13.05.2019-19.05.2019 • No: 211

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POSSIBLE IMPACT OF U.S.-IRAN TENSIONS ON The long-standing conflict between the conflicts in recent years, can affect the But Beijing’s support for Iran in the U.S.- United States and Iran, which especially in- whole world with its geopolitical, geostrate- Iran confrontation is economically damag- tensified after Donald Trump’s accession to gic and geoeconomic dimensions. The rea- ing for China. The possibility of the Iranian power, has passed to a new critical stage son is that the U.S. ban on Iran’s oil exports economy shrinking due to the U.S. sanctions with the latest sanctions imposed by Wash- will affect not only the Iranian economy, but may affect China, Iran’s largest trading part- ington. Iran, which is rich in energy re- also other countries that are in close cooper- ner. Despite the abolition of sanctions sources, argues that its nuclear energy de- ation with Iran in the trade, economic and, against Iran following the JCPOA agree- velopment efforts are for peaceful purposes, particularly, energy sectors. The total ban on ment, the decline in the Iranian economy while the United States is concerned that Iran’s oil exports, which has one of the larg- due to a sharp drop in global oil prices has Iran’s nuclear power capacity can turn into est oil reserves in the world and is the third led to a decrease in the volume of trade be- nuclear weapons production. In fact, the largest oil producer, will lead to significant tween Iran and China. For example, the Chi- United States supported Iran’s nuclear pro- deficits in the global energy market. In this nese-Iranian bilateral trade volume, which gram in the 1950s. However, after Iran’s Is- context, it can be said that China, which is reached $51.85 billion in 2014, decreased by lamic Revolution in 1979, relations between the biggest oil customer of Iran, will be most 34.7% in 2015 to $33.842 billion and by the two countries soured, and after the affected by the U.S.-Iran tensions. 7.7% in 2016 to $31.23 billion. The Chi- 2000s, the United States accused Iran of try- From the geopolitical and geostrategic nese-Iranian bilateral trade turnover, which ing to develop nuclear weapons. Although points of view, it can be assumed that the increased by 19% to 37.18 billion dollars in Iran’s efforts to develop nuclear energy are rising U.S.-Iran tensions may lead to the de- 2017, fell by 5.4% in 2018 to $35.13 billion. regarded as the main cause of Washington- velopment of political relations between Considering the fact that most of the Chi- Tehran tensions, it can be said that the basis China and Iran. In this regard, first of all, we nese-Iranian bilateral trade is composed of of this endless tension lies in the strategic in- need to briefly review the China-Iran rela- raw materials, especially oil, the U.S. oil terests of both Iran and the United States. tions. China and Iran, which established of- sanctions against Iran could directly affect The economic development and growing re- ficial diplomatic relations in August 1971, the Chinese-Iranian trade. gional influence of Iran, which has an im- have been developing bilateral cooperation From the perspective of China, which im- portant geostrategic position between Cen- at the level of strategic partnership in the po- ports approximately one-fourth of Iran’s to- tral Asia, Eurasia and the Middle East, is of litical, military, commercial-economic and tal crude oil, a complete ban on Iran’s oil ex- great concern for the United States, Israel other fields. After the 2000s, the United ports will result in a significant energy sup- and some of the Gulf countries. On the one States has long accused Iran of trying to de- ply deficit for China. Currently, nearly 7% hand, Iran seeks to increase its regional in- velop nuclear weapons. In addition to that, of China’s total oil imports are provided by fluence with its special position in the Per- the war in Afghanistan in 2001, the Iraq War Iran. If China continues to import oil from sian Gulf and the Hormuz Strait, which are in 2003 and the Arab Spring movements that Iran in spite of the U.S. sanctions against of great importance in terms of global en- started in 2010 have led Iran to pursue an Iran, Chinese companies engaged in trade ergy production and energy transportation, anti-U.S. policy and to have closer relations and cooperation with Iran may also be sub- on the other hand, the United States together with China as an alternative power. China, ject to sanctions by the United States. For with its allies strives to control the region. which is trying to increase its regional and example, in April 2018, the United States Moreover, the involvement of the global and global impact in parallel with its economic banned the Chinese telecommunications gi- regional powers, such as the European Un- growth, has been willing to develop its co- ant ZTE from purchasing U.S. components ion (EU), Great Britain, China and Russia, operation with Iran, an energy-rich and im- for 7 years because of its illegal exports to brings the tensions to the global level. portant Middle Eastern country. In this con- Iran in disregard for the U.S. sanctions Although the parties tried to preserve the text, it could be said that the relations be- against Iran. On May 15, 2019, the Trump administration also imposed sanctions Joint Comprehensive Plan of Action tween China and Iran are undergoing a new against the Chinese telecommunications gi- (JCPOA), signed in July 2015 with the par- development period after Iranian President ant Huawei. ticipation of the United States, the EU, Ger- Hassan Rouhani visited Beijing in May In summary, the U.S.-Iran conflict may have many, China, France, Great Britain, Iran and 2014, and Chinese President Xi Jinping vis- a direct impact on the China-Iran relations Russia, in May 2018, the Trump administra- ited Tehran in January 2016. As recently as from the political, trade-economic and geo- tion unilaterally withdrew from the JCPOA. in February 2019, during the visit of Speaker political standpoints. Moreover, the rise of Moreover, the Trump administration, which of Iran’s Parliament (Islamic Consultative the U.S.-Iran tensions at a time when the started to implement economic sanctions Assembly) Ali Larijani to Beijing, Xi stated trade war between the United States and against Iran in August and November 2018, that despite global and regional develop- China flares up was a factor that brought terminated the exemptions from sanctions ments, China would remain committed to China and Iran closer together. In recent for eight countries that import Iranian oil, in- developing a comprehensive strategic part- years, due to the geopolitical changes, China cluding China, on May 2, 2019. Iran nership with Iran. China was one of the first in Asia-Pacific, Iran in the Middle East, and strongly objected to the U.S. decision on a countries to react to recent U.S. sanctions Russia in Eurasia are forming a tripartite al- total ban on Iranian oil exports. Conse- against Iran. For example, on April 23, liance against the United States. However, quently, on May 8, 2019, Tehran stated that 2019, Chinese Foreign Ministry Spokesper- while China is steadily trying to develop it would fully or partially halt its obligations son Geng Shuang announced at a regular strategic partnership with Iran, how China under the nuclear agreement in response to press conference in Beijing that China was will continue to import oil from Iran under Washington’s sanctions. On the same day, strongly opposed to the U.S. unilateral sanc- harsh U.S. sanctions against Iran is a big Washington imposed sanctions on Iran’s tions against Iran. On May 7, 2019, Chinese question. If China’s oil imports from Iran iron, steel, copper and aluminum sectors, Foreign Minister Wang Yi, who met with decreases in the coming period, there will be which has further exacerbated the already Iran’s Foreign Minister Javad Zarif, said significant economic losses for both China growing U.S.-Iranian tensions. that China was opposed to the U.S. introduc- and Iran. The U.S.-Iranian tension is a chal- It can be said that the rise of the U.S.-Iran tion of unilateral sanctions against Iran and lenging test for the Chinese-Iranian relations tensions in the Middle East, which has be- supported Iran’s protection of its own inter- and may be a bargain for the China-U.S. re- come the center of many global and regional ests. lations.

Written by Omirbek Hanayi, Eurasian Research Institute,

Politics, Foreign Affairs, and Security Economy, Finance, and Energy Society and Culture  The EU extended the mandate of its ad-  During his visit to Kazakhstan, Prime  The International Turkic Academy held visory mission in Ukraine until May 31, Minister of Georgia Mamuka Bakh- the international forum titled “The 2021 and increased its budget by more tadze met with President Kassym- Jomart Tokayev and Prime Minister Great Steppe: Its Cultural Heritage and than 25% to €54 million. The overall Role in World History” in Paris. About objective of the mission with the head- to discuss prospects of cooperation in trade, economic, invest- 70 leading Turkologists from across the quarters in Kyiv and field offices in ment, tourism and humanitarian sectors. world and UNESCO representatives Lviv, Kharkiv and Odessa is to support The parties also reviewed opportunities discussed historical issues related to the the reform of Ukraine’s civilian security for boosting transit and transport com- services. Turkic civilization and its contribution munications, including via the ports of to world culture, including the article  The EU adopted an updated strategy on Aktau and Kuryk as part of the Trans- “Seven Facets of the Great Steppe” by relations with outlining its Caspian International Transport Route. th . vision for a renewed partnership with  The 12 Astana Economic Forum, th the region. The future EU engagement themed “Inspiring growth: people, cit-  The 14 Forum of CIS Creative and Sci- with the five regional countries will fo- ies, economies”, was held in Nur-Sul- entific Intelligentsia was held in Ash- cus on strengthening their capacity to tan. 5,492 delegates from 74 countries, gabat under the title “CIS common hu- overcome internal and external shocks, including politicians, experts, business- manitarian space: dialogue in the sphere supporting economic modernization, people, and scientists, attended the fo- of culture, science, education”. During and promoting regional cooperation in rum, which received significant interest the event, more than 200 delegates from Central Asia. from foreign and domestic media, with the CIS countries discussed innovative  The government of Tajikistan, in coop- 710 journalists from 30 countries cover- forms of cooperation in education, ing Eurasia’s annual key business event. youth policy and intercultural dialogue. eration with the UN, the EU and the  During the Astana Economic Forum, OSCE, organized the high level confer- the Turkic Council member states  The Kazakh National Geographic Soci- ence titled “International and Regional signed a charter of a joint Chamber of ety jointly with the Nazarbayev Univer- Cooperation on Countering Terrorism Commerce and Industry of the Turkic sity scientists launched a scientific and and its Financing through Illicit Drug countries that will replace the Turkic educational expedition to the Aral Sea. Trafficking and Organized Crime” in Business Council. The secretariat of the The 4,000 km long Aral 2019 expedi- Dushanbe. The purpose of the event was newly established chamber, which is tion will study hydrological water envi- to strengthen cooperation, identify ef- aimed at further promoting trade and ronment in several parts of the Aral Sea, fective practices to combat terrorism fi- economic cooperation between the Tur- nancing and facilitate expert discus- kic-speaking countries, will be located map out tour itineraries across the Aral sions on possible response measures. in Turkey. region and collect unique photo and video footage.  The Seventh Foreign Ministers’ Meet-  The CIS Intergovernmental Coordinat- ing of the “Central Asia plus Japan” Di- ing Council on Seed Production held its  Singapore’s KinderWorld International alogue, which was created 15 years ago, meeting in Ashgabat. During the two- Group attended the third annual Ka- was held in Dushanbe. During the three- day event, the parties discussed a wide zakhstan Global Investment roundtable, session meeting, the participants dis- range of issues of interstate cooperation held as part of the 12th Astana Economic cussed the development of mutual prac- in the field of selection, seed produc- Forum. In accordance with a roadmap tical cooperation across regional secu- tion, plant breeding, viticulture and gar- signed during the event, the Singapo- dening. The CIS representatives also at- rean company will build a network of rity, trade, transport, investment and tended an exhibition of agricultural tourism, with special emphasis placed achievements of Turkmenistan and a world-class schools and colleges, along on the efficient use of the region’s specialized international scientific con- with educational campuses, in Nur-Sul- transit and transport potential. ference. tan, Almaty and .  During his visit to Turkmenistan, Ira-  President of Uzbekistan Shavkat Mir-  USAID will allocate a grant of $19.5 nian Foreign Minister Mohammad Ja- ziyoyev received head of the Russian million to support reforms in the field of vad Zarif met with President Gurban- Lukoil company Vagit Alekperov, who public education in Uzbekistan. The guly Berdimuhamedov to exchange visited Tashkent to attend the 23rd inter- funds will be used to transform ap- views on international and regional de- national exhibition “Oil and Gas of Uz- proaches to school management, velopments and ways to expand cooper- bekistan 2019”, to discuss prospective teacher training, teaching, and the de- ation, including on the Caspian Sea. Za- oil and gas projects. Currently, the vol- velopment of teaching materials. The rif also held talks with senior Turkmen ume of Lukoil investments in Uzbeki- officials to discuss bilateral political, stan exceeds $7.5 billion, and the joint project will also facilitate the integra- commercial, transportation, energy and projects include the Kandym gas pro- tion of modern information technolo- customs ties, and Afghanistan-related cessing complex and the development gies into the educational process, as economic assistance projects. of the Khauzak, Shady and South-West well as increase transparency and ac-  The delegations of Kyrgyzstan and Uz- Gissar fields. countability at schools. bekistan headed by their security coun-  The Uzbekistan Railways dispatched its  The first ever roundtable on the prob- cil secretaries held bilateral consulta- first transit cargo from Kazakhstan’s lems related to the development of civil tions in Bishkek. Representatives of the port of Aktau to Uzbekistan on the Ak- aviation in Central Asia was held in Du- security, defense and law enforcement tau-Tashkent freight train with 10 well shanbe. Top managers of the regional agencies of the two countries discussed cars carrying 20-foot containers. This airlines examined the existing impedi- border issues, interaction in the fight was a result of successful cooperation between the railway administrations of ments for the growth of air connectivity against terrorism and extremism, coop- in the region and focused on ways to eration in emergency response, and Uzbekistan, Kazakhstan, China, Iran, and Turkmenistan on developing freight promote closer cooperation in this field measures to strengthen veterinary and between the Central Asian states. phytosanitary safety. transportation along the Trans-Caspian International Transport Route.  During the ceremony held in Sarajevo,  As part of his working visit to ,  Kyrgyzstan ratified an intergovernmen- as part of the EBRD’s 28th annual meet- Kazakhstan’s Minister of Defense Ma- tal agreement with Turkmenistan on the jor General Nurlan Yermekbayev vis- ing and business forum, Turkmenistan’s elimination of double taxation and the Hosh Zaman company received the ited the zone of responsibility of the Ka- prevention of tax evasion. The docu- zakh peacekeeping contingent, which is bank’s award for its contribution to en- ment, signed in August 2018 in Ash- suring environmental sustainability. deployed there as part of the Indian bat- gabat, protects a resident of one state talion in the UN Interim Force in Leba- from discriminatory taxation in another The company introduced hydroponic non. The minister was informed about signatory state and prevents tax abuse greenhouses into its production with a everyday activities of the military per- via information exchange between the highly efficient technology that allows sonnel related to maintaining peace and competent authorities of the two coun- growing tomatoes without using soil security. tries. and with reduced water consumption.

Prepared by Dauren Aben and Kanat Makhanov