Farzin and six ministers, including Oil Minister Javad Ouji, began . The welcome ceremony included a volley of 21 cannons.

In three days, Raisi and his team will meet not only with Xi, but also with Premier of the State Council of China Li Keqiang and Chairman of the Parliament (National People's Congress) Li Zhanshu, government members and representatives of state corporations.

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An attempt to present the current visit as a milestone is nothing more than the result of the focus of observers, because the previous state visit of the President of Iran to China took place in 2014, and the return visit took place in 2016, Adlan Margoev, a researcher at the Institute of International Studies at MGIMO, draws attention. Both the previous President of Iran, Hassan Rouhani, and the current one, have repeatedly met with the Chinese leader as part of working visits and on the sidelines of meetings of international organizations. The previous meeting between Xi and Raisi took place last summer in Tashkent during the summit of the Shanghai Cooperation Organization. “Iran is systematically increasing the volume of its interaction with non-Western countries represented by China and RUSSIA, especially under the current administration, and the first state visit to Beijing by President Raisi looks like a logical embodiment of Iranian foreign policy,”

Against intimidation and interference

In the public part of the talks, Xi Jinping and Ebrahim Raisi stressed the closeness of the two countries on political issues. "China supports Iran in safeguarding state sovereignty, independence, territorial integrity and national dignity, supports Iran in resisting unilateralism and intimidation, and opposes foreign interference in Iran's internal affairs and undermining Iran's security and stability," Xi said. cited by China Central Television.

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Just three days before the start of the visit, on February 11, Raisi announced victory over the protest movement: “See what the enemies have done in one year, what plots have they organized? But the Iranian people recognized the devil's hand and <...> defeated the enemy.

Since September last year, protests of unprecedented scale and scope have taken place across Iran, the participants of which first demanded greater freedoms for women, and then called for an end to the Islamic Republic as a form of government. The Iranian authorities blamed the protests on external forces, primarily the United States, 18 people were sentenced to death, and four were executed, the AFP agency calculated.

The leaders also noted the closeness of approaches to the situation in the Middle East, although at the end of 2022 China's position aroused indignation in Tehran. Then Xi, during a visit to Saudi Arabia, supported the declaration of the Gulf Cooperation Council, which called for negotiations on the ownership of the three islands in the Gulf, which Iran considers its sovereign territory, and the UAE its own. After that, Chinese Ambassador to Tehran Chang Hua was summoned to the Iranian Foreign Ministry.

The volume of China's economic cooperation with the Arab countries of the region is incomparably greater than with Iran, so Xi Jinping signed a joint statement with their leaders, but China is not going to change its actual position on Iran, the Chinese earn money with the Arabs, and they are building a new fair world order with the Iranians, explains Margoev.

Xi Jinping promised that China would continue to participate constructively in the negotiations on the resumption of the Joint Comprehensive Plan of Action, uphold Iran's legitimate rights and interests, and promote an early resolution of the nuclear issue. A plan agreed in 2015 lifted Iran out of international isolation, but then-U.S. President Donald Trump's refusal to implement the agreement and the reimposition of U.S. sanctions in 2018 triggered an economic crisis in Iran. Beijing alone cannot restart the negotiation process, but its voice will be important both in the IAEA Board of Governors and on the platform of the UN Security Council, where a new round of crisis around the Iranian nuclear program is possible, says Adlan Margoev.

Finalization of the secret agreement

In addition to political support, Tehran, which is under sanctions, also needs to develop economic ties with China. For Tehran, Beijing is the main trading partner and investor, followed by the UAE.

Deputy Chief of Staff of the Iranian Presidential Administration for Political Affairs Mohammad Jamshidi called the finalization of the operational mechanism of the partnership agreement signed between China and Iran in 2021 and designed for 25 years as the main purpose of Raisi's visit. In early 2022, Iranian Foreign Minister Hossein Amir Abdollahian said that the agreement had entered the "execution phase", but no major contracts between the countries have been reported since then, and Iran remains under heavy US sanctions.

The text of the agreement has not yet been published. In 2021, The New York Times reported that it deals with cooperation on many issues, but one of the main provisions is Beijing's massive purchases of Iranian oil at a reduced price in exchange for diversified investments in the Iranian economy totaling up to $400 billion. Iran International channel reported that keeping this document secret causes dissatisfaction among a part of the population of the Islamic Republic, who fear the sale of the country.

At a meeting with Raisi, Xi said that stability in the Middle East is essential for global economic development and the stability of energy supplies. China is one of the main consumers of Iranian oil (the US has imposed sanctions on this sector ). In March 2021, The Wall Street Journal wrote that Beijing was increasing its purchases from Iran, which eased American pressure. According to the publication, in March 2021, China could buy up to 918 thousand barrels. oil per day. And on average, in 2021, China could receive about 850 thousand barrels. a day with an estimated profit of $20 billion, the non-governmental opposition organization United Against Nuclear Iran calculated.

According to official figures, the volume of oil trade between the two countries is much smaller. According to China's customs records, in 2022, trade between Iran and China amounted to $15.7 billion, up $1.035 billion from 2021, Iranian news agency IRNA reported. Iran's non-oil exports to China decreased by 2% in 2022, to $6.355 billion. According to the China Customs Administration, non-oil trade between Iran and China was $14.8 billion in 2021.

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The result of the first day of the visit was the signing of 20 documents on cooperation in various fields, from tourism to intellectual property and joint media projects, but the content of these documents and their status have not yet been disclosed.