Iran Deal: Has China Stepped On A Visible Landmine Laid By Modi Government ?

“The smiles of the Chinese and the Russians are as harmful and destructive to Iran as Trump’s frown” – Journalist Shirzad Abdollahi in Hamdeli


In a recent development in July 2020, Iran-China inked a $400 billion deal. This is a 25-year pact:

  • Iran doesn’t gain much from the deal, other than immediate relief from the American sanctions.
  • Which would get China a considerable bargain on the Iranian oil.
  • China will invest $400 billion in the Islamic nation over a period of 25 years.
  • China will invest $280 billion in oil, gas, and petrochemicals.
  • China will invest $120bn in transport and manufacturing, within the first five years.
  • The deal would expand economic development in 100 odd diverse fields, including banking and infrastructure, such as airports, high-speed railways, subways, and 5G telecommunications(this would give Iran, China-style censorship of the internet).
  • Iran-China set up an industrial town in the southern port city of Jask, to establish and develop different industries, including petrochemical, refinery, aluminum, and steel industries.
  • China will get priority to bid on any new project in Iran that is linked to these sectors.
  • China will get a 12 percent discount and it can delay payments by up to two years.
  • China will be able to pay in any currency it desires.
  • China will receive total discounts of nearly 32 percent.
  • 5,000 Chinese military personnel to be stationed in the country to protect their interests and the Chinese air force would be given access to Iranian bases.

Xi Jinping and Rouhani : Courtesy Reuters

The pact was first proposed in a January 2016 trip to Iran by Chinese President Xi Jinping, during which the two sides agreed to establish their ties based on a ‘Comprehensive Strategic Partnership’, while announcing discussions would begin aimed at concluding a 25-year bilateral pact. Around the same time in May 2016, Indian PM Modi visited Iran to sign the 10-year Chabahar port contract. Was Modi in Iran for a great future gameplan?

The answer is ‘Yes’. The game plan was to:

  • Counter China in Iran.
  • Render CPEC a failed project.


  • Iran’s first deep-sea port, Chabahar is just 72 km from the Pakistani Gwadar port and has tremendous strategic importance. If Iran’s enemies were to shut down the Straits of Hormuz, Chabahar port, being 300 km to the east of the straits would be able to function, reducing Iran’s vulnerability to international pressure.
  • Operating Chabahar port provides India with a foothold at the mouth of the strategic Straits of Hormuz, through which a third of all the world’s sea-borne oil passes.
  • 2003– India started interaction for the development of Chabahar.
  • 2003-2014– The development idea remained on paper.
  • 2014– Major push came in to take things ahead.
  • 2015– A MoU(Memorandum of Understanding) signed. 
  • 2016– PM Modi converted the MoU in a 10-year contract, to equip and operate the Chabahar port.
  • 2016– A MoU between Iranian President Rouhani, Afghan President Ashraf Ghani, and Indian Railway Construction Company Limited(IRCON), with the Iranian Rail Ministry to construct a 628 km rail line, at the cost of $1.6 billion, from Chabahar port to Zahedan, which will be extended to Zaranj across the border in Afghanistan, and Sarakhs.
  • 2018– Due to US sanctions and difficulties in the execution of a long term contract, a short term contract was signed by visiting Iranian President Rouhani.
  • December 2018– Port commences operations. Since then, as many as 4500 containers have moved from India through Chabahar.
  • 2019– Washington exempts India to develop the Chabahar port in Iran, although the sanctions against trade in oil continued.
  • July 2020– Reports emerge that Iran has decided to proceed with the construction of a rail line from Chabahar port to Zahedan on its own, due to delays from the Indian government in funding.
  • India refutes the claims, and states that it is committed to the project. It further states that Iran is responsible for the earth-moving and preparing the ground for the tracks. Indian responsibility is ‘super-structure’ which includes the tracks and rakes. 
  • Surprisingly, Pakistan was overjoyed with the news that China is replacing India in Iran as a major foreign power. However, there was a hush after the initial jubilation, when they realized that China is moving away from them and the CPEC.

I had predicted an year ago that China would take initiative in Iran sooner than later and the Indian game plan would work out. It might happen that Iran hands over the Chabahar port to China in toto, once the short-term Indian contract expires. In that case, China might abandon the Gwadar port altogether or make it a low key affair. There are four scenarios emerging in the very fast-changing landscape of geopolitics. Let us analyze along with relevant Chinese stratagems:

1. India volunteered for the Chabahar project to sabotage the Pakistani project, CPEC. China understands the vulnerability of CPEC, which passes through volatile POK & Balochistan. Indians have shown their vehement objection to the project, since it passes through Indian territory of POK. China took the Indian bait and shifted its focus to Iran. (Feign Madness but Keep your Balance– Hide behind the mask of a fool, a drunk, or a madman to create confusion about your intentions and motivations).

  • Due to the vulnerability of the existing CPEC, China may divert it through the Afghan territory of the Wakhan corridor. The only common border with China.
  • The Wakhan Corridor was born from the strategic logic, drawn by a joint Russian-British entity to prevent present-day Tajikistan(Russia) and POK(British India) from having a direct border.
  • There are three main advantages of building infrastructure through the Wakhan corridor. 
    • The inhabitants of the region share a common history, culture, religion, and geography thus has fewer chances of disruption. 
    • China is already working on building a road through Wakhjir Pass. Presently it is far from completion, however, Afghan workers have made significant progress, and eventually, it would end up connecting Afghanistan’s road network to the Karakoram Highway, which is part of CPEC, linking Kashgar in Xinjiang to Islamabad.
    • China would have options of either extending the Afghan section of the network further to connect with Chabahar or planned BRI via Tehran with the Port of Jask.

2. India-US have an understanding wherein the US gave India waver on the Chabahar Port, in return India made no progress on the rail project, so that China jumps into the trap and expands its resources, far and wide. Once China exposes itself in the region, Iran could be choked, to take the Chinese project to its logical conclusion: failure. (Lure them onto the roof, then take away the Ladder– With baits and deceptions, lure your enemy into treacherous terrain, then cut off his lines of communication and avenue of escape; to save himself, he must fight both your own forces and the elements of nature). Iranian populace and opposition leaders are unhappy that Iran is getting into a debt trap as well as allowing foreign forces into their land. They are vehemently opposing the one-sided pact: 

  • Critics are comparing the proposed Iran-China deal to the 1828 Treaty of ‘Turkmenchay’ between Persia and tsarist Russia, under which the Persians ceded control of territory in the South Caucasus. 
  • The pact is also being compared to the humiliating ‘Reuter Concession’ made in 1872, between the Iranian ruler Nasir Al-Din Shah and British banker Baron Julius de Reuter. Reuter was given significant control over Persian roads, factories, the extraction of resources, telegraphs, mills, and other public works in exchange for some of the revenue for 20 years. 
  • The relationship between Tehran and Beijing has long been recognized as benefiting China far more than Iran. The Iranian regime has become so miserable economically that it is transgressing its own revolutionary values. 
  • Israel also feels threatened with the deal. Any dollar going into the Iranian system is one that could likely be spent against Israel. 
  • Part of the deal may be a massive sale of weapons to Iran. China plans to sell Iran, attack helicopters, fighter jets, tanks and more, once the UN arms embargo expires in October 2020.
  • Tel Aviv light rail project and the Iranian railway project have common Chinese-owned companies. China could use the companies operating in Israel and Iran for political leverage on Israel, what they had done in the past.
  • Chinese companies have not always fared well in Iran.
    • The Iranians have complained of being fobbed off with third-rate, overpriced goods.
    • China National Petroleum Corporation was expelled from the major Azadegan oilfield and Iran Liquefied Natural Gas project because of slow progress.
    • In 2012, Sinohydro Group was pushed out of a $2bn contract to build Bakhtiari Dam in south-western Iran, and replaced by Khatam Al Anbiya, the construction arm of the Revolutionary Guards.

Tweet by Son of the last Shah of Iran

3. The least likely scenario is the understanding between India and China. In this scenario, the government of India gives up the Chabahar rail project(and eventually the Chabahar port itself), in return, China connects the Wakhan corridor to Chabahar port and not with CPEC. China’s trade routes are secured and CPEC remains in limbo.

4. The last scenario that is not being considered is ‘was India caught napping?’. That is not the case. Indian diplomats are astute and well respected in the diplomatic circles. They were very well aware of the situation and ready for the showdown for a long time.


The 18th-century writer philosopher Thomas Robert Malthus predicted a grim future of the Earth, based on his theory, which is popularly referred to as the Malthusian Catastrophe. Malthus predicted that a growing population will soon outpace the planet’s agricultural production capacity. In other words, at some point, there will be far too many people and very limited food supply, leading to great unrest. Though the modern scientific and technological know-how has proved Malthus wrong, the Chinese may prove him right in a different way, altogether. At the rate at which China is planning to expand, soon it would have too many projects and very limited funds. The Chinese regime, in its desire to be great again, is spreading itself too wide and far, at breakneck speed. The Chinese leadership is wasting hard-working Chinese citizen’s money in faraway lands, with no foreseeable return in the near future. Iranians are very strong nationalist. They do not like any external involvement or interference, beyond a certain limit. This proposition makes Chinese success in Iran a very slim one. Similar Chinese zeal of $200 billion has failed in Africa. Post-pandemic China is looking at loan defaults, and requests for waivers from most of the African nations. China is also staring at economic blockade from the Western and Asian blocks, due to its role in the pandemic. China’s recent handling of Indo-Tibetan border, aggression in the South China Sea, Hong Kong National Security Law, treatment of Uighur & Tibetan minorities, and regular threats to Taiwan might become its death knell.

Has China bitten the Indian bullet or it is smarter than that, only time would tell. However, if India wants to emerge as a future Superpower, it has to start working on it, today. This lesson from Niccolò Machiavelli, the Italian Renaissance diplomat, philosopher, and writer, is a very apt and important one for India- ”There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things.”

Article by Commander Sandeep Dhawan (Veteran)

The article was originally posted here

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