The Ties That Bind China, Russia and Iran


Richard Moore

The Ties That Bind China, Russia and Iran 

By Jephraim P. Gundzik 
The military implementation of the George W Bush
administration's unilateralist foreign policy is creating
monumental changes in the world's geostrategic alliances.   
The most significant of these changes is the formation of a
new triangle comprised of China, Iran and Russia.

Growing ties between Moscow and Beijing in the past 18 months
is an important geopolitical event that has gone
practically unnoticed. China's premier, Wen Jiabao, visited
Russia in September 2004. In October 2004, President Vladimir 
Putin visited China. During the October meeting, both China
and Russia declared that Sino-Russian relations had reached
"unparalleled heights". In addition to settling
long-standing border issues, Moscow and Beijing agreed to
hold joint military exercises in 2005. This marks the first
large-scale military exercises between Russia and China
since 1958.

The joint military exercises complement a rapidly growing arms
trade between Moscow and Beijing. China is Russia's largest
buyer of military equipment. In 2004, China was reported to
have signed deals worth more than $2 billion for Russian
arms. These included naval ships and submarines, missile
systems and aircraft. According to the head of Russia's
armed forces, Anatoliy Kvashnin, "our defense industrial
complex is working for this country [China], supplying the
latest models of arms and military equipment, which the
Russian army does not have". Russia's relations with China
are not limited to military trade. In the past five years,
non-military trade between Russia and China has increased   
at an average annual rate of nearly 20%. Moscow and Beijing
have targeted non-military trade to reach $60 billion by
2010, from $20 billion in 2004. One of the key components
of commercial trade is Russian energy exports to China.

In early 2005, Moscow agreed to more than double electricity
exports to China, to 800 million kilowatt hours (kWh), by
2006. Officials at Russia's electricity monopoly, Unified
Energy Systems, are also courting Chinese investment in the   
development and renovation of Russia's electricity system. In
October 2004, the China National Petroleum Corporation
(CNPC) and Russia's Gazprom signed a series of agreements
intended to study how Russia can best supply natural gas to
China. At the same time, Russia signed specific agreements
with China on oil exports.

Russia's oil shipments to China are slated to reach 10 million
tons in 2005, increasing to 15 million tons in 2006. All of
these shipments will be made by rail. However, this
agreement was overshadowed by talks concerning the
construction of an oil pipeline from Siberia to northern
China. Russia has been pondering an oil pipeline to China
for nearly 10 years. In 2002, plans for this pipeline   
received a boost when Moscow pledged to invest $2 billion in
an oil pipeline running from the Siberian city of Angarsk
to Daqing in northeastern China.

At the end of 2004, Russian officials announced that rather
than running into China, the new mega pipeline would
terminate in Russia's Pacific port of Nakhodka. Japan
lobbied Moscow hard for this configuration, offering to
finance the entire construction project, the cost of which
is estimated to exceed $10 billion. In addition to a
readily available financing source, the Nakhodka pipeline will
remain entirely in Russian territory, allowing Moscow
complete control over the oil flow.

Many analysts viewed Moscow's decision as a blow to relations
with China. Though the pipeline does not terminate in
China, it does pass within 40 miles of Russia's border with
China. A spur from this pipeline to China would be
inexpensive, while further diversifying the market for
annual oil flows expected to reach 80 million tons. In
other words, why should either Moscow or Beijing finance an
eastern oil pipeline when Tokyo is bending over backwards to
provide such financing?

More indicative of Russia's deepening energy relations with
China are the circumstances surrounding the
renationalization of Russian oil major Yukos. Yukos was the   
only Russian company exporting oil to China. Russia's
government effectively renationalized Yukos in late 2004
when it seized the company's primary production unit,
Yuganskneftegaz, and auctioned it off to the highest bidder.
Yuganskneftegaz, located in Siberia, is Russia's
second-largest oil producer.

Through somewhat twisted means, Russia's state-owned oil
company, Rosneft, acquired Yuganskneftegaz for $9.3
billion. In December 2004, Russia's Industry and Energy   
Minister Viktor Khristenko offered the CNPC a 20% stake in
Yuganskneftegaz. In February 2005, Russian Finance Minister
Alexei Kudrin revealed that Chinese banks provided $6
billion in financing for Rosneft's acquisition of
Yuganskneftegaz. This financing was secured by long-term
oil delivery contracts between Rosneft and the CNPC. It is
unclear whether the CNPC owns a portion of Yuganskneftegaz.
However, in March, Russian authorities approved a merger
between state-owned gas company Gazprom and Rosneft. This
merger excludes Yuganskneftegaz, which will remain a
separate state-owned company. It is possible that
Yuganskneftegaz was left a stand-alone unit to facilitate
China's investment in the company. China's involvement in the
renationalization of Yukos represents the most significant   
foreign participation in Russia's highly guarded oil sector.
The CNPC is also involved in several joint ventures with
Russia's state-owned gas company, Gazprom. These include
ventures to develop energy reserves in Iran, the home of
China's largest energy-related investments.

Beijing and Moscow warm to Tehran.

In March 2004, China's state-owned oil trading company, Zhuhai
Zhenrong Corporation, signed a 25-year deal to import 110
million tons of liquefied natural gas (LNG) from Iran. This
was followed by a much larger deal between another of China's 
state-owned oil companies, Sinopec, and Iran, signed in
October 2004. This deal, worth about $100 billion, allows
China to import a further 250 million tons of LNG from
Iran's Yadavaran oilfield over a 25-year period. In addition
to LNG, the Yadavaran deal provides China with 150,000
barrels per day of crude oil over the same period.

This huge deal also enlists substantial Chinese investment in
Iranian energy exploration, drilling and production as well
as in petrochemical and natural gas infrastructure. Total
Chinese investment targeted toward Iran's energy sector   
could exceed a further $100 billion over 25 years. At the end
of 2004, China became Iran's top oil export market. Apart
from the oil and natural gas delivery contracts, the
massive investment being undertaken by China's state-owned oil
companies in Iran's energy sector contravenes the US
Iran-Libya Sanctions Act. This law penalizes foreign
companies for investing more than $20 million in either
Libya or Iran. Side-stepping US laws is nothing new for China.
Beijing, as well as Moscow, has supplied Tehran with
advanced missiles and missile technology since the   
mid-1980s. In addition to anti-ship missiles like the
Silkworm, China has sold Iran surface-to-surface cruise
missiles and, along with Russia, assisted in the
development of Iran's long-range ballistic missiles. This
assistance included the development of Iran's Shihab-3 and
Shihab-4 missiles, with a range of about 2,000 kilometers.
Iran is also reportedly developing missiles with ranges
approaching 3,000 kilometers.

In late 2004, former secretary of state Colin Powell asserted
that Iran was working to adapt its long-range ballistic
missiles to carry nuclear warheads. China was also believed
to be producing several new types of guided anti-ship   
missiles for Iran in 2004. China's and Russia's sales of
missiles and missile technology as well as missile
development assistance contravenes the US-Iran   
non-proliferation act of 2000. This act specifically states
that sanctions will be "imposed on countries whose
companies provide assistance to Iran in its efforts to
acquire weapons of mass destruction and missile delivery

In the past several years a number of Chinese and Russian
companies have faced US sanctions for selling missiles and
missile technology to Iran. Rather than slowing or stopping
such sales, the pace of missile acquisition and development   
in Iran has accelerated. Like relations between China and
Russia and China and Iran, Russia's relations with Iran
have also advanced considerably in the past 18 months. In
addition to increased investment in Iran by Russia and
burgeoning arms trade between the two countries, Russia has
been heavily involved in Iran's nascent nuclear energy

After much wrangling and repeated US intervention, Russia and
Iran finally signed, in February, a deal clearing the way
for the shipment of Russian nuclear fuel to Iran's nuclear
power plant at Bushehr. Washington's primary concern about   
Bushehr is the intended use of the plant's spent nuclear fuel.
This fuel can be discarded, reprocessed, or used in the
manufacture of weapons-grade plutonium. In an effort to
assure Washington that the last of these three possibilities  
 will not come to pass, Moscow has promised that all the spent
fuel from Bushehr will be returned to Russia.

Nonetheless, Washington continues to believe that Bushehr's
start-up will advance Tehran's supposed nuclear weapons
program. Though evidence of an Iranian weapons program is
sparse, the US remains convinced that Iran is working to
develop nuclear weapons with Russian assistance.

The new geostrategic alliance

Along with energy trade, investment and economic development,
the China-Iran-Russia alliance has cultivated compatible
foreign policies. China, Iran and Russia have identical
foreign policy positions regarding Taiwan and Chechnya. China 
  and Iran fully support the Putin government's war against
the Chechen separatists (Iran's self-described status as an
"Islamic republic" notwithstanding). Russia and Iran
support Beijing's one-China policy. The recent promulgation   
of China's anti-secession law, aimed at making Beijing's
intolerance of Taiwanese independence explicit, was
heartily commended in both Moscow and Tehran.

The most compelling aspect of this alliance is revealed in
China's and Russia's support for Iran's much-maligned
nuclear energy program. The Putin government has
consistently maintained that Russia would not support UN
Security Council resolutions that condemn Iran's nuclear
energy program or apply economic sanctions against Iran. In
February, Putin said he was convinced Iran was not seeking   
to develop nuclear weapons and announced plans to visit the
country, in support of Tehran, just prior to his summit
with President Bush.

Beijing has echoed Moscow's opposition to UN action against
Iran. After concluding the historic gas and oil deal
between China and Iran in October 2004, China's Foreign
Minister Li Zhaoxing announced that China would not support UN
Security Council action against Iran's nuclear energy
program. Opposition in Moscow and Beijing to UN action
against Iran is significant because both countries hold UN
Security Council veto power.

The endorsement of Tehran's nuclear energy program by Moscow
and Beijing reveals the primary impetus behind the
China-Iran-Russia axis - to counter US unilateralism and
global hegemonic intentions. For Beijing and Moscow, this
means minimizing US influence in Asia, Central Asia and the
Middle East. For the regime in Tehran, keeping the US at
bay is a matter of survival. The joint statement issued at the
conclusion of Putin's state visit to China in October 2004
was a clear indication of Beijing's and Moscow's abhorrence   
of the Bush administration's unilateral foreign policy. The
statement noted that China and Russia "hold that it is
urgently needed to [resolve] international disputes under
the chairing of the UN and resolve crisis [sic] on the basis  
 of universally recognized principles of international law.
Any coercive action should only be taken with the approval
of the UN Security Council and enforced under its

Two weeks after this statement was released, and just prior to
the US presidential election, Beijing's position against US
unilateralism was again made explicit by China's former
foreign minister Qian Qichen - arguably China's most
distinguished diplomat. In an opinion piece published in
the China Daily, Qian ripped Washington's unilateralism:   
"The United States has tightened its control of the Middle
East, Central Asia, Southeast Asia and Northeast Asia." He
noted that this control "testifies that Washington's
anti-terror campaign has already gone beyond the scope of   
self defense". Qian went further, stating that: "The US case
in Iraq has caused the Muslim world and Arab countries to
believe that the superpower already regards them as targets
[for] its ambitious democratic reform program."

To China and Russia, Washington's "democratic reform program"
is a thinly disguised method for the US to militarily
dispose of unfriendly regimes in order to ensure the
country's primacy as the world's sole superpower. The   
China-Iran-Russia alliance can be considered as Beijing's and
Moscow's counterpunch to Washington's global ambitions.
From this perspective, Iran is integral to thwarting the
Bush administration's foreign policy goals. This is precisely 
  why Beijing and Moscow have strengthened their economic and
diplomatic ties with Tehran. It is also why Beijing and
Moscow are providing Tehran with increasingly sophisticated

This article appeared in The Asia Times on June 4, 2005.
Jephraim P Gundzik is president of Condor Advisers. This
article was posted at Japan Focus on June 6, 2005.

ISSN: 1557-4660 
Home About Japan Focus View All Search Texts Resources 
Back to Top 
© 2004 

If you find this material useful, you might want to check out our website
( or try out our low-traffic, moderated email 
list by sending a message to:

You are encouraged to forward any material from the lists or the website,
provided it is for non-commercial use and you include the source and
this disclaimer.

Richard Moore (rkm)
Wexford, Ireland

"Escaping The Matrix - 
Global Transformation: 
    "...the Patriot Act followed 9-11 as smoothly as the
      suspension of the Weimar constitution followed the
      Reichstag fire."  
      - Srdja Trifkovic

    There is not a problem with the system.
    The system is the problem.

    Faith in ourselves - not gods, ideologies, leaders, or programs.
cj list archives:

newslog list archives:
Informative links: