Analyst says relations between Iran and China could strengthen if sanctions are lifted

CEO says Iran nuclear deal unlikely before midterm elections

Iran will need sanctions lifted if it hopes to strengthen its economic ties with China — and that can only come with a successful nuclear deal, one analyst told CNBC.

Iran, which has business dealings with China, is now facing a slew of US economic devastation.

On Thursday, Iranian President Ebrahim Raisi is scheduled to meet Chinese President Xi Jinping and Russian President Vladimir Putin in Uzbekistan.

It comes as the Islamic Republic prepares to join the Shanghai Cooperation Organization, a security group that includes Russia, China, India, Pakistan and four Central Asian countries.

Iran currently holds observer status in the SCO, but will become a full member at the upcoming summit in the Uzbek city of Samarkand.

For that relationship to grow, you need sanctions, because a lot of companies… don’t care about sanctions risks.

Ali Ahmadi

Geneva Center for Security Policy

Ali Ahmadi, an executive fellow at the Geneva Center for Security Policy, told CNBC on Tuesday that Iran’s desire to become a member of the SCO does not necessarily indicate that Tehran will have a smooth economic relationship with China. Country.

“That doesn’t mean Iran doesn’t need sanctions,” Ahmadi said. “Iran sells some oil to China … but the relationship between the two is one-way.”

Iranian President Ebrahim Raisi speaks during a press conference in Tehran on August 29, 2022. Iran needs sanctions from a successful Iran deal to nurture its relationship with China further, Ali Ahmadi from the Geneva Center for Security Policy said. This comes as Iranian President Ebrahim Raisi is expected to meet his Chinese and Russian counterparts in Uzbekistan on Thursday.

STR | AFP | beautiful pictures

In mid-2018, the US unilaterally withdrew from the nuclear agreement – officially known as Joint Comprehensive Plan of Action or JCPOA.

Since then, Washington has imposed sanctions against Iran have strangled the country’s economy. The US sanctions extend to companies doing business with Iran and ban all imports originating from Iran, among other sanctions.

“For that relationship to grow, you need sanctions, because a lot of companies, even state-owned enterprises in China… don’t care about the risk of sanctions,” Ahmadi said. speak.

In the first day of this month, US imposes sanctions on Chinese companies helped sell Iranian oil.

Sanctions can be both a deterrent and an incentive

US sanctions will make Chinese companies think twice about dealings with Iran, especially if these companies are very dependent on the West, said Djavad Salehi Isfahani, an economics professor at Virginia Tech. , told CNBC.

“Chinese manufacturers are highly dependent on exports to the West, as they are subject to unilateral US sanctions, even if they assure their Iranian counterparts that they consider them non-existent,” Isfahani said. fair or not”.

Revival of Iran nuclear deal will not be a 'silver bullet', senior colleague says

However, sanctions could benefit more risk-averse consumers, said Behnam Taleblu, a senior fellow at the Foundation for Defense of Democracies.

Unenforced – or sporadic – oil sanctions may opportunities for traders to take risks, while smugglers can find creative ways to generate revenue, according to Taleblu.

Iran’s relationship with China

Iran has recently begun to actively pivot to the East. Before the US pulled out of the nuclear deal in 2018, Iran’s Supreme Leader Ayatollah Ali Khamenei stated that one of the country’s top foreign policy priorities was to “prefer the East to the West. “

Last month, former Trump administration national security adviser John Bolton told CNBC that lifting sanctions on Iran could prompt the Islamic state to establish closer ties with both China and Russia. .

Bolton: Saving Iran copes with an 'incredible mistake' by the Biden administration

Mr Bolton said that freed from international sanctions, Iran would become richer and more powerful, making it a “better partner for Russia”.

“In the Middle East, where [Russia and China] have overlapping interests, their preferred partner is Iran. So it’s a kind of three-dimensional arrangement that I think has global significance,” said Bolton.

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