October 2018

In October, we saw a general worsening of the media reporting about China across the Mediterranean region. While it is not uncommon to find negative articles published in countries like Algeria or Israel, it is very rare to read Iranian articles that, even indirectly, criticize the close relations between Tehran and Beijing.

Although some genuine anti-American sentiment and a sure degree of complementarity in the oil market have contributed towards good relations between China and Iran, external circumstances, such as American pressures and sanctions against Iran, have brought both countries closer than they otherwise would naturally be. This is especially true following US President Trump’s decision to reimpose sanctions on Iran, completely undoing the 2015 multilateral deal enacted by his predecessor, Barack Obama. While this unique relationship is sometimes acknowledged by Chinese scholars working on Middle Eastern issues,[1] it is very uncommon to find similar, on the record acknowledgements within the Iranian media and commentaries. Yet, in October Persia Digest published two very interesting and sobering commentaries by Fereydoun Majlesi, a veteran Iranian diplomat, and, Mohammad Jamshidi, a scholar at the University of Tehran, on Iran’s “Look East” policy.[2] According to Majlesi, Iran’s deeper economic integration with Asian economies is not beneficial to its own economy because only Western companies offer opportunities to buy good-quality products and acquire new technologies. Moreover, he noted, sanctions are forcing Iran to compromise both on the quality of purchased products and on the price of its oil sold to Asian countries like India and China. As he bluntly wrote:

“We might choose Russia as a trade partner and they would force us to sell our products 30% cheaper and buy all the things we need from them paying 30% more. The same is true about what Turkey and the United Arab Emirates have done for years. Russia has a future, but it has no industrial manufacturing base. Its borders are not open to Iran. China and India also force us to sell oil at a low price and import their goods with their money.”

Professor Jamshidi’s position appears less pessimistic as he invites readers to look at the current situation in a more pragmatic way. On the one hand, he argues, Asia will eventually become the center of global wealth and power. Cooperation with Asian countries will give Iran a chance to shape the future world order as they will be its main architects. On the other hand, no one should expect Asian countries to make any substantial sacrifice to defend Iran. In fact, they could even exploit their advantageous position since Europe cannot trade with Iran. It is normal for countries like China and India to look at Iran through the lens of their own national interests. In any case, Jamshidi argues, Iran currently has no real alternative. At the same time, sources in Beijing told the official Islamic Republic News Agency that Chinese and Iranian officials have held many meetings to set up a payment system that will replace Kunlun Bank, a bank controlled by the financial arm of the Chinese state energy group CNPC, as China’s conduit for transactions with Iran.[3] This new system will likely be launched in 2019.

In an article about China’s reaction to the murder of Saudi journalist Jamal Khashoggi, Al Jazeera’s China Bureau journalist Ali Abu Murihil urged readers to view China’s behavior, in pursuing its own interests, as not much different from that of the United States.[4] He noted that China often criticizes the West for its double-standard in judging human rights violations, but Beijing also kept silent and did not put pressure on the Saudi government. Although Beijing can hardly drive a wedge between Washington and Riyadh, there is no doubt that it pays great attention to the evolution of the Saudi-American relationship as its interests in the Kingdom increase. A journalist for the Algerian media outlet Djazairess criticized China over its the treatment of Uygur Muslims.[5] However, they were even more critical of the silence displayed by Arab countries on this issue.

Meanwhile, Israeli commentators continued to discuss the benefits and disadvantages of closer Sino-Israeli relations. Like their Iranian counterparts, they do not view Israel’s relationship with China as bilateral, but rather in a trilateral framework that includes the United States. They surely did not miss the fact that Wang Qishan’s does not travel abroad much and, given also his role as chair of the fourth Israel-China Joint Committee on Innovation Cooperation, his recent visit to Israel reveals how much China values the relationship with their country. Amir Gal-Or, founder and managing partner of the USD 1,5 billion Israeli-Chinese equity fund Infinity Group, commented that China is not looking for simple cooperation. Rather, it wants to establish its own independent system and set of rules as it tries to leverage its political influence over other countries. Israel is one of those countries and this is why Beijing sent a powerful figure like Wang. Chinese attempts to lure Israel closer are a challenge for the United States. At the same time, Israeli companies must also be careful in choosing which market to prioritize between the China and the American one since two blocs with different rules and technical standards are likely to emerge soon.[6] Efraim Halevy, former director of Mossad, warned that Chinese companies are on the hunt for new technologies, especially those that can be used for both peaceful and military purposes.[7] “Israel must do business with China, of course, but there is no serious mechanism to ensure that we do not sell important economic assets and expensive technological know-how” he noted. Subsequently, Bar-Ilan University’s scholar Roie Yellinek concluded that China’s growing interests in Israel does indeed present economic opportunities for Israeli companies, which are always looking for new markets.[8] However, he noted, the problem is that those companies have “too much” to offer China and as this working relationship strengthens, so will the pressure from Washington to prevent the transfer of sensitive technology to China. Similar questions have been raised in Italy regarding its government’s approach to China.[9] In response to criticism following the entrance of Chinese manufacturer Huawei into the Italian telecommunication system, Michele Geraci, Italian Undersecretary of State for Economic Development and leader in the push to strengthen the relations with China, stated that “every system can be hacked if one wants to and has the time do so.” He further explained that “regardless of which country or company we talk about, the belief that it is possible to control the telecommunication systems is just an illusion.” Turkey is another country that hopes to leverage a closer cooperation with China. Sedat Aybar, professor at Istanbul Aydin University, argued that Turkey’s geographical and geopolitical positions make it a preferential partner for China.[10] He argued that closer relations with Turkey would buffer China against its current trade war with the United States. Therefore, the two countries are destined to become mutually indispensable trade partners.

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