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Tehran Turning East Amid Sanctions

Tehran Turning East Amid Sanctions Tehran Turning East Amid Sanctions

Iran, burdened by American sanctions and a terrible coronavirus outbreak, has turned east to China over the last year for economic support, the Hill wrote in a recent article.  
Despite an acute debt crisis that led Beijing to scale back its major Belt and Road Initiative, falling Iranian oil prices have enticed China to look for astute, even covert, alternatives for cheaper energy resources, undermining the United States. 
Over the last few years, China has been the largest oil importer and relied more on the Middle East for it. It views Iran as both a critical supplier of energy resources and a participant in its global infrastructure project. 
China considers freedom of navigation in the Persian Gulf as critical to protection of its interests. But in 2020, Beijing purchased just three million tons of Iranian oil, down more than 70% from 2019.
The new US administration offers hope that, with the return to a nuclear deal and the easing of sanctions, oil will begin to flow vigorously once more. But barring systemic reform that will bolster business environment for Western firms, Iran is still reliant on Chinese economic relations. 
The draft of an ambitious deal with China, which envisions $400 billion worth of projects, emerged over the summer and signals Beijing’s intention to play a greater role in the region. This has coincided with other prominent leaders in the Middle East and Africa turning to China for grand infrastructure investments.
Iran needs cash and its labor market is not in good shape. The International Monetary Fund estimates a sharp contraction of the economy while inflation is above 30%. 
Its currency rial has lost 85% of its value in two years. There are over one million coronavirus cases and over 55,000 deaths in the country of 80 million. 
China could profit from Iranian infrastructure projects. Collaboration with Iran will also help China gain a greater hold on the Belt and Road Initiative corridor linking markets in Asia, Africa and Europe. 
What is likewise significant about this partnership is that China and Iran have broader ambitions as foes of the United States. While China now challenges the United States in Asia, the Middle East and Iran could become the new battlefield for a confrontation between the two powers. 
By providing scarce resources to Tehran, China can bolster the Iranian government burdened by sanctions. The influx of cash could have remedial effects by improving the buying power of Iranian citizens and reducing inflation.
 

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