26 - 28 Sep 2018

Tehran Goftegoo Park

As U.S. sanctions keep Western businesses out of Iran, China seizes the opportunity

The Chinese government hasalso extended huge loans to Iran, most recently a $10 billion line ofcredit for Chinese companies to build infrastructure projects such as dams, powergeneration facilities and transportation projects. Meanwhile, the Trumpadministration continues to block U.S. investment and most trade with Iran.Analysts in Iran say the U.S. pressures European businesses to do the same.

“The more the U.S. puts pressureon Iran, the closer Iran will get to China,” said Foad Izadi, an assistantprofessor in the Department of North American Studies at the University ofTehran.

Izadi said China remained a reliable trading partner even during the height ofU.S. sanctions earlier this decade. After implementing the nuclear accord in2015, Iran signed numerous memoranda of understandings with companies in Italy,Germany and France. But facing the possibility of new U.S. sanctions, few ofthem followed through with sales or investments.

The European plane manufacturerAirbus, for example, agreed to sell 100 planes to Iran but has deliveredonly three so far.

China, on the other hand, hasaccelerated its investments, with infrastructure projects and sales ofmoderately priced cars, cell phones and clothing.

The Chinese “are interested inbuying and selling stuff,” said Izadi. “They are not interested in regimechange. They are not interested in putting political pressure on governmentsthat have an independent foreign policy.”

In 2016 Chinese President Xi Jinping and Iranian President Hassan Rouhaniannounced plans to increase bilateral trade to $600 billion over thenext decade. That's an ambitious goal, to say the least.

China exported $7.95 billionworth of goods to Iran over the last eight months, a 22% increase over the sameperiod last year, according to Iranian customs statistics provided by theTehran Chamber of Commerce. Iran’s exports to China, excluding oil, were valuedat $5.7 billion, a 13.5% increase during the same period.

China sees Iran as an importantcomponent of its "One Belt, One Road" program, connecting China toEurope via Asia. The project costs an estimated $1.7 trillion per year to buildports, highways, rail lines and other infrastructure in the region. Chinais also constructing a 2,000-mile long railroad to connect the westernChinese city of Urumqi with the northern Iranian city of Mashhad, cuttingthrough four former Soviet republics.

Politically, China seeks alliesagainst what it perceives as U.S. hegemony in the Middle East. Izadi said Chinadoesn’t want to depend on oil produced in Saudi Arabia, the Gulf States andother U.S. allies.

“As long as there is a defiantIran in the Middle East, the United States cannot fully concentrate on EastAsia where China’s core interests are located,” Izadi and EsfandiarKhodaee wrote in a scholarly journal.

But those common interests goonly so far.

While China continued to buyIranian oil during the sanctions era, it kept the money from those sales inspecial accounts in China as prescribed by U.N. sanctions. After sanctions werelifted, however, China didn’t release the $22 billion it accumulated. It onlyallows the funds to be used to finance Chinese infrastructure projects in Iran.

“They were ruthless,” politicalanalyst Saeed Laylaz said. “They tried to cheat us. But at least they soldthings to us.”

China faces another problem withIran. Many ordinary people complain about the shoddy quality of Chinese goodssuch as the watches in the Bazaar jewelry stores.

“We know there are differentquality goods in China,” said Bazaar shopper Fereshteh, who declined to giveher last name. “But the poor quality ones end up coming to Iran. They don'tlast for long and break down quickly compared to products from other places.”

Izadi notes that the shoddyquality of some imports are as much the fault of Iranian traders as Chinesemanufacturers. The traders buy cheap goods to make a bigger profit.

Even those consumers who want to“buy Iranian” face difficult choices.

Nasibeh Tavakoli, another Bazaarshopper, said she supports buying her own country’s products rather thanChinese goods. But like consumers the world over, that’s not so easy anymore.Asked if she actually buys Iranian, she replied sheepishly, “Sometimes I don’tknow if it’s Iranian or Chinese. I end up buying very few Iranian goods.”

Reese Erlich’s reportingfrom Iran was made possible by a grant from the Pulitzer Center on CrisisReporting.

This article originallyappeared on PRI.org. Its content was created separately toUSA TODAY.

Source: USA Today/Reese Erlich, PRI.org

Published: 12/29/17