Bottom Line & Above

17 – 23 May 2023 

The Real Poverty of the Nezam

The economic failures of the Islamic Republic of Iran are legion and well-known. In this space last week, we examined a number of examples of the Nezam’s economic dysfunction to argue that the regime is weaker than it appears. Beset by high inflation, lack of transparency, political interference, international sanctions, and epic corruption, the Iranian economy will hobble the ambitions of the Nezam and the prosperity of the people well into the future. This is an important weakness, but it is not the only one holding back the Islamic Republic. Perhaps equally as debilitating as its economic poverty is the Nezam’s poverty of imagination.

There is a dearth of new ideas, of the ability to reexamine assumptions or reinterpret principles in the Islamic Republic. This was on display last week at a conference on the “New World Order Geometry,” hosted by the Supreme National Defense University in response to Supreme Leader Ali Khamenei’s call to study the lessons of the war in Ukraine and the changes in the world order. Both topics have, of course, spawned a vast body of literature and opinion and are fertile ground for cultivating new insights and ideas about international affairs and security. As described by a report on the conference by the Israeli Meir Amit Terrorism and Intelligence Center, however, the main speeches at the conference produced little in the way of new insights—most simply repeated standard Iranian propaganda tropes and policy nostrums: the US is in decline, the East is rising, Israel is decaying and the Palestinians growing stronger, and so on.  And of course, to exploit these changes the Muslim world must recognize its strength, resolve its disputes, and “demonstrate greater solidarity to become a significant force” in the new world order—an idea that has been around at least since the days of Jamal al-Din Afghani.

The problem is deeper, however, than the lack of creative thinking at a conference intended to demonstrate fealty to Khamenei. The organizing concept of the current configuration of state power—the “homogenization of government,” in which all branches of government are controlled by reliably conservative figures loyal to the leader—is predicated on excluding an entire range of political thought from the deliberations of the Nezam. Intended, in part, to produce a more efficient government and overcome policy gridlock, it has instead resulted in an incompetent presidency unable to address effectively the main challenges facing the Nezam. After the government last fall provoked the worst episode of unrest since the revolution, it fell to Khamenei’s Swiss army knife, the IRGC, to quell the protests and it became the task of the pragmatic Ali Shamkhani, Secretary of the Supreme National Security Council (SNSC), to complete the stalled negotiations with Saudi Arabia and relieve Iran’s isolation.

Shamkhani’s reward arrived this past week when he was relieved of his duties at the SNSC and replaced by Rear Admiral Ali Akbar Ahmadian, a career IRGC officer noted mainly for his development of the IRGC Navy’s asymmetric small boat swarming tactics. As noted in our featured article this week, the hardline Paydari Front had long sought Shamkhani’s removal—they were especially incensed at his outreach to moderate and reformist figures during the protests last fall—and he really was not on the same page as the government of President Ebrahim Ra’isi with regard to security policy. (Tellingly, he was one of the few speakers at the New World Order conference last week who sounded a note of caution, warning that the changing world order posed threats as well as opportunities for Iran, and urging that the “doctrine of resistance” not become a policy of domination.)  Looking ahead to the parliamentary elections only nine months away, President Ra’isi likely sought to escape the shadow of the politically astute Shamkhani, who succeeded where Ra’isi’s government had failed in negotiating détente with the Saudis.  The career military man Ahmadian—whose most significant political act was to sign the infamous “coup letter” of July 1999 in which 24 IRGC senior officers threatened to intervene if then-President Khatami did not rein in student protests—will no doubt supply the Nezam with predictably conservative policy advice without eclipsing President Ra’isi and his lackluster administration.

Similarly, the election reform bill before the Majles, as detailed in the PersuMedia Daily Summary this past week, aims to ensure that figures who might challenge the status quo or question the prevailing orthodoxy are marginalized. After the “women, life, freedom” protests last fall, the Nezam came face to face with the stark fact that it had lost much of its political legitimacy—and that early warning of this could be found in the historically low voter turnout for the blatantly fixed presidential election of 2021. Last month, Khamenei charged officials with organizing elections in such a way as to ensure their credibility, security, and voter participation.  The reform bill’s solution is to empower the appointed and hardline Guardian Council to remove a Majles deputy from office at any time during before or after his election, thus allowing the Nezam to approve a broader range of candidates to attract greater voter participation, while giving it the power to dispose of any candidate the minute he actually tries to implement new ideas or policies the Nezam disapproves of.

The election reform bill is emblematic of the Nezam’s governance under Khamenei: it is at once cunning and shortsighted in its defense of the status quo. It favors the illusion of tolerance over the genuine article, which if permitted might lead to challenges to the ruling orthodoxy and Khamenei’s authority. But it fails to see—or perhaps, does not care—that such chicanery, a “bait and switch” approach to the electorate, will only worsen the Nezam’s legitimacy problem by raising expectations of change and then dashing them.

The Islamic Republic was not always so rigid. Although it was never a democracy, in its first decade a fairly broad range of ideas were at least tolerated, with liberal Islamists such as Mehdi Bazargan’s Freedom Movement allowed to operate and even speak out against government policy in wartime. To be sure voices who challenged the supremacy of the clerics around Khomeini were suppressed, but the Nezam countenanced a greater variety of voices then than it does now. When Khamenei became Supreme Leader, the range of condoned voices steadily narrowed. The Freedom Movement was banned in 1990; the Guardian Council required candidates for the Assembly of Experts to take a test to demonstrate their theological chops in 1992; rightwing vigilantes began breaking up lectures by popular reformist professors, and by 1996 the IRGC and the Basij were campaigning against “liberals”—mostly supporters of President Ali Akbar Rafsanjani.  The winnowing continues today, with even such regime stalwarts as Ali Larijani prevented from running for president in 2021 and hardliner calls this month for the prosecution of former President Hasan Rouhani.  Iranian politics have become even more impoverished as a result. 

The Nezam’s steady drive for monochromatic thinking and loyalty to the Leader has, to be sure, preserved Khamenei’s power and secured the regime for more than thirty years. But the cost has been to deprive the Nezam of the services of some of its more talented and thoughtful figures, limiting the options that might be considered in policy deliberations and narrowing the political base on which the Nezam relies for support. That, in turn, feeds discontent and erodes the political legitimacy of the regime. Shamkhani reached out to moderates and reformists during the protests for a reason—he wanted their assistance in calming the unrest and broadening the appeal of the Nezam. The Nezam is signaling, however, that in the end it values ideological purity over such “unprincipled” pragmatism. The regime will be surprised and reactive when reality does not conform to ideology.

Perhaps it does not matter that the Nezam no longer enjoys political legitimacy among much of Iranian society, and even among some elites, as long as it commands the loyalty of the IRGC. Moreover, a new government effort to censor Iranian media—masquerading as an effort to evaluate each outlet’s “performance”—will help to stifle criticism and limit government accountability.  But as policy options and competent officials are excluded from consideration for insufficient fealty to principlist dogma, at what point does the system become so narrowly based and limited in vision that it cannot effectively react to a crisis? We may not have long to wait to see such a test—Khamenei is 84, and his passing may reveal whether the system he has built is supple enough to survive him. 

Behind Shamkhani’s Departure, Future of Security Policies

From Daily Summary of 23 May 2023

The mysterious departure of Ali Shamkhani from the Supreme National Security Council (SNSC) continues to drive debates about the factors behind the decision. The appointment of a new SNSC secretary in the person of Ali-Akbar Ahmadian, who retains his position as the chief of the IRGC’s Strategic Center, suggests the Nezam is keeping its hardline train on a pragmatic rail. Ahmadian’s track record of giving expression to hardline goals via practical strategic policies suggests that under his stewardship security policy will still be informed by hardline ideas but exhibit  scholarly depth, a structured approach, and pragmatism.

There is no denying the hardline Paydari Front’s calls for Shamkhani’s dismissal. Apart from the group’s special interest in the elimination of Rouhani administration holdovers, Shamkhani’s engagement with reformist politicians during the 1401 protests particularly irritated members of the Paydari Front. There are also unconfirmed claims that he toned down orders for harsher confrontation with the protesters. Former diplomat Jalal Sadatian cautiously points the finger at the Paydari Front, but does not discount the impact of reports about the corruption of Shamkhani’s sons and his connection with Alireza Akbari, his former deputy who was executed in January on charges of espionage. In recent days, a foreign-based journalist has been leaking scandalous documents in connection with Shamkhani’s relatives abroad. The reformist outlet E’temad claims that if the source of these leaks is revealed, the mystery of Shamkhani’s departure could also be unlocked. Although some like conservative former MP Ahmad Bakhshayesh-Ardestani describe Shamkhani’s removal as a natural part of the reshuffling of the elite, it is clear that Shamkhani was not on the same page with the current administration on major security and diplomatic policies. The arrest of two members of the Hoseiniyyun, a proxy militia Iran has created to expand its influence in the Republic of Azerbaijan, also caused friction between the supporters of the resistance front and Shamkhani. Earlier in April, an angry letter from the Caucasus regional HQ and International Student Basij offices across Iran criticized the SNSC for “mistreating” the two Hoseiniyyun members. Writers had threatened that they would take matters into their own hands if President Ra’isi did not change the leadership and approach of the SNSC to satisfy the resistance front. In a nutshell, it seems that Shamkhani had to go and perhaps Ra’isi only tolerated him for a while until he found a proper replacement for him, as conservative politician Mansur Haqiqatpur puts it.

Meanwhile, advice for the new SNSC chairman reflects a conservative outlet’s concerns about the most urgent matters of the country with respect to security after the 1401 protests. Farhikhtegan newspaper urges the new chief to make sure major decisions can be reasonably justified so that even if a segment of the population opposes a decision it can still see it as a logical decision and not stand up against it. The outlet seems to be referring to the recent push for the implementation of hijab. Additionally, the outlet hopes that the council understands the importance of people-based security. Among other concerns expressed by Farhikhtegan, the following are noteworthy: the loss of credibility of domestic media, lack of accountability on the part of officials, the absence of a legal mechanisms for political activities of university students which results in radicalism, the need for rationality in the management of cyberspace, incentivizing voter participation, and reducing social polarization by avoiding approaches that cause tension.

Ali-Akbar Ahmadian, Shamkhani’s replacement, has served at Imam Hosein University. In tandem with senior military commanders like Chief of Armed Forces General Staff Mohammad-Hosein Baqeri (né Afshordi), and former IRGC commander Yahya Rahim-Safavi, now an advisor to Supreme Leader Ali Khamenei, he has developed ways to shoe-horn ideology into military doctrine and strategic policies, including “asymmetric defense theory in the IRGC” and “the Nezam’s challenges in facing hybrid warfare.” A war veteran with a Ph.D. from the Supreme National Defense University in strategic management, Ahmadian has been leading the IRGC Strategic Center for 16 years. When Rahim-Safavi was promoted as commander of the IRGC in August 1997, among his early moves was a recommendation that Khamenei appoint Ahmadian to head the IRGC naval force. During his tenure at the IRGC Navy, Ahmadian increased the IRGC’s asymmetric defensive capabilities to confront threats against the Nezam from the great powers. Iran’s adoption of asymmetric warfare is a military and security strategy developed by theoreticians like Rahim-Safavi at Imam Hosein University, combining conventional and unconventional tactics to counter adversaries blessed with greater power and more resources. “It is a reality,” said Rahim-Safavi, “that our enemies have superiority in technology and military equipment. This is not hidden from our sight, but our military strategy is an asymmetric one.” Hinting at the continuation of the IRGC’s assertive stances and policies, the appointment of a military strategist with hardline views may be indicative of a move by policymakers to more calculated and examined approaches to policy.

Majles Research Center’s Stance against ‘Islamic’ Economy 

From Daily Summary of 17 May 2023

In a recent study of factors causing inflation in Iran’s economy, the Majles Research Center (MRC) took the side of reformist and centrist economists who advocate for an open market in their disputes with hardliners, who have been peddling command economic principles under the label of “Islamic economy.”

The MRC’s work came in time to add to the debates and disputes between Iranian economists and analysts over the main contributing factors to inflation. A high number of economists close to reformist and centrist political groups identify the intractable growth of liquidity in Iran’s economy as the major inflationary factor, while hardline groups attribute it to fluctuations and the high rate of FOREX (Daily Summary of 13 May 2023: “Assessment of Economic Indicators for Hyperinflation”). In an attempt to provide a roadmap for curbing inflation growth, the MRC points to the country’s continuous income-expenditure imbalance as the underlying element for the growth of liquidity and consecutively inflation in the long term. The MRC also delivers a straightforward response to hardliners’ diagnosis of inflation, which flags the fluctuation of the FOREX rate as itself a manifestation of rising liquidity. The study formulates its suggested roadmap for the economy in weathering the incessant high inflation with disciplined fiscal policies. The MRC’s analysis came as an unpleasant revelation to the IRGC-affiliated outlet Tasnim. Tasnim rejects the link between liquidity and inflation by pointing to a course of time in 2022–23 when the Central Bank of Iran (CBI) was successful in curtailing liquidity growth with no tangible impact on soaring inflation and the rise of the FOREX rate. The Monetary and Banking Research Center affiliated with the CBI is another institute that identified excess liquidity as a destabilizing factor in the economy. In research released in 2022, the CBI’s research institute highlighted the destructive impacts of liquidity growth in the economy and emphasized that the needed financial resources for the production sector must be provided by an increase in real as opposed to nominal growth in the country’s GDP. The research by the Monetary and Banking Research Center seems to be a response to economic policies hardliners advocate whereby they justify the generation of liquidity for supporting the production sector and seek solutions to inflation by interfering in the markets. Meanwhile, a private financial group released an outlook on Iran’s economy in 2023–24 that foresees a high inflation rate and a decline in GDP. Along the same lines, a 5.8-percent decline in industrial production emerged in the monthly report of the Monetary and Banking Research Center for March 2023, confirming a gloomy GDP outlook and implicitly auguring a supply pull inflationary effect for the coming months. As the controversy between the political groups with different economic doctrines continues, a lack of consensus over the roots of economic issues is making coordination improbable between the monetary policies instituted by the CBI and the fiscal plan the Majles has issued for the government.

Nezam’s Tightening Grip on Power

From Daily Summary of 19 May 2023

Evidence suggests the Nezam’s ultimate policymakers are not retreating from placing political power exclusively in the hands of Iran’s hardliners, regardless of wishful speculation on the part of Iran’s reformist news outlets about the regime’s openness to a more inclusive approach. Bills to “reform” the election law and to require “transparency” in the votes of legislators are currently in the final stages of review and approval. In coordination with the Nezam’s approach to creating a homogenized power system, conservative power groups have drafted the two bills.

After days of scattered information about the bill on reforms in the election law, the details disclosed today reveal a considerable change in the country’s election system and reflect the Nezam’s will for closer oversight of the Majles. The initiation of the bill goes back to the supreme leader’s policy guidelines to the Majles in 2017 for reforms in the election law. While the previous administration had drawn up a bill to address the supreme leader’s demands, MP Mohammad-Saleh Jowkar clarified that the Majles replaced the former administration’s bill with a completely new one. According to his reformist colleague Gholamreza Nuri-Qezeljeh, the new bill slashed the republican aspect of the Nezam by empowering the Guardian Council (GC) to disqualify elected candidates at any time during their term, in effect rendering people’s votes meaningless. The GC’s new scope of power enables the unelected body to influence the political moves and decisions of the legislature even more than before (Daily Summaries of 10 May 2023: “Nezam’s Underhanded Plan To Boost Voter Turnout” and 18 May 2023: “Conservatives Prioritize Handpicked Candidates over Voter Turnout”).

Contacting a number of MPs only one of whom was willing to provide limited details about the progress of the bill, Khabar Online, the media outlet close to Ali Larijani, made a largely unsuccessful attempt to dig up more information. MP Lotfollah Siahkali claims the main articles of the bill have been ratified and submitted to the ministry of interior for implementation, while committee discussions on the details of the bill continue. Siahkali highlights the clause that allows the GC to oust elected MPs during their tenure. The change in the scope of the GC’s power is clearly a violation of the Islamic Republic’s Constitution. Amir Hoseinabadi, a legal scholar and former faculty member of Shahid Beheshti University, challenges the legislation on constitutional grounds. Nor is this the only change that the bill envisages. Jowkar says it will apportion seats in the legislature by the percentage of votes that slates of candidates receive. Called a “percentage-based model,” the legislation gives added weight to a party structure that is currently nonexistent in Iran’s political system. It also enables the Nezam, at a lower political cost, to keep “homogenized” political power in the hands of its favored hardliners. The mechanism is designed to allow great diversity in candidates during an election cycle, thereby potentially attracting high voter turnout, but ultimately reserving power for the GC to oust any legislator it deems fit at any time. The bill for so-called transparency also facilitates the identification of MPs who do not abide by the Nezam’s will.

De-Dollarize This! USD Threatening To Take Over Housing Sector

From Daily Summary of 20 May 2023

One of Supreme Leader Ali Khamenei’s new hobby horses is his desire for the “de-dollarization” of the Iranian economy—an economy whose greatest inflow of revenue comes from petrodollars and whose national currency experiences dizzying fluctuations. New trends in the Iranian marketplace, this time in the real estate sector where costs are continuing to climb, suggest the country is heading in the opposite direction, meaning more people are conducting transactions in USD. This can only mean trends in the Iranian economy have a long way to go before they can do a U-turn to realize Khamenei’s dream (Daily Summary of 25 April 2023: “Domestic, Foreign Possibilities for De-Dollarization”).

The Iranian real estate market’s greater reliance on U.S. currency is affecting not only the purchase of homes but also rental agreements. The housing climate that has witnessed the shrinking size of homes, alternatively characterized as a spike in housing costs, has engendered unwelcome new trends such as people sleeping in public transit vehicles, or else renting basements or rooftops. Sa’id Lotfi, a senior member of an association of real estate agents, says this is simply a matter of supply and demand and warns that Iran has not yet reached the peak of housing demand. He adds that pricing homes in dollars, whether for sale or lease, is the preferred way for owners to protect themselves from runaway inflation. The fact that the practice is illegal is no obstacle, since the parties to such agreements make no mention of it in contracts for sale or lease, but they do come to terms verbally that payments are expected in dollars. In large part, the demand for housing is driven by shortness of supply. The Ra’isi administration has done nothing to realize its promise of building a million homes in each of its first four years in office, and two million new homes by now would have gone a long way to resolving the problem. Instead, according to a report by the Majles Research Center, 55 percent of Iran’s population is living in inadequate housing—what the economic news outlet Donya-e-Eqtesad refers to as “housing poverty.” After the Ra’isi administration’s inglorious record-setting in inflation (see above), this is yet another mark of its many failures. For instance, the only thing we have heard from Ra’isi and his men are unfulfilled promises of building more homes, but the administration has no plan to help in areas such as housing assistance. Another news report suggests that in a town like Chabahar, foreign investors—Afghans, in fact—are driving up housing costs and pricing the local population out of the real estate market.

So, the fact that the supreme leader’s handpicked president is presiding over the greater dollarization of the Iranian economy rather than its de-dollarization must be galling to his supporters. Further bad news comes from Iran’s auto industry, where it is reported that the raw materials that go into the manufacture of auto vehicles are also priced in dollars. The supreme leader seems to have not woken up yet to the fact that his high-flying ambitions almost always run into the brick wall of hard reality.

Rejecting ’Begging Diplomacy,’ Khamenei Advocates Strategic Flexibility

From Daily Summary of 21 May 2023

In what seemed to be a veiled criticism of proponents of a more open foreign policy, Supreme Leader Ali Khamenei rejected the idea of compromising principles to achieve international agreements, while simultaneously expressing support for strategic flexibility. While conservatives highlighted Khamenei’s dismissal of an open foreign policy approach, they also emphasized his endorsement of temporary strategic flexibility, hinting at a potential acceptance of pragmatic considerations within conservative circles.

In a meeting with diplomats and foreign ministry officials, Khamenei underscored the significance of upholding dignity in foreign policy, advocating for the avoidance of what he refers to as “begging diplomacy.” The term “begging diplomacy” has been employed before, as evidenced by Kayhan newspaper’s critique of the Rouhani administration’s foreign policy in 2018. The ultraconservative publication had contended that the administration’s “begging diplomacy undermines national pride.” ​​Khamenei also emphasized the significance of expediency and pragmatism in foreign policy, asserting that it entails “flexibility” to surmount formidable challenges while steadfastly pursuing the intended course of action. Conservatives emphasized both Khamenei’s rejection of an open foreign policy approach and his endorsement of temporary strategic flexibility, suggesting a potential willingness to entertain pragmatic considerations within their ranks. The IRGC-affiliated Javan publication shared a tweet by a conservative activist that featured a photo of former foreign minister Mohammad-Javad Zarif, labeling it as a “picture of begging diplomacy.” In the image, Zarif can be seen reaching out to an official from an Arab country during an international forum. Criticizing the Rouhani administration for adopting “begging diplomacy,” conservative Kayhan argued that the cost of resistance and assertive diplomacy is unquestionably lower than that of inaction and diplomatic pleading. The conservative newspaper maintained that “in a world marked by the prevalence of the law of the jungle, due to the destructive and criminal actions of oppressive governments, the power and dignity exhibited through assertive diplomacy command respect.” In the realm of foreign policy, conservatives have consistently emphasized Khamenei’s firm position, whereas reformists point to his endorsement of the JCPoA agreement, which he had referred to as “heroic flexibility” at the time. In an article titled “Demarcation between Begging Diplomacy and Heroic Flexibility,” Mohsen Mahdian, the conservative CEO of the Hamshahri Organization, contended that the key to “heroic flexibility” lies in maintaining adaptability on the path to the ultimate objective, rather than abandoning it outright. According to Mahdian, the essence of Khamenei’s notion of flexibility is not contradictory to his idea of dignity and the rejection of “begging diplomacy.”

In a preliminary statement preceding Khameni’s speech, Foreign Minister Hosein Amir-Abdollahian emphasized a significant shift in his ministry’s strategy, moving away from what he referred to as the “single-axis policy centered around the JCPoA.” Amir-Abollahian further articulated his ministry’s support for the axis of resistance and their commitment to active engagement by participating in regional coalitions such as the Eurasian Economic Union, the Shanghai Cooperation Organization, and BRICS.

China in the Gulf: Tale of Two Cities

From Daily Summary of 23 May 2023

It Was the Best of Times for Riyadh. It Was the Worst of Times for Tehran...

And things weren’t looking that good, either, for Ali Shamkhani, former secretary of the Supreme National Security Council (SNSC), replaced days ago by Ali-Akbar Ahmadian, a decorated IRGC commander who has been recognized for his strategic initiatives in “countering the presence of the hostile U.S. naval fleet.” As noted in PersuMedia’s Daily Summary of 22 May, the change in leadership may suggest a shift towards a more hawkish approach within the SNSC. Shamkhani, it will be remembered, was the father of the China brokered Iran-Saudi rapprochement. While it is too early to conclude that Shamkhani was replaced as a result of his part in the deal, there are indications that the results to date have been skewed in favor of Riyadh.

China-Iran Trade: The Devil in the Details

In the first four months of 2023, the value of trade between Iran and China exceeded $5 billion, as reported by China’s Customs Office. At first glance, this may not appear all that significant, as it amounts to a mere four-percent increase compared to this time last year, and on track to more or less match last year’s total trade of $15.795 billion. However, a closer analysis of the figures reveals some fascinating trends. Although the overall picture is largely the same, the devil is in the details. While exports from China to Iran grew, China’s imports from Iran saw a steep decline of 39 percent, mainly attributed to the decrease in oil prices. Chinese products exported to Iran in the same period recorded a robust growth of 46 percent, reaching $3.710 billion. In other words, Iranians are buying more Chinese products, but China is both importing less and paying less for Iranian oil. This is hardly the result that the Iranians were probably hoping for when China allegedly promised an increase in economic relations following the Beijing-backed Saudi-Iran agreement.

 To the U.S., Any Increase Is a Bad Increase

At the same time, the United States is sending a clear signal that China’s relations with Iran will be subjected to the highest level of scrutiny. Fresh on the heels of the Tanker Wars earlier this month, which saw the United States seize a tanker full of Iranian oil bound for China (and prompting Iran to retaliate by seizing a tanker bound for the U.S.—albeit one partially owned by a Chinese company!), the U.S. government announced a series of charges related to espionage, three of which targeted Chinese nationals. One, Xiangjiang Qiao, has been charged by federal prosecutors in Manhattan for allegedly violating U.S. sanctions by providing Iran with materials used in the production of ballistic missiles, according to a statement on Tuesday. Qiao is employed at Sinotech Dalian Carbon and Graphite Manufacturing Corporation, a Chinese company that was placed on the U.S. Treasury Department’s sanctions list in 2014 for assisting Iran in acquiring missile parts. Prosecutors claim that between 2019 and 2022, Qiao facilitated the supply of isostatic graphite, a crucial component for rocket nozzles, to Iran. He also allegedly established a bank account under a front company’s name to receive $15,000 in transfers from a U.S. bank related to these transactions. Currently residing in China, Qiao, aged 39, has not been arrested and is facing charges that include sanctions evasion, bank fraud, and money laundering. The arrest echoes the high-profile arrest of Meng Wanzhou in 2019 for charges related to evading U.S. sanctions, and will no doubt serve as a reminder to potential Chinese investors of the many hurdles thrown up by the U.S. to prevent military and economic cooperation with Tehran.

6th China-Arab States Trade Expo, Starring Saudi Arabia

While the Iranian economy is looking increasingly like a destination for Chinese goods, Saudi Arabia continues to develop a deeper, more comprehensive partnership with China, as highlighted in the recent promotion meeting for the 6th China-Arab States Expo. The event, held in Riyadh and themed “Beautiful Times, Common Vision,” showcased the growing strength of the traditional friendship between China and the Arab states, and featured Saudi Arabia as the “country of honor.” Liang Yanshun, secretary of the Party Committee of Ningxia Hui Autonomous Region and director of the Standing Committee of the National People’s Congress, emphasized in his speech at the event the growing ties between China and Saudi Arabia, and looked forward to Saudi Arabia’s participation in upcoming trade expositions in China.  Liang’s involvement highlights the ways in which Chinese Muslims and the Ningxia Hui Autonomous Region play an important role in Sino-Saudi cultural relations, regardless of (or as a way to distract attention from) China’s treatment of its Muslim Uighurs. Bandar Alkhorayef, Saudi Minister of Industry and Mineral Resources, highlighted rising China-Saudi cooperation in the Saudi economy, including energy, trade, finance, and infrastructure. He highlighted China’s pivotal role as Saudi Arabia’s most important and influential economic partner.

For a Few Renminbi More

The same week, the opening ceremony of the Industrial and Commercial Bank of China (ICBC) Saudi Jeddah Branch and the renminbi (RMB) business promotion conference was held in Riyadh. During the event, ICBC showcased China’s economic and financial development, its cross-border RMB service system, and financial products in Saudi Arabia. ICBC also signed a cooperation agreement with Saudi Ajlan Group to strengthen RMB business ties. Representatives from Saudi International Power and Water Group expressed eagerness to explore further opportunities with ICBC and support the internationalization of the RMB. With branches established in several Middle Eastern countries, including Saudi Arabia, ICBC represents a further expansion of China into areas beyond the energy and export markets, marking a clear contrast with Tehran.