One analyst told CNBC that Iran will need to lift sanctions if it hopes to boost economic ties with China – and that can only come with a successful nuclear deal.
Iran, which has business dealings with China, is currently facing a slew of US devastated its economy.
On Thursday, Iranian President Ebrahim Raisi is expected to meet Chinese President Xi Jinping and Russian President Vladimir Putin in Uzbekistan.
It comes as the Islamic Republic prepares to join the Shanghai Cooperation Organization, a security group made up of Russia, China, India, Pakistan and four Central Asian countries.
Iran currently has observer status in the Shanghai Cooperation Organization, but it is set to become a full member at the upcoming summit in Samarkand, Uzbekistan.
In order for this relationship to grow, you need to have sanctions relief, because a lot of companies … have no desire to take the risk of sanctions.
Ali Al Ahmadi
Geneva Center for Security Policy
Ali Ahmadi, executive fellow at the Geneva Center for Security Policy, told CNBC on Tuesday that Iran’s bid to join the Shanghai Cooperation Organization does not necessarily indicate that Tehran will enjoy a smooth economic relationship with China.
“It will not mean that Iran does not need sanctions relief,” Ahmadi said. “Iran sells some oil to China…but their relationship is very much one-dimensional.”
Iranian President Ebrahim Raisi speaks during a press conference in Tehran on August 29, 2022. Ali Ahmadi of the Geneva Center for Security Policy, said Iran needs sanctions relief from a successful Iranian deal to strengthen its relations with China. This comes as Iranian President Ebrahim Raisi is expected to meet with his Chinese and Russian counterparts in Uzbekistan on Thursday.
STR | AFP | Getty Images
In mid-2018, the United States unilaterally withdrew from the nuclear deal – officially referred to as JCPOA Joint Comprehensive Plan of Action.
Since then, Washington imposed Sanctions on Iran destroyed its economy. The US sanctions extend to companies doing business with Iran and impose a ban on all imports coming from Iran, among other types of bans.
“For this relationship to grow, you need to ease sanctions, because a lot of companies, even state-owned companies in China … do not have the appetite for sanctions risk,” Ahmadi said.
earlier this month, The United States has imposed sanctions on Chinese companies that helped sell Iranian oil.
Sanctions can both deter and motivate
Javad Salehi-Isfahani, a professor of economics at Virginia Tech, told CNBC that US sanctions will make Chinese companies think twice about doing business with Iran, especially if the companies are highly dependent on the West.
“Chinese producers are highly dependent on exports to the West, and they should abide by unilateral US sanctions, no matter how much they reassure their Iranian counterpart that they consider them unfair,” Esfahani said.
However, Behnam Taleblu, a senior fellow at the Foundation for Defense of Democracies, said the sanctions could benefit the most risk-tolerant consumers.
Unapplied – or sporadic – oil sanctions may be imposed Opportunities for risk-taking dealers, while smugglers may find creative ways to generate revenue, according to Taleblow.
Iran’s relationship with China
Iran has recently begun to actively turn eastward. Before the United States withdrew from the nuclear deal in 2018, Iran’s Supreme Leader Ayatollah Ali Khamenei declared that one of the top priorities of its foreign policy was Preferring the East over the West. “
Last month, the Trump administration’s former national security adviser, John Bolton, told CNBC that lifting sanctions on Iran could push the Islamic State to forge closer ties with both China and Russia.
Bolton said that exempting Iran from international sanctions would become richer and stronger, making it a “better partner for Russia.”
“In the Middle East, where [Russia and China] They have overlapping interests, and their preferred partner is Iran. So it’s kind of a triangular arrangement that I think has global ramifications,” Bolton said.
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