It takes two to tango- How the Iran-China investment deals are fraught with risks

Iran and China have recently inked an investment pact worth $400 billion. Though this is just a plan and not a confirmed deal, it makes sense for both.

China wants a regular supply of crude oil, which Iran is more than happy to provide. On the other hand, Iran wants to desperately free itself from the chokehold of American sanctions.

The deal envisaged is a massive investment to upgrade Iran’s infrastructure- to construct roads and rail, telecommunications and ports and the like. Though Iran welcomes this deal, Beijing knows it cannot ‘bully’ Iran the way it does with Pakistan.

China also aims to cooperate and partner with Iran in the defence and security sectors. The Iran-China deal can make China a formidable player in the geopolitics of the Middle East. With a preferential supply of oil from Iran, this deal can help China to control the supply of oil from the Middle East. With the current geopolitical and economic scenario, the idea of an aggressive China in the Middle East seems futile.

Both Tehran and Beijing are looking closely at the American presidential elections. The campaign before the election will shed some light on how to move forward with the deal. If Trump is re-elected, both American adversaries know what risks they face if this deal goes through. Till then, it’s a wait and watches the game.

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