China Wades into IRAN-SAUDI Swamp

Iran is back with a bang. And what a bang. The simplistic Western narrative rules that after the end of UN, US and EU sanctions – in fact a few still remain in place – Iran is rejoining global markets.

That may be the case – from Tehran clinching a deal to buy 114 planes from Airbus to Iranian oil soon hitting Western markets. But the key question is actually how, at what pace, and with what partners Tehran plans to rejoin global markets.

All the commotion, at the moment, predictably revolves around oil. Iran’s Deputy Oil Minister for Commerce and International Affairs, Amir Hossein Zamaninia, said the new oil export target is an extra 500,000 barrels a day within a few months. Tehran may indeed boost production by 600,000 barrels a day in six months, and add up to 800,000 barrels a day in output before the end of 2016.

Not even the sharper oil analysts really know what this will mean in terms of an all-out, open market-share battle between Iran and Saudi Arabia. What even some sections of Western corporate media are not buying anymore are Saudi diversionist tactics about their cheap oil strategy – which has been essentially designed to hurt Iran, and Russia.

The fact is Iran is already selling more oil as we speak. Over 1,000 lines of credit have been opened for banks, according to President Hassan Rouhani. Energy-hungry Europeans are predictably going nuts. Even with non-denial denials, the fact is Shell executives, for instance, are already in Tehran, talking about Iran’s “energy potential” and solidifying their positioning as Iran’s “prime partner” in energy. Meanwhile, Iran’s oil tankers are already sailing under Lloyd’s insurance.

Into this frenzy steps in none other than the aspiring ‘New Master of the Universe’; Chinese President Xi Jinping, currently on a ultra high-profile Middle East tour of Saudi Arabia, Egypt and, of course, Iran. This is Beijing’s cool, calculated way of laterally selling One Belt, One Road – or the New Silk Roads project – by carefully increasing “strategic cooperation” in the energy sphere.

Take the strategic cooperation agreement signed this Tuesday in Riyadh between Aramco and China’s Sinopec. It may be worth no more than $1.5 billion, but there will be others in its wake; after all Saudi Arabia, on and off, remains the biggest supplier of crude oil to China.

Yet the really crucial strategic partnership here is Beijing-Tehran.

China has been Iran’s biggest trade partner since 2010, as well as the top buyer of Iranian crude and non-petroleum products (ore, agriculture) even under UN, US and EU sanctions.

Beijing was active in solidifying the Iranian nuclear deal clinched last July – backing the Russians at the table.

And in a graphic demonstration for the entire world to see, Xi is the first head of state to visit Iran since nuclear-related sanctions were lifted this past weekend.

All this leads to a long-term question: is Iran the new China, in terms of a capitalist development bonanza, and will Iran follow a Chinese-style, centrally controlled, development project from now on?

What’s certain is that Supreme Leader Ayatollah Khamenei stressed over and over again that the renewal of negotiations with the US touched only the nuclear issue. And he repeatedly warned about the cultural, political and security consequences of an economic opening that could eventually weaken the Islamic Republic.

So forget about Iran as a US partner. That won’t happen. In the West, the privileged partner will be the EU, especially concerning investment in energy and in the sprawling, young, educated, virtually “virgin” Iranian market. And then, there’s Eurasia integration.

Relations with Russia will remain solid – from the need to secure Iran’s northern frontier to a counterbalance to the American encirclement (which remains in place). Tehran and Moscow still need to solve the status of the Caspian Sea.

But both share serious strategic interests in the Caucasus-Caspian-Central Asia arc – from fighting Salafi-jihadism (whose ideological matrix is, who else, Saudi Arabia) to the most crucial categorical imperative; the drive by the Shanghai Cooperation Organization (SCO) for a Central Asian security mechanism limiting all Washington’s options.

This means that much sooner rather than later, perhaps in a few months, Iran will become a full-fledged member of the SCO.


It certainly does not hurt that in militarily Iran finally received Russia’s S-300 missiles, and their political-military coordination is in full effect; see for instance those Russian cruise missiles launched from the Caspian last October against ISIS/ISIL/Daesh traversing Iranian airspace.

In both Syria and Iraq, the Russia-China strategic partnership – as well as Iran – shares the same basic objectives; support for the governments in both Damascus and Baghdad; containment of NATO; and the overall fight against Salafi-jihadism. The same applies to Afghanistan; Iran – and the SCO – will do what it takes to prevent Afghanistan from being a perennial jihadist platform.

And in the ‘Pipelineistan’ domain, Iran’s relations with Pakistan tend to stabilize; after all Islamabad badly needs the Iran-Pakistan (IP) pipeline, which will eventually become IPI (reaching India, with which Iran has excellent relations).

And that brings us back once again to the ultimate confrontation; the vicious proxy war between Tehran and the (collapsing) House of Saud on multiple theaters, from “Syraq”, Bahrain and Yemen to the oil market.

Everything is irreconcilable here. Wahhabism (spawning Salafi-jihadism) against Shi’ism. A tribal, dynastic, corrupt monarchy against a republic born out of a popular revolution. The weaponized American umbrella over the Persian Gulf against activist anti-imperialism.

Xi Jinping’s Middle East trip cannot possibly work as a messianic cure. The strategic relationship that matters is Beijing-Tehran – from the energy sphere to Eurasia integration via One Belt, One Road. But Beijing also needs Saudi oil.

Warrior prince Mohammed bin Sultan – who’s actually running the show in Riyadh – is thinking of selling Aramco. Why not offer it to Beijing? But be prepared to be paid in yuan. And all the oil goes to China. Talk about a New Silk Road offer one can’t refuse.

Pepe Escobar is an independent geopolitical analyst. He is the author of “Globalistan” (2007), “Red Zone Blues” (2007), “Obama does Globalistan” (2009) and “Empire of Chaos” (2014), all published by Nimble Books. His latest book is “2030”, also by Nimble Books, out in December 2015.



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