China Will Not Capitalise 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.

Photo: Wikicommons

Iran's Business Leaders Must Do More to Protect the Environment

In today’s energized, almost-post-sanctions-era Iran, so much has become possible. But as growth takes place, and as increased capital flows into the country, we need to expect more from our business community as contributors to human development. 

Businesses are expected to make profits. That is how wealth and jobs are created.  That is how lives and livelihoods are transformed. But, along with profits, comes an expectation that the business community must act responsibly in terms of the social, environmental and economic improvement of the communities in which they make these profits. Most notably, businesses must focus on their responsibility to protect our environment.

Facing Grave Challenges

At present, our fragile, endangered planet faces many grave challenges. One of the greatest human development challenges we are witnessing in Iran is the threat of an increasingly hot and dry environment.  The environment is being degraded through our actions. Climate change, coupled with the poor environmental decisions of the past, is making Iran hotter and drier.  We see a country that is water-stressed, losing its forests, polluted by sand and dust storms, and energy inefficient. We see dramatically less biodiversity than even a decade ago. 

The government is trying to reverse environmental degradation, but without the overall level of success required. Due to the scale of the problems and the nature of the causes, these problems can only be successfully addressed when all stakeholders who have had a share in creating them commit to finding solutions. 

We all need to start acting sustainably. Governments need to do more.  Citizens need to do more. And yes, frankly, the United Nations must also do more. We need to speed up our responses. Fortunately, the governments of the world, including Iran, have agreed to implement the Sustainable Development Goals (SDGs) which came in to effect in January 2016. These goals strive to end poverty, protect the planet, and ensure prosperity and peace for all through partnerships. We all need to take the time to learn, understand and apply these goals. 

The United Nations is already working closely with the Iranian government to tackle many of the challenges identified through the SDGs. Encouragingly, Iranian authorities, along with most governments worldwide, are starting to frame a response to SDG targets. 

Now is the time for the Iranian business community to also become more involved and visible in sustaining our environment. I believe that the business community must get involved both directly and indirectly in order to protect our environment. This can come in two ways.  Direct and indirect.

Direct Efforts

Business efforts to reduce the environmental impact will increasingly become a matter of self-interest. Iran has committed, under its draft sixth Five-Year National Development Plan, to implement a low-carbon economy. Given this, plus the global commitments to which Iran has signed up to under the Paris Agreement, the Government will increasingly pass laws and policies which mandate emission reductions.  Businesses therefore have a profit incentive to anticipate the regulations which will inevitably be imposed by an Iranian Government increasingly needing to comply with its own international carbon-reduction obligations.

In line with this, businesses should be innovative. Innovation brings about new opportunities and thus benefits the company and the society. “Sustainable innovation” can include such elements as a reduction in water use for production and the encouragement of companies to incentivize their customers to use less water by recycling.

Next, businesses should switch to more cost-effective techniques for their infrastructure. For example, when operating a business, one of the biggest burdens can be the cost of energy.  Thus, in order to reduce these costs, the following steps can be taken:

1. Buy energy-efficient appliances and devices.

2. Switch off equipment when not in use.

3. Monitor your corporation’s energy usage by installing the necessary equipment (and act on what the numbers show)

4. Switch to using renewable sources of energy where possible (such as wind and solar).

But we also need to start with ourselves. And so, another step forward for businesses can be the engagement of employees and customers in sustainable behavior and actions. These actions entail raising awareness about a company's own “sustainable goals,” so that more people can become involved in supporting and helping to achieve those goals. It is the responsibility of every business to send the same message and encourage others to join these efforts.

Indirect Efforts

But there is another – indirect – way in which businesses can act to improve the environment.  This is through Corporate Social Responsibility (CSR). Across the planet, CSR is becoming recognized as a strategic management tool for guiding corporate decisions. The ethos of CSR should also filter down to operations.  In the end, and if done well, CSR will powerfully enhance a company’s corporate image in a world where, increasingly, if you are not visible, you are not relevant.

We are no longer in a position to choose pure profit. Our growth must be inclusive. Our development must be sustainable. And our environment must be safeguarded. These ideas were what drove former UN Secretary-General Kofi Annan to create the UN’s Global Compact in the year 2000. The Global Compact brings together business, governments, civil society and UN agencies to advance universal principles in the areas of environment, labor, human rights and anti-corruption. This initiative is the world's largest voluntary corporate citizenship pact. At present, over 4,100 companies from over one hundred countries participate. CSR is at the very center of our Global Compact. But there are hardly any Iranian companies represented in the Global Compact. The time has come for this to change.

CSR can contribute to overcoming human development challenges in all countries. Through CSR, companies can financially (or in-kind) support environmental causes and donate to organizations and charities that are working to overcome some of the challenges facing our planet. Irrespective of size, businesses can get involved and send a positive message to others to participate in CSR.

With this in mind, I urge business leaders in Iran to explore CSR and engage in partnerships to make growth more inclusive and more environmentally-sustainable. Living in Iran, I am encouraged by the number of private sector organizations, public corporations, and banks who wish to collaborate with entities – including those like the UN – to promote environmental initiatives and inclusive growth. Although I see encouraging signs within the private sector towards these goals, much more needs to be done.

Today, the world is demanding that companies behave responsibly vis-a-vis the environment. The spirit of “partnership” within the corporate community is at the heart of the SDGs. One goal in particular—Sustainable Development Goal 17—calls on all states to “Strengthen the means of implementation and revitalize the global partnership for sustainable development.”  This is a direct call-to-action for the private sector. In order to attain sustainable development we need more hands. Each and every citizen has a role to play.  

The UN stands ready to assist Iran's robust business community in promoting CSR.

Photo: Newsweek