China Will Not Capitalise on the End of the Iran Arms Embargo

19 Oct 2020

China Will Not Capitalise on the End of the Iran Arms Embargo

By Lucille Greer

October 19, 2020

https://www.bourseandbazaar.com/articles/2020/10/17/china-will-not-capitalize-on-the-end-of-the-iran-arms-embargo

 

 

On October 18, the arms embargo imposed on Iran by the United Nations expired. The provision, which was part of UN Resolution 2231 (2015) that endorsed the Iran Nuclear Deal, expired five years after the resolution’s endorsement and a month after the failure of a U.S. attempt to extend its terms.

There has been some speculation that China will rush in to export conventional weapons to the Islamic Republic. Iranian Foreign Minister Javad Zarif’s visit to Beijing two weeks ago no doubt set off alarm bells in Washington. China appears keen to maintain its reputation as a legitimate international player that abides by the rules. In July, Chinese Foreign Ministry Spokesperson Hua Chunying stated, "China has practiced caution and responsibility in arms exports. And no one can criticize China for conducting regular arms trade with any country that does not violate international obligations."

Between dueling words from Beijing and Washington, the reality is that an influx of Chinese arms to Iran not track with the trend of Chinese arms sales in the Middle East or the broader Chinese-Iranian relationship, which is characterised by mutual anxieties. While the expiration of the arms embargo could offer some opportunities in the long-term, China is not set to become a major arms exporter to Iran.

Conventional weapons trade is a lucrative business in the Middle East. The countries of the region are consistently global leaders in arms imports. Purchases are on the rise—between 2014 and 2019, arms flows to the Middle East increased 87 percent. At the same time, the Chinese military is moderising and seeking advanced weaponry, propelled by the priorities of Xi Jinping’s rising China. While the Chinese defense industry will always have the People’s Liberation Army as their supreme client, arms exports have been encouraged by Beijing. The PRC ranked the world’s fifth-largest weapons exporter for the period of 2014-2019.

To be among the most competitive international defense contractors, Chinese companies need to acquire customers in the Middle East. China’s unique selling point for buyers in the Middle East is the promise of apolitical trade. The arms market, however, is not just a commercial market, but a political one as well. The PRC views the Middle East as a political tar pit and Chinese policymakers see the failures US policy in the region as a cautionary tale. But Chinese defense contractors have benefited from the region’s instability—the Middle East is an arena where Chinese weapons can be battle-tested.

China first made inroads selling weapons to Iran during the Iran-Iraq War in the 1980s, a conflict in which it also sold arms to Iraq. Iran ordered fighter aircraft, tanks, guns, and missiles from the PRC. There were some sporadic orders in the 1990s and 2000s, the final one being in 2005, according to data compiled by the Stockholm International Peace Research Institute. After the imposition of international sanctions, no more orders have been recorded, though previously scheduled deliveries may have been taking place as late as 2015. 

To date, there is no hard evidence of any major Chinese violations of international arms embargoes, although the U.S. has sanctioned Chinese defense companies before. International sanctions, which China voted for, have worked to halt Chinese-Iranian arms trade. Iran has not acquired the latest high-tech weaponry to come out of the Chinese defense industry. The PRC has supplied a majority of Iranian arms imports since 2006, but that is only by dint of international sanctions regimes. As in many fields, Iran is not paired with China by choice. Iran’s only other reliable supplier is Russia, with some sporadic business with Belarus, North Korea, Pakistan, and Ukraine. The end of the arms embargo is unlikely to return momentum to a trade relationship that has none. Even Russia, Iran’s only other realistic alternative for advanced weapons expiration the end of the arms embargo, faces its own hurdles and hesitations in selling arms to Tehran—Russia too is unlikely to prove a major weapons supplier to Iran.

While China’s sales to Iran have languished, arms sales to the countries like the United Arab Emirates and Saudi Arabia have grown, reflecting that relations with Iran are just one pillar of China’s overall strategy in the Middle East. One of the Beijing’s diplomatic feats is maintaining relationships with regional powers such as Iran and Saudi Arabia, whose rivalry is responsible for a great deal of bloodshed.

Sales of unarmed aerial vehicles (UAVs), or drones, are a hallmark of China’s international arms sales. China has two series of drones on the international arms market: The Wing Loong I and II and the Chang Hong series, the most exported of which in the Middle East is the CH-4. The CH-4 drone is a medium-altitude, long endurance armed drone comparable to the U.S.-made Predator series, only cheaper. China has exported Wing Loong and CH-4 drones to Saudi Arabia, the UAE, Iraq, and Pakistan, but not Iran. Saudi Arabia and the UAE have both deployed CH-4 drones in the war against the Iranian-backed Houthis in Yemen, a fact sure to vex Iran. The sale of ballistic missile systems and certain kinds of long-range UAVs to Iran remain subject to a nuclear-weapons related embargo in force for a further three years.

Saudi Arabia also enjoys joint arms production with China. During King Salman’s visit to Beijing in 2017, one of the agreements signed included China’s first drone factory in the Middle East. King Abdulaziz City for Science and Technology (KACST) signed a partnership agreement with China Aerospace Science and Technology Corporation (CASC) to manufacture the CH-4 drone line.

Iran has sought to address what it perceives as unequal treatment. In a leaked draft of the Chinese-Iranian Comprehensive Strategic Partnership agreement, there are provisions calling for joint defense production ventures as part of security cooperation. Whether such joint production enterprises will materialize has yet to be seen, as China has yet to even sell drones to Iran. Other Chinese efforts to invest in production in Iran have struggled, particularly oil and gas.

Selling a substantial arsenal to Iran would endanger China’s other partnerships in the region, to say nothing of heightening regional threat perceptions and tilting the Middle East towards further instability. The financial rewards of any such sales are not worth upsetting the entire basis of Chinese foreign policy in the Middle East.

Another pillar of China’s Middle East strategy is reliance on the U.S. security architecture in the region. While China has made its own strides in mobilising its naval fleet and leveraging a logistical base in Djibouti off the Gulf of Aden, these developments pale in comparison with the U.S. military presence in the region. The U.S. presence serves to secure the flow of oil from Middle Eastern producers to China. Significant arms sales to Iran could increase the likelihood of a confrontation between U.S. and Iranian forces in the Persian Gulf—an outcome Chinese policymakers fear. Furthermore, China’s relationship with the U.S. will always be a higher priority than its relationship with Iran. Historically, China has pulled back from engagement with Iran under U.S. pressure. Until the latest UN vote to extend the arms embargo in Iran, China generally did not defy the United States on Iran. In this regard, the vote was more of an ill-omen for U.S. multilateralism and the U.S.-China relationship than a material promise of China’s commitment to Iran.

Finally, there is also the matter of whether Iran can actually pay for large orders of advanced arms. Years of sanctions had taken their toll even before the COVID-19 crisis has ravaged the country’s economy and taken over 29,000 lives. Even with the appetite for defense spending of an increasingly militarised state, Iranian priorities will have to adapt, and Beijing’s motivation is profit. Additionally, the PRC does not manufacture the kinds of weaponry Iran covets. Iran is desperately in need of air-to-air machinery and air defense systems. Despite much effort, China cannot yet produce passable jet engines, and there are questions about its drones. China and Iran are mismatched when it comes to the weaponry on offer and spending capacity.

When it comes to trade, politics, and wider security, Chinese and Iranian interests can often align, but the partnership between the countries has not developed into a functional alliance. Certainly, the end of the UN arms embargo on Iran presents a long-term commercial opportunity for China’s defense industry. But in concert with both China’s ambitions and restraint in the region, it is unlikely that China will move to capitalise on the expiration of the arms embargo.