Disappointed with the lack of action by Europeans, who did nothing to comply with their obligations under the nuclear deal, Iran is shifting its diplomatic and trade emphasis to its main partners in Asia - China, India and Japan. In fact, the reorientation of Iran’s foreign policy has been already going on for several decades, since the West started to impose various sanctions against the country. There are also objective reasons pushing Iran in eastern direction, in particular - a rapid growth of two biggest Asian economies - India and China. In recent years, more than 60% of Iranian oil was intended for Asia.
In this respect, the latest visit of Japan’s Prime Minister Shinzo Abe to Teheran speaks for itself. The Japanese leader came to Tehran on June 12. On the same day he held talks with Iran’s President Hassan Rouhani. On the following day he met with Supreme Leader of Iran Ali Hosseini Khamenei.
Considering that Japan is one of the three biggest importers of Iranian oil alongside with China and India, Tehran attaches significance to the talks with Abe.
On the eve of his visit to Iran, international media outlets were playing up the idea that Tokyo, which has special relations with both Washington and Tehran, will act as a mediator trying to reduce tension between the U.S. and Iran. Speaking at a joint press conference held after the talks with Hassan Rouhani in Tehran, Abe actually confirmed the role of the mediator Japan was trying to play. Speaking about the tension in the Middle East, Abe stressed that, “an armed clash must be avoided by all means.” He also said that Japan “wishes to play an utmost role in its capacity to ease tension.”
For the moment it is hard to say whether Abe’s peacekeeping efforts will be successful or not. The only thing Rouhani assured him of is that Iran “will not initiate a conflict in the region, even against the U.S.” As for any talks with Donald Trump, the leadership of the Islamic republic has declared in recent weeks that they do not have even an idea of holding the dialogue with Washington because the level of trust is now close to zero.
Iranians can be understood. Should they trust the nation, which withdrew from the internationally recognized agreement (the Joint Comprehensive Plan of Action – JCPOA), imposed tough sanctions against their oil and banking sectors, while new sanctions are being imposed in bunches: either against the Islamic Revolutionary Guard Corps or 39 Iranian refining companies.
Now, a new Iranian entity that was created for direct interaction with INSTEX, the European financial mechanism to ensure settlements in the euro with Tehran beyond the control of Washington, is also under threat of sanctions. If the U.S. imposes these sanctions, this will put an end to the EU’s attempts to fulfill its obligations as part of the nuclear deal with Iran and in fact will mean the failure of the European diplomacy. In this case, Iran’s U-turn to the East will become obvious.
Although Japan supported the JCPOA from the very start, it gave way to sanctions and now has almost stopped buying Iranian oil. But, apparently, at the talks in Tehran they were discussing the resumption of supplies. At the joint press conference held after the talks on Wednesday, Rouhani welcomed Japan’s interest in buying Iranian and solving the country’s financial problems, the IRNA news agency reported. He added that the import of Iranian oil is the point that can guarantee further expansion of relations between the two countries. If we translate his statement from the diplomatic language to the everyday speech language, it sounds like this: “if you resume oil imports, you will have greater access to the Iranian market.” It is clear that the talks really concerned an extensive cooperation, including investments in the southeastern port of Chabahar and in the development of the Makran industrial zone. “We are interested in mutual cooperation on peaceful nuclear energy,” Rouhani added.
India, which is another major partner of the Islamic republic, has also stopped buying Iranian oil. This came quite unexpectedly for Iranians, since the two countries had already worked out a mutual mechanism for trading in national currencies bypassing the dollar. Some Iranian media assumed that India had only suspended imports in order not to irritate Washington on the eve of the forthcoming election of the country’s Prime Minister. Considering that reelected Prime Minister Narendra Modi took office May 31, Tehran is now clearly awaiting steps from New Delhi.
In general, Iran and India are building a strategic partnership. Over the past ten years, this process was based on the formation of a trade corridor for Indian goods shipped to Afghanistan and Central Asia through the Iranian southeast port of Chabahar. India allocated $500 million for the development of the port infrastructure and was going to lease its loading berths for a long period. India even convinced Washington to exclude the port from the sanctions list of Iranian companies and enterprises. Iran has reasons to expect India to resume oil imports, even if they are paid not in dollars but in rials or rupees, as a compensation for granting it such a strategic access to major regional markets. Tehran also hopes that the Chabahar project will push New Delhi to more active involvement in the region on the side of the Islamic Republic.
Nevertheless, if India does not resume oil imports, Iran has a backup plan, New Delhi would unlikely be happy about. Tehran is already in talks with India’s political and trade rivals - China and Pakistan - to make Chabahar part of the China-Pakistan Economic Corridor (CPEC). The potential of CPEC is estimated at billions of dollars and its infrastructure already includes the Pakistani port of Gwadar, which is being financed by Beijing. If Chabahar is included into CPEC and Japan invests in it, India will lose its “exclusiveness” on the route to Afghanistan and Central Asia. In the future, Gwadar is expected to play an important role in supplies of Iranian gas from the largest South Pars field to Asia, mainly to China. Thus, Iran will strengthen its relations with both Pakistan and its main trading partner, China.
Now China accounts for 20% of Iran’s total foreign trade. Unlike Tokyo and New Delhi, Beijing did not succumb to sanctions. The escalating U.S.-China trade war created additional grounds for the expansion of cooperation between Tehran and Beijing.
In general, being under sanctions, Iran is counting on its largest partners in Asia, which can ease the U.S economic pressure on the Islamic Republic. It is also important to take into account the global shift of world power to the east. This means that China, India and Japan are likely to sideline Europe in Iran’s foreign policy doctrine.