The latest direct rail link, connecting China to Iran overland, offers a pivotal geoeconomic win for these two BRIC economies.
The freight route, from Khorgos in western China to Iran’s capital, Tehran, slashes the transportation time from forty days by sea to just fifteen.
China and Iran signed a 25-year cooperation agreement in 2021 to deepen collaboration across infrastructure, energy, and trade. This railway project marks one of the tangible results of that agreement.
It strategically avoids chokepoints like the Strait of Malacca and Suez Canal, areas long dominated by the U.S. Navy.
In doing so, the route undercuts the deterrent capabilities of U.S. military power and the use of economic sanctions to shape foreign policy decisions by Tehran and Beijing.
The new railway route forms part of China’s Belt and Road Initiative and aims to improve connectivity between East Asia and the Middle East.
Economic Incentives: Infrastructure Link
Beijing gains quicker, cheaper, and more secure access to Iranian oil; a resource it continues to buy in defiance of U.S. restrictions.
According to tanker tracking consultancy Vortexa, Chinese oil maritime imports reached their highest in 17 months, with imports from Iran peaking, in March this year. Beijing's purchase of Iranian oil continues to surge whilst U.S. and European sanctions on Russia and Iran's 'Shadow Fleet' threatens a crucial lifeline for Iran's sanctioned economy and China's cheap access to raw energy inputs.
Reports suggest a possible extension of sanctions on Russia over Ukraine with the possibility of more sanctions on Iran, if Tehran refuses to agree to a revised nuclear agreement, under President Trump.
Therefore, the link offers a new viable route, that is much faster from production to consumption, avoiding possible seizure points at major ports if sanctions are extended.
Together, the new railine offers a safety valve against a sanctions regime that is committed to seizing and eliminating the ‘Shadow Fleet.’
Sanctions are a Losing Game
The latest connection also sheds light on the failure of sanctions to isolate Iran and contain China.
Washington has spent years trying to limit Tehran’s oil exports through a complex web of sanctions and diplomatic pressure.
America also tried to counter China’s global rise by forming strategic alliances across Asia and the Indo-Pacific. Yet both countries just built a trade route that defies these efforts whilst China deepens trade ties across ASEAN with the latest trade agreement.
For years, the United States has treated economic sanctions as a blunt-force tool to isolate adversaries.
However, sanctions only work if the system is multilateral whilst offshore networks are targeted.
Risks of Overland Routes Offset by Regional Investment
Some observers argue the new route remains vulnerable to sabotage, however, recent efforts to foster cooperation and development between the EU, GCC, and Central Asia offers hope that radical extremism is a thing of the past.
In recent weeks, the President of the EU Commission, Ursula von der Leyen, visited Uzbekistan on the first official EU-Central Asia visit in Samarkand, Uzbekistan, whilst the UAE signed it's latest CEPA with Kazakhstan last week.
Overland corridors face risks that ships do not, including cross-border tensions, infrastructure decay, or insurgent threats.
However, the EU’s bid to broaden it’s sphere of influence in Central Asia whilst China seeks to build on it’s Silk Road initiative suggests a positive trajectory for Central Asian states.
Therefore, Washington should reengage in regions, that are vital to alternative maritime and overland trading routes, whilst taking active efforts to close sanction loopholes if it seeks to maintain the credibility of it’s foreign policy. Lobbying efforts for greater material access and development partnerships in Mauritius, Greenland, Somaliland, Taiwan, and Panama confirm this.
Right now, America risks losing ground not through war or diplomacy, but through logistics.
This overland route has the potential to derail U.S. foreign policy tools, if Washington turns a blind eye.
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