Iran, China, and the Belt and Road Initiative (Part II)

IV. The JCPOA and Global Data Connectivity

Iran’s 5G infrastructure development, like many other things Iranian, has been entangled in global geopolitics. After JCPOA (the Iranian Nuclear Deal) was signed in 2015, Iran was allowed to officially do business with the (Western) world again. To develop its 5G network, Iran developed a policy of relying on both the West and China. MTN Irancell, the second largest mobile operator in Iran, and Ericsson signed an agreement to develop the Iranian 5G network. In Sept 2017, the two companies conducted a trial test of a 5G network in Tehran, in an event which was attended by Jahromi, the Iranian ICT Minister, and Ralph Pichler, Ericsson Director for Iran and Turkey, and the Swedish Ambassador to Iran. In a parallel move, Mobile Communications Company of Iran (MCI), the largest mobile operator in the country and one of the largest in the Middle East, signed a Memorandum of Understanding with Nokia to develop part of its 5G infrastructure. MCI owns 58% of the Iranian mobile network. Vahid Sadouqi, the CEO of MCI, and Amr Karim El-Leithy, Nokia director for Middle East and North Africa, signed the MOU. The Chinese tech giants seem to have been sidelined in the Iranian over enthusiasm for connecting with the West in the aftermath of the sanctions being lifted due to Iran Nuclear deal. This situation very much displeased the Chinese (including one can assume the Chinese tech giants) who felt very much ignored if not betrayed. After Trump reimposed sanctions, one can argue that Chinese tech giants, such as Huawei, became the only solid option for Iran.

The Iranians were optimistic that, with 5G, the delayed introductions of 3G and 4G to the country were a thing of the past. In the new 5G era, Iran was hoping to move abreast of the rest of the world. However, the potential promise of cooperation with Nokia and Ericsson came to a grinding halt with the Trump administration’s unilateral withdrawal from the Iran Nuclear Deal and the re-imposition of American sanctions against Iran, which practically cut off the country from the international banking system. The American sanctions killed almost all the potential for cooperation with Nokia and Ericsson. The latter informed Americans that it was ‘winding down its business and organization [in Iran] significantly’.

This opened up the space for China in general and Huawei in particular to increase their presence in the Iranian ICT infrastructure scene. China and Iran have agreed in their 25-year strategic deal on the development of Iranian 5G infrastructure network as one of the short-term objectives of the deal. Needless to say, Huawei is the most likely candidate to develop this infrastructure in Iran. Officially, the Iranian policy is to not rely exclusively on one ICT infrastructure provider, neither Eastern, nor Western. However, with Nokia and Ericson retreating almost completely from Iran, it is all but certain that China will be the sole or the dominant actor in Iran’s 5G networks. The pace of Iran’s development of 5G is currently slow due to the American sanctions, but it is moving ahead steadily. MCI has announced that it will launch 5G network in five spots in Tehran in March 2021. With the enforced absence of non- Chinese competitors, Iranian 5G development can progress only with the support of China’s providers such as Huawei.

V. An Iranian and Chinese Digital Alliance

What is most surprising in the Sino-Iranian digital relations is that despite the commonality of the ‘New Silk Road’ as an expression in the Iranian elite and popular discourses, ‘DSR’ (as a discursive trope) is not used much as an expression to describe the Iranian digital relations with China. This goes against the increasingly deepening relations between the two countries in all strategic sectors, including cyber. Further research is required to determine the causes behind this conspicuous lack in the Iranian discourse.

As was shown in this analysis, the story of Sino-Iranian relations in all fields including the cyberspace percolates into some major global dynamics. A consequence of the American reinstatement of sanctions has been that Iran has had to systematically get closer to and rely on China on the (geo)economic as well as the cyber front. This development happened in the context of the US technological cold war against China and its tech giants such as Huawei and ZTE. Iran and China naturally have common grievances against the US as targets of sanctions and tariffs. Since Stuxnet, Iran considers itself in a hot tech war against the US. Since the Trump administration’s crackdown on Huawei, the Chinese leadership consider China to be in a cold tech war or technological ‘decoupling’ with the US. These common grievances, among others, add to the existing Sino-Iranian repertoire of mutual affinities and create new areas of cooperation. In 2019, for instance, Iran and China (together with Russia) conducted a joint naval exercise in the aftermath of the Trump administration putting heavy pressure on all three countries through sanctions. The 25-year deal with China is rumoured to include intelligence-sharing between the two countries as well. With the Biden administration coming into office, Iranian oil is already flowing more publicly than before although technically the US has not yet lifted its unilateral sanctions.

Another new area of cooperation is cryptocurrency mining. To evade international banking sanctions and shoring up its economy, Iran has been systematically mining bitcoin. According to University of Cambridge’s Bitcoin Electricity Consumption Index, during 2020 Iran contributed nearly 4% of global hash rate. The Chinese miners are also heavily invested in crypto mining. In this area there has been cooperation between the two countries as well. Several Chinese companies have moved their assets to Iran due to the cheap price of electricity in Iran. For Chinese companies, these processes involve Iranian authorities such as Ministry of Energy, Ministry of Foreign Affairs, and ‘even the army in Iran’, which is also reportedly involved in mining bitcoins.

Against the backdrop of American unilateral policy against Iran and China under Trump, these new and old areas of cooperation were solidified in the 25-year roadmap between the two countries. Such processes have led Iranian ICT Minister, Jahromi, to advocate for a ‘common cyber front’ with China against the US on several occasions. In a 2019 meeting with his Chinese counterpart in Beijing, he claimed that China and Iran are already ‘standing in a united front to confront US unilateralism and hegemony in the field of IT.’ According to Iranian state news agencies, Iran and China agreed to form a ‘joint workgroup to survey and counter those threats’. The ‘threats’ come at a time in global and technological history when the question of technology is almost inseparable from the question of geopolitics and geoeconomics. And the united front that the two countries are discussing, needless to say, will involve the conventional questions of technological development such as 5G infrastructure, AI, e- governance, and the like as well as cyber power as it pertains to the military and security domains. The two countries are not likely to become full ‘cyber allies’; however, the strategic partnership is deepening in all fields including cyber.