China seeks global domination.
The vehicle to achieve it is the Belt and Road Initiative (BRI), a collection of infrastructure projects and a network of commercial agreements designed to link the entire world directly to the Chinese economy through inter-connected land-based and maritime routes. The guarantor of that soft power approach is the hard power of military expansion.
Beijing’s ambitions cannot be realized, starting with supremacy in South Asia, if its largest single BRI investment, the China-Pakistan Economic Corridor (CPEC), fails.
There are certain preconditions for the success of CPEC: (1) the removal of U.S. and NATO military forces from Afghanistan; (2) a reduction of American and Indian influence in South Asia; (3) the curtailment of Islamic extremism and ethnic separatism; and (4) a decrease in regional tensions due to national rivalries; all to be obtained under the stewardship of China, a “Pax Sinica.”
Critical among China’s efforts is the successful wooing of Iran and its proper placement within the framework of CPEC. Given the inherent competition and sometimes enmity in the region, China has been obliged to navigate a diplomatic minefield cautiously, combining direct support for Iran with what appear to be calculated, yet sometimes convoluted attempts to leverage the current U.S.- Iranian conflict to its regional advantage.
On October 29th, Chinese Ambassador to Pakistan, Yao Jing stated, “China is interested in the partnership of the friendly states and neighbors of Pakistan, specially Iran, in the CPEC project.”
An equivalent level of cooperation was also extended to Afghanistan, emphasizing that CPEC benefits not only Pakistan and China but also all the regional states.
Although Pakistani media recently claimed that BRI would eventually extend from China through Pakistan’s port of Gwadar and onto Africa via Oman and Riyadh, an offer to join CPEC made to Saudi Arabia by Pakistan was later rescinded, undoubtedly due to objection by Beijing.
Although China has welcomed Saudi Arabian investments in Pakistan, including a multibillion-dollar oil refinery complex in Gwadar, CPEC’s strategic port, and a $6 billion loan, Saudi Arabia becoming a third member of CPEC conflicted with China’s greater interest of maintaining good relations with Iran.
The Saudis are not only considered allies of the U.S., but they have a festering conflict with Iran including a proxy war in Yemen. In addition, the Saudis have been accused of exacerbating long-standing tensions along the Iran-Pakistan border, a flash point that remains a threat to the success of CPEC.
Those tensions were recently inflamed by the kidnapping of fourteen Iranian border guards by the Sunni extremist group, Jaish-ul-Adl, allegedly supported by Saudi Arabia.
From the standpoint of U.S. relations with Riyadh, it is important to note that Saudi Arabia has very recently injected $500 million, a 20-percent stake, into the Russia-China Investment Fund established in June 2012 by two government-backed entities, the Russian Direct Investment Fund and China Investment Corporation (CIC) to advance bilateral economic cooperation between Russia and China.
In response to the November 4th reimposition of U.S. sanctions against Iran, China announced that the Bank of Kunlun, which handles China’s financial transactions with Iran, will stop processing them on November 1.
China’s largest oil refiners, Sinopec and China National Petroleum Corporation, may also stop importing Iranian oil in November, actions which appear to acquiesce to the Trump Administration’s policy to pressure the Iranian regime.
Nevertheless, China has already begun to erode the illusion that it will adhere to the U.S. demand that countries reduce Iranian oil imports to zero. Beijing’s announcement does not preclude smaller refiners from accessing Iranian oil and Iranian and Chinese bankers have already held several meetings to establish a new financial system to replace the Bank of Kunlun.
In addition, Iran has set up an oil exchange mechanism by which private companies acting as brokers may evade U.S. sanctions. The first such sale occurred on October 28 for 280,000 barrels to three unnamed buyers.
Chinese-Iranian collaboration is an important element in the formula for CPEC success, which remains the center of gravity of China’s global ambitions.
This column was originally published at The Daily Caller.
The views expressed in CCNS member articles are not necessarily the views or positions of the entire CCNS. They are the views of the authors, who are members of the CCNS.