By THOMAS ERDBRINKJAN. 24, 2016
The
New York Times
ZARRINABAD,
Iran — Rising from the
yellowish, treeless plains so typical for central Iran stands a square labyrinth of
pipes and conveyor belts, topped by a silver chimney that glitters in the
summer sun.
Sanctions
against Iran
failed to halt the construction of the complex, a steel mill that went into
operation in September and now churns out ingots and billets. The sanctions
also did not stop Sheng Kuan Li, a Chinese businessman, from pouring $200
million into the project.
Mr. Li is
one of many Chinese investors who in recent years worked around the sanctions
imposed on Iran by the United States and other world powers over Tehran ’s nuclear program.
His steel
mill and other similar endeavors are the result of a strategic pact that gives China a much-needed western gateway to Middle
Eastern markets and beyond, and that has saved Iran from international isolation
and economic ruin.
On Saturday,
both countries agreed to increase trade to $600 billion in the coming decade.
That
agreement was made during a meeting between Iran ’s
leaders and China ’s
president, Xi Jinping, who late last week became the first foreign leader to
visit Iran
after most international sanctions were lifted. China
has relied on Iranian oil and views the country as a vital link in Mr. Xi’s
so-called Silk Road strategy, an ambitious agenda that seeks to extend China ’s
economic influence westward.
“Where we
had to stand on the sidelines, the Chinese have been filling the void,” said a
European diplomat who spoke on the condition of anonymity to discuss strategic
considerations. “They are way ahead of all of us.”
The deep
Chinese footprint in Iran
does not manifest itself only in the tens of thousands of inexpensive cars that
have flooded the streets of Tehran
in the past few years. Investors like Mr. Li, who has built two other factories
here, as well as Chinese state companies, are active all over the country,
building highways, digging mines and melting steel.
In Tehran , the Chinese have
been involved in the construction of a huge elevated expressway and the
building of the Niayesh Tunnel, which at more than three and a half miles will
be one of the longest urban tunnels in the world. The city’s metro system was
built from scratch, starting in 1995, with Chinese capital and Chinese
engineers. The train cars that run on it are Chinese, too.
“Westerners
visiting the capital often wonder how we managed to pull off such ambitious
projects during the heaviest sanction regime in history,” said Mohammad Reza
Sabzalipour, Iran ’s World Trade
Center representative.
“Well, we did it with the help of our Chinese friends.”
Thirst for
cheap crude oil and enthusiasm for the Silk Road project, which incorporates
the goal of unlocking China ’s
isolated western provinces, brought the Chinese to Iran ,
the only country in the Middle East where the United States had no presence.
“We are Iran ’s biggest trading partner for six years in
a row,” Mr. Xi wrote in an open letter to the Iranian people, Xinhua ,
China ’s state news agency,
reported on Thursday, a day before his arrival on a Middle East tour that will
also take him to Saudi Arabia
and Egypt .
During the
Iran-Iraq war, China sold
weapons, including Silkworm missiles, to Iran .
“After the
revolution we exchanged the Western frowns with the smiles from the East,” said
Asadollah Asgaroladi, one of Iran ’s
wealthiest businessmen and the head of the Iran-China chamber of commerce.
“They continue to smile at us.”
So the two
countries, which were connected by the old Silk Road ,
have embarked on building a new one.
“China has
considerable strength in capital, technologies, equipment and other areas,” Mr.
Xi wrote in his letter. “Iran
has rich resources, ample labor force and huge market potential, and it is in
the crucial stage of industrialization and modernization.”
In the last
decade, trade started gravitating toward China
and away from Germany , Iran ’s
traditional partner, with a business volume of more than $30 billion annually. Iran exported
$19 billion in crude oil and petrochemical products and imported $17 billion in
goods and services in 2013.
“They are
an independent country,” Mr. Asgaroladi said. “They don’t allow the Americans
to tell them what to do. So they buy our oil, now and in the future.”
On
Saturday, the Chinese president sat down with Iran ’s supreme leader, Ayatollah
Ali Khamenei, who told him that “Iranians had never trusted the West.” That was
why Iran was seeking more
cooperation with independent countries, Ayatollah Khamenei said, clearly
indicating China .
In order to
ease Chinese oil payments to Iran ,
a bank was created, Mr. Asgaroladi said.
Although
that institution, the Bank of Kunlun, was formed to handle oil money, Reuters,
quoting a Western intelligence report, said in 2014 that the elite Quds Force
of the Islamic Revolutionary Guards Corps also used the bank for payments.
The Chinese
may have no qualms about buying Iranian oil, but they take care not to violate United States
sanctions on banking transactions because of their extensive use of American
banks, Mr. Asgaroladi said.
“The
Ministry of Oil’s money is deposited in accounts in this bank,” he said. “We
use 30 to 40 percent to make cash payments for purchases elsewhere in Asia, and
the rest is used to finance projects in Iran and buy Chinese items.”
During a
visit last summer to Mr. Li’s steel mill, near the village of Zarrinabad ,
Chinese laborers were sweeping in preparation for its opening.
Speaking
through an interpreter, Mr. Li said that he became interested in Iran after
relatives told him that it was an interesting place to invest, and that he came
here in 2010. While he refused to go into details of how the money for the
project arrived, he said it involved a “private transfer,” essentially a money
swap that was based on trust and that avoided traditional banking routes.
Mr.
Asgaroladi said Mr. Li had received financing through the Chinese government
but did not say how that money made it to Iran . “We do a lot of bartering,”
he said.
“If all
goes well, we will have a yearly output of 600,000 tons of steel,” an assistant
to Mr. Li said. In August, the plant — which has a private train, 700 mostly
Chinese employees and a huge exhaust tower — was officially opened in the
presence of Iranian and Chinese officials.
“On the
other hand, I think it was never the intention to destroy our economy, just
make us feel pain,” he said. “So perhaps the Americans intentionally looked the
other way when China
threw us this lifeline.”
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