Monday, 14 September, 2020

Silk Road and China’s Initiative, an Important Opportunity to Boost Iran’s Role

By Bahram Amir-Ahmadian, IndraStra Global

China’s latest initiative to revive the ancient Silk Road and the huge economic and cultural project known as the “One Belt, One Road,” have stirred new activities in countries located along the Silk Road. Countries located along the traditional path of this huge historical highway, on the one hand, and countries that are located around it, on the other hand, are interested in playing a part in this humongous economic project one way or another. Iran is located at the center of a region, which connects two parts of the land route of this network, which travels from east to west, but unfortunately, there have been few reactions to these developments in Iran.

The Silk Road is the path along which ancient China conducted its trade with South and West Asia, Europe, and Africa through Central Asia in old times. Since a large part of consignments containing silk and silk fabrics produced in China reached the western regions through this road, it was called the “Silk Road.”

The incumbent leader of China has used an apparently simple, but actually ambiguous term to delineate his outlook for Asia by calling the new project “One Belt, One Road.” As Xi Jinping has recently said, this One Belt, One Road project will be an answer to current needs of China to boost its regional and international cooperation.

Accumulation of capital as a result of many consecutive years of economic growth and earning high foreign exchange revenues has on the whole turned China into the world’s second economic power after the United States. China, as a result, needs to find new markets to import energy and raw materials and export its manufactured goods. Two major factors, that is, China’s burgeoning population, on the one hand, and its high need to fossil energy sources, on the other hand, have prompted this economic power to think about putting its economy in better shape in the future. About 90 percent of the world trade is currently being carried out through maritime routes. Therefore, access to free waters, on the one hand, and dominance over maritime routes crossing these waters, on the other hand, will form two sides of the balance of future world trade between China and the Western world.

Even now, China is entangled in maritime disputes with neighboring and other countries an example of which is ongoing disputes over certain collections of islands which are claimed by both China and its neighboring countries in the South China Sea. Due to presence of the United States powerful marine fleet across the Pacific Ocean, through which vital maritime routes for China cross, Beijing has been planning to include concerns related to this issue in its military strategy for 2015 in order to work out measures to overcome these obstacles. On the other hand, in order to reduce its dependence on maritime routes, China has been trying to find two-way trade, which would in the first phase open new markets to China’s goods and products as well as technical and engineering services. In the next phase, China wants such trade to provide it with much-needed energy resources and raw materials to be used by the country’s industries. This goal can be met in regions located to the west of China, firstly in Central Asia and then in the Middle East.

The new Silk Road initiative is sure to open new opportunities to China through which Beijing would be able to achieve its long-term goals to boost welfare for its huge population. Two routes have been under study for building the new Silk Road. The first route is the same traditional Silk Road, which crosses through the western part of China to enter Central Asia, and after going through Turkmenistan enters Iran. It then reaches the Middle East after crossing through the Iranian territory. The other route is the Silk Road as seen by European countries. This route follows the traditional path of the Silk Road up to Turkmenistan from where it avoids entering Iran and instead goes toward southeastern coast of the Caspian Sea. After reaching the Caspian coast it uses shipping lines between Turkmenbashi port city on the eastern shores of the Caspian Sea, which is part of Turkmenistan’s territory, to reach Baku port on the western shores of the Caspian Sea in the Republic of Azerbaijan, after which the route continues toward the Black Sea en route to the Mediterranean.

Western countries have established this route under the generic name of “Trascica” corridor. Since Western countries play a decisive role in establishing this route, Chinese officials are not very willing to make large-scale investment in this path and, in addition, this route would be used for one-way trade, because at its final destination there are not enough energy resources to meet China’s need to consumption of energy. Another route is the traditional path of the Silk Road, which exits China through is northwestern territory in Xinjiang Province to enter the Central Asia and after going through Turkmenistan, enters the territory of Iran. Once in Iran, the route would facilitate China’s access to the Mesopotamia and the eastern shores of the Mediterranean, on the one hand, while giving it access to the Persian Gulf and the Sea of Oman, on the other hand. Finally, it goes through Iran to reach Turkey and then continues its march toward Europe.

 Map Attribute: Iran-China Silk Route Rail Link / Source: China Daily/DW

Map Attribute: Iran-China Silk Route Rail Link / Source: China Daily/DW 2015

Iran will be located at the gravitational center of the new route and would be able to serve as a link connecting China to the Middle East, on the one hand, and Europe, on the other hand. By joining this initiative as envisaged by China, the Islamic Republic would be able to promote its geographical situation to a geopolitical situation as the country has been waiting for years to do so.

It is noteworthy that real steps have been taken during past months in order to put this initiative into gear. Beijing has been trying to spend its money in the way that Xi Jinping has already explained. Chinese companies are also hoping that they would sign contracts to take charge of many engineering projects that are part of this big plan, including construction of roads, railroads, and port facilities as well as oil and gas pipelines. It seems that China has realized that construction of the new “Silk Road” would be similar to the United States’ “Marshall Plan;” a plan, which came to be known as the most successful project in the United States’ foreign policy following World War II and through which Washington managed to help many countries in Western Europe to renovate their economies following the war.

It must be noted that this huge plan is eying the traditional route of the Silk Road, which starts in Xinjiang Province in northwestern China and after entering Central Asia would continue up to the southern part of Turkmenistan in the city of Mary before entering Iran. A portion of connecting roads between Iran’s land border with Turkmenistan in the Iranian town of Lotfabad and at Bajgiran customs crossing in Iran’s Razavi Khorasan Province, needs investment in order to reach a major highway in northern Iran and play its proper role. Of course, the governor of the Islamic Republic of Iran Customs Administration has recently indicated Iran’s willingness to join this initiative and has pointed out its comparative advantages. However, it must be noted that Iran enjoys very good conditions in terms of its geographical situation as a result of which, the country is in a good position to muse over this plan and boost its geopolitical position in all kinds of initiatives and interactions related to regional cooperation. In this way, Iran would be able to attract more investment, create new jobs, and boost activities in such sectors as trade, transit, transportation, warehousing, and development of ports. In short, the country would be able to greatly develop its economy by joining this initiative.

If, at this historical juncture, Iran proves unable to take good advantage of this opportunity, the other proposed route, which crosses beyond Iran’s northern borders, would replace the Iran route. The northern route passes through the Caspian Sea by connecting Turkmenistan’s Turkmenbashi port city in the east to Baku port in the Republic of Azerbaijan on the western shores of the Caspian Sea. From there, it crosses the Caucasus corridor to reach the Black Sea and finally Europe. Alternatively, the northern Caspian route, which crosses through Kazakhstan and Russian territory, would replace it. These are the routes that China is not actually willing to invest in as the country’s thinkers, economists, and strategists have been putting the highest emphasis on the Iran route.

China is totally willing to be present in the Middle East. China is hoping that following the removal of international sanctions against Iran, it would be able to have close cooperation with the Islamic Republic and take advantage of the influence that Tehran sways in the Middle East to secure a foothold in regional markets. Signing of an agreement between Iran and the P5+1 group of countries over Tehran’s nuclear program, which put an end to this issue through a mutually acceptable solution, will help China get closer to Iran than ever before. This is why China has been insisting on choosing the traditional route of the Silk Road, which includes Iran because it would enable Beijing to play a role in the Persian Gulf region and finally in the Middle East without facing troubles from the United States and possibly Russia. Resolution of the ongoing crises in Syria and Iraq and restoration of tranquility to this region will pave the way for the revival of the traditional route of the Silk Road from Iran toward the eastern shores of the Mediterranean and from there to North Africa. These regions includes countries, which can provide China with its needed energy resources, on the one hand, while on the other hand, providing a big and permanent market for Chinese products.

However, when it comes to the maritime route of the Silk Road, there are many suspicions about true intentions of China. Beijing’s arrogant behavior in the South China Sea, where border disputes are going on between China and its neighbors, can foster the concept that revival of the maritime Silk Road would cause China to possibly deal with its smaller neighbors in a bullying manner. For this reason, early reactions to China’s “One Belt, One Road” initiative in Southeast Asia have been mixed with doubt and suspicion.

Bahram Amir-Ahmadian is a Professor and Researcher at Institute for Trade Studies and Research, Tehran University, Iran

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  1. Amir

    April 14, 2021 at 6:58 pm

    Of Course, countries like Russia and Azerbaijan would love the northern route but during the winter time while cold and snow are ponding the landscape, it would not be financially acceptable to take the route during the cold season. This means halt for some period of time. Also due to low oil revenues and unelected officials in country of Azerbaijan, who knows what comes next. If I were Chinese, I would choose Iran’s route over Russia’s route. Investors should look at the returns financially rather putting feelings and push by some local governments. The era of push and shove is over.

    • babakp

      April 14, 2021 at 9:15 pm

      You did not mention the capacity of the Railroad, Is iran the final distenation? or it will go to other countries from there? how is the investment? who will build it? where the money comes from?

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