Editor's Note: Below is a complimentary research note written by National Security analyst LTG Dan Christman. To access our Macro Policy research please email sales@hedgeye.com.

Iran-China Cooperation? The Strategic Implications Are Enormous. - wallpaper urban qom urban photos life iran

In one of the most intriguing developments of late on the foreign policy front, the New York Times published last month a leaked draft of an alleged 25-year economic and strategic cooperation agreement between Iran and the PRC; but after a flurry of articles assessing the implications, mostly in regional media, attention has waned.

So, what gives? 

The deal itself evidently includes cut-rate Iranian oil to China for the 25-year period in exchange for over $400 billion of Chinese investment in key Iranian infrastructure, e.g., ports, telecom, highways and rail.

The military component will apparently extend to joint exercises, weapons development, and intelligence sharing, amongst an extensive array of security cooperation opportunities mentioned in the draft.  

The strategic worries abound, of course.

But to remind: the deal hasn’t been consummated; further, there’s evidence of some reluctance, even push-back, from each of the parties. 

Iran, for example, still harbors resentment at having been forced, in a weakened state, to cede major parts of its territory to a growing Russian empire - in 1828! As an analyst at the Washington Institute reminded readers in July, the Treaty of Turkmenchay between Russia and Persia almost two centuries ago hived off from Persia what is now Armenia and major parts of Azerbaijan to Czar Nicholas I.

Legislators in Tehran (apparently with long memories!) fear China may now be repeating what Russia did in the 19th Century.

And China, as reporting suggests, understands fully what befalls major powers (U.S., Soviet Union/Russia, Great Britain until the late 50’s) who try to hustle the Middle East: endless involvement, with marginal strategic returns.    

But if there eventually is a deal, the strategic implications are enormous.  

For Iran, it would be a potential life-line, undercutting any “maximum pressure” campaign by the White House; and going forward, with China in long-term economic overwatch, a cooperation agreement would make it far harder for a President Biden and our European allies to lure Tehran back to the nuclear deal (“JCPOA”) with economic blandishments.

And for China, it would be a strategic flanking maneuver, bolstering their flagging “Belt and Road” program and unsettling the one rising power to whom the U.S. is increasingly turning as a counter-weight to Beijing: India. 

Bottom Line: one of many international developments to watch carefully as we course through the second half of the year; it’s especially unsettling and risk-inducing because a long-term Iran-China cooperation deal would lash together the two countries who represent the greatest threat to stability in the regions they - and the U.S. - consider vital. 

Leaders in Tehran and Beijing fully understand how unsettling this development appears to U.S. strategists; in that light especially, I’d be surprised if the deal doesn’t go through.   

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LTG Dan Christman, USA, Ret. serves as Hedgeye Potomac Research’s Senior National Security Analyst, providing deep insight into international affairs and national security. Most recently, Dan provided strategic leadership on international issues affecting the business community for organizations such as the US Chamber of Commerce. Dan’s long history of leadership includes his service as a United States Army lieutenant general and former Superintendent of the United States Military Academy. He served in highly visible and strategically important positions and four times was awarded the Defense Distinguished Service Medal, the nation's highest peacetime service award.

He also served for two years as assistant to the chairman of the Joint Chiefs of Staff, during which time he traveled with and advised Secretary of State Warren Christopher. He was centrally involved during this period with negotiations between Israel and Syria as a member of the Secretary's Middle East Peace Team. Further, Christman represented the United States as a member of NATO's Military Committee in Brussels, Belgium.

Graduating first in his class from West Point, Christman also received MPA and MSE degrees in public affairs and civil engineering from Princeton University and graduated with honors from The George Washington University Law School. He is a decorated combat veteran of Southeast Asia, where he commanded a company in the 101st Airborne Division in 1969.