POLITICS: IRAN’S NEW BEST FRIEND
Tehran traffic is gridlocked half the time, and the city spends most of the year engulfed in smog, so it’s not surprising that locals travel underground when they can — on a metro system that sometimes carries two million people a day.
During the sanctions decade, when Iran was largely frozen out of global commerce, the capital’s authorities managed to steadily expand the network — roughly doubling its size. It wasn’t easy. Often, “the parts we needed, we had to build ourselves,’’ said Ali Abdollahpour, deputy managing director of Tehran Urban and Suburban Railway Operating Company.
A constant of those years was Chinese help, with everything from building rails to manufacturing wagons. The nuclear deal of 2015, and the lifting of major sanctions the year after, was supposed to broaden Iran’s options. Abdollahpour had his eyes on Europe (“their tech is better’’) for essential braking and signalling systems.
But when a major contract, to supply more than 600 wagons, came up for tender it went to a unit of China’s CRRC Corp., which beat off two European bids to win a contract worth more than 900 million dollars this year. That’s part of a wider pattern. The nuclear deal hasn’t delivered more than a trickle of Western investment — and even that is poised to dry up, after President Donald Trump pulled out of the agreement and said he’ll re-impose sanctions
To develop its 430 billion dollar economy, Iran is being forced to rely on political allies in the East.
Trade with China has more than doubled since 2006, to 28 billion dollars. The biggest chunk of Iran’s oil exports go to China, about 11 billion dollars a year at current prices.
Chinese direct investment is arriving too, though reliable data is harder to come by.
Iran’s door to the West is slamming shut, and that leaves China as its business partner
China is “already the winner,’’ said Dina Esfandiary, a fellow at the Centre for Science and Security Studies at King’s College in London, and co-author of the forthcoming Triple Axis: Iran’s Relations With Russia and China.
“Iran has slowly abandoned the idea of being open to the West,’’ she said. “The Chinese have been in Iran for the past 30 years. They have the contacts, the guys on the ground, the links to the local banks.’’
Read: China stands to gain in Iran after US quits nuclear deal
And they’re more willing to defy US pressure as Trump slaps sanctions back on.
Even that possibility has kept many European banks and manufacturers from doing business with Iran. And some of those that were ready to do so could reconsider in the light of tougher American rules.
Airbus Group’s contract for 100 jetliners, worth about 19 billion dollars at list prices, was already held up amid financing problems, and Treasury Secretary Steven Mnuchin said last week that the export license will be revoked (Russian manufacturers could be the beneficiaries). Total has a contract to develop the South Pars gas field together with China National Petroleum Corp., but has signalled that it would pull out if the US re-imposes sanctions and it can’t win an exemption. In that event, Iran says, the Chinese partner would take over Total’s share.
Chinese companies aren’t beyond the reach of American regulators. Huawei Technologies Co. is said to be under investigation for possible violations over sales to Iran, and network-equipment maker ZTE Corp. was banned from buying American components for a similar offence.