Iran Economy NewsIn the Real World, China and Russia Are Turning...

In the Real World, China and Russia Are Turning Away From Iran

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Negotiations to revive the 2015 Iran nuclear deal JCPOA have stalled, and the task of the seventh round of talks is still unclear. At a time when there is no clear prospect of talks between Iran and the United States, some of Iran’s political figures say that Iran is turning to the Eastern powers and claim that the problem of sanctions will be solved by signing 25-year cooperation documents between Iran, Russia, and China.

These largely principled political figures, speak about the Chinese $ 400 billion in capital inflows, saying that the way out of the pressure of sanctions is to take refuge in the world’s second-largest economy, China and, of course, Russia.

The signing of the 25-year Iran-China cooperation document had many ramifications. Many Iranians, who did not have happy memories of China’s economic interactions with Iran, opposed the signing of the document in various ways, but the signing took place while the regime had previously signed a similar document with Russia.

None of these documents made the years of sanctions on Iran easier. Even in 2016 and after the JCPOA, Iran was able to enter negotiations with the United States to buy Boeing aircraft, but Russia did not accept to sell its Sukhoi aircraft to Iran.

Now that the window on the JCPOA’s revival talks is said to be closing, some opponents and even supporters of the JCPOA in this regime see China and Russia as a replacement to the United States and believe the two Eastern trading partners will be able to move Iran out of the economic stalemate.

But the narratives of some other political and economic figures about how the Eastern powers interacted with Iran are very different and even contradictory.

In the meantime, we can mention the recent speech of Eshagh Jahangiri, Iran’s first vice president, held at the Central Bank.

He said: “We did not think that even India would not buy oil from Iran and would not revalue it, and even Russia and some neighboring countries for which we have sacrificed our children for the independence of their country did so, and we were alone in this economic war and did not retaliate. We could only circumvent the sanctions, move the goods, and bring in the money to buy the goods by adopting policies after the banking sanctions.”

After the sanctions against Iran, China was not only one of the first countries to withdraw its capital from the oil and gas, automobile, and infrastructure projects, such as highway and rail projects, etc., even blocked the regime’s resources. Iran is said to have about $40 billion in blocked assets in five countries, half of which are in China.

But China not only blocked a significant amount of Iranian assets, but also took advantage of sanctions to buy Iranian oil at below world prices and at high discounts, and even, according to petrochemical industry activists, brokered some Iranian oil products, such as urea, and bought it at a cheap price from Iran and exported it to India.

This is a simple example of why many regime’s opponents say that the regime is selling and auctioning the country. Meanwhile, China’s trade volume with the United States, Saudi Arabia, the United Arab Emirates, and even Israel is so large that Iran is not a major trading partner for it, and it seems that it prefers its national interests in trade and, according to economic activists, friendship has no meaning in trade.

It is good to know that currently, the volume of trade between Iran and China has reached the lowest figure in the last 16 years. Majid Reza Hariri, head of the Iran-China Chamber, told ILNA in this regard:

“As our total international and cross-border trade shrinks, so does our share of trade with China, as Iran and China have not had so little trade with each other in the last 15 or 16 years.”

According to him, according to statistics, by the end of 2020, the volume of trade between Iran and China was about $16 billion, which, including the unofficial sale of oil, still does not reach $ 20 billion.

Hariri also stressed: “The decline in our foreign trade last year has been unprecedented in the last 10 or 12 years. In other words, in terms of the volume of our foreign trade, we are back to the mid-1990s, an important part of which was due to heavy sanctions in 2020 and declining oil sales. Naturally, in these circumstances, we cannot provide the necessary currency for imports.”

Referring to some problems in Iran-China exchanges, he said: “However, it is difficult to buy some goods from China and from US-licensed companies that are either American-owned, have US shareholders, or are active in US markets. Of course, this is not a decision made by the Chinese government, but corporate decisions.

“This is a problem not only for vaccines but also for many other commodities from companies that work with Americans, are listed on the US stock exchange, or use American raw materials.

“Businesses ultimately prefer corporate interests even in the case of oil, China has officially stated that it will not accept unilateral US oil and non-oil sanctions. But many Chinese companies do not work with us lest their corporate interests are jeopardized.

“There are other issues, such as port sanctions, all of which affect trade between the two countries. If Iranian ship anchors in a port, the port, and its operator face US sanctions. The oil companies in China are commercial enterprises and do not prefer political issues to commercial ones.” (ILNA, July 18, 2021)

Shoaib Bahman, an expert on Russian issues, told ILNA: “Over the past years, one of the major challenges in Iran-Russia relations has been the development of trade relations. The trade volume between the two countries has always been below $2 billion, which is not a significant figure in international trade relations.

“The amount of trade agreements signed between Iran and Russia reaches more than $25 billion, but you can see that the level of operational trade relations between the two countries is less than $2 billion.”

About the regime’s backwardness in economic relations, he added: “For example, the trade volume between Turkey and Russia is more than $ 30 billion, and the two sides planned to increase this figure to $100 billion, which is a determining factor in political issues.”

He said that even other countries do have not a good economic relation with Iran and added: “And of course, even neighboring countries like Iraq have behaved similarly with Iran’s trading partners, and not only they have considered higher tariffs on imports from Iran than their other partners but repeatedly refused to settle its $5 billion debt with Iran under various pretexts.”

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