Tehran traffic is gridlocked half the time, and the city spends most of the year engulfed in smog, so it is not surprising that locals travel underground when they can — on a metro system that sometimes carries 2 million people a day.
During the sanctions decade, when Iran was largely frozen out of global commerce, the capital’s authorities managed to steadily expand the network — nearly doubling its size.
It was not easy.
Often, “the parts we needed, we had to build ourselves,” Tehran Urban and Suburban Railway Operating Company deputy managing director Ali Abdollahpour said.
A constant of those years was Chinese help, with everything from building rails to manufacturing wagons. The nuclear deal of 2015, and the lifting of major sanctions the year after, was supposed to broaden Iran’s options.
Abdollahpour had his eyes on Europe (“their tech is better”) for essential braking and signaling systems.
However, when a major contract that would supply more than 600 wagons came up for tender, it went to a unit of China’s CRRC Corp, which beat off two European bids to win a contract worth more than US$900 million this year.
That is part of a wider pattern. The nuclear deal has not delivered more than a trickle of Western investment — and even that is poised to dry up, after US President Donald Trump pulled out of the agreement and said he would reimpose sanctions
To develop its US$430 billion economy, Iran is being forced to rely on political allies in the East.
Trade with China has more than doubled since 2006, to US$28 billion. The biggest chunk of Iran’s oil exports go to China, about US$11 billion a year at current prices.
Chinese direct investment is arriving too, although reliable data are harder to come by.
China is “already the winner,” said Dina Esfandiary, a fellow at the Centre for Science and Security Studies at King’s College in London, and coauthor of the forthcoming Triple Axis: Iran’s Relations with Russia and China.
“Iran has slowly abandoned the idea of being open to the West,” she said. “The Chinese have been in Iran for the past 30 years. They have the contacts, the guys on the ground, the links to the local banks.”
And they are more willing to defy US pressure as Trump slaps sanctions back on.
DOUBT
Even that possibility has kept many European banks and manufacturers from doing business with Iran and some of those that were ready to do so could reconsider in the light of tougher US rules.
Airbus Group’s contract for 100 jetliners, worth about US$19 billion at list prices, was already held up amid financing problems, and US Secretary of the Treasury Steven Mnuchin on Tuesday said the export license would be revoked (Russian manufacturers could be the beneficiaries).
Total has a contract to develop the South Pars gas field together with China National Petroleum, but has signaled that it would pull out if the US reimposes sanctions and it cannot win an exemption.
In that event, Iran says, the Chinese partner would take over Total’s share.
Chinese companies are not beyond the reach of US regulators. Huawei Technologies is said to be under investigation for possible violations over sales to Iran, and network-equipment maker ZTE was banned from buying US components for a similar offense.
Compared with the pre-sanctions era, “Chinese companies have become much more multinational and global, they have more of a brand reputation that’s important to them,” said Esfandyar Batmanghelidj, founder of the Europe-Iran Forum, an annual gathering for executives.
That gives the US leverage “to discourage them from engaging in Iranian markets, by going after them,” Batmanghelidj said.
WORKAROUNDS
However, the Chinese have some workarounds that Europeans lack. There are many more Chinese companies with zero exposure to the US and as many of the Chinese businesses working in Iran are state-run, it is relatively easy to set up special-purpose vehicles for bypassing US regulations.
“All they have to do is create a subsidiary that’s separate from the original entity, and they’re good to go,” Batmanghelidj said.
Chinese businesses are also likely to be more flexible about how they are paid, Batmanghelidj said, citing a transaction that he is aware of where the European company declined to be paid in bonds.
The politics are different, too.
The key EU countries are long-time US allies wary of a direct clash with Washington. They are promising to keep the nuclear deal alive, but many Iranians doubt that they are able or willing to do so.
Europe “doesn’t have the power to take important decisions,” said Alaeddin Boroujerdi, head of the Iranian parliament’s nation security and foreign policy committee. “The Europeans, by sanctioning Iran, seek to dance in front of the US.”
However, China — along with Russia — is the US’ main strategic rival, with big geopolitical ambitions. Central to them is a plan to criss-cross Eurasia with a web of transportation and infrastructure links. Persia was on the old Silk Road, and Iran is at the heart of Chinese President Xi Jinping’s (習近平) plans for a new one.
Chinese companies are building or funding railway lines to the eastern city of Mashhad and the Gulf port of Bushehr, under deals signed in the past year worth more than US$2.2 billion. India was supposed to be developing the strategic port of Chabahar on the Arabian Sea, but repeated delays have prompted Iranian officials to turn to China in the hope of speeding up construction.
China looks at relations with Iran “from a strategic perspective,” Chinese Minister of Foreign Affairs Wang Yi (王毅) said last year as he met Iranian officials in Beijing.
At the Tehran metro, it would not be the first time that global politics have intruded on planning.
When building work began in the pro-Western Iran of the 1970s, it was under French managers. Within a year of the 1979 Islamic revolution, they were gone.
“That’s business,” metro manager Abdollahpour said. “In the world of commerce, one day you’re friends with someone, one day you aren’t.”
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