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Power Shifts in the Middle East

As US President Donald Trump and his Secretary of State Mike Pompeo continue to step up their crackdown on China and try to form an alliance of “freedom-loving nations” against “new tyranny” in China, China and Iran are stepping up cooperation. Beijing is thus abandoning its previous foreign policy restraint in the US conflict with Iran. The consequences are far-reaching. The FAZ speaks of a “geotectonic shift”.

China and Iran intensify economic and military cooperation

Iran is suffering not only from the economic and social consequences of the harsh US sanctions regime, which have exacerbated the mullah regime’s homegrown economic and social problems, but also from the consequences of the coronavirus pandemic. President Hassan Rouhani fears that 25 million Iranians are already infected with the coronavirus. In view of this desolate overall situation, Iran has stepped up pressure on China to fill a final declaration between Tehran and Beijing, which had already been concluded in 2016, with concrete commitments.

Until now, China had, at least in part, adhered to US sanctions against Iran. The Chinese were one of the main buyers of Iranian oil, with oil imports from Iran reportedly falling by almost 90% by March 2020. Trade between the two countries has fallen by 40%. Now, China’s foreign policy has clearly changed: about ‘400 billion dollars are to be made available over a quarter of a century for the expansion of Iranian bridges and ports, pipelines and railway lines, holiday hotels, telecommunications, and agriculture. In return, Iran is supplying oil for China’s growth process (which restarted after the pandemic was reined in). Iran and its 82 million inhabitants also offer a large new growth market for Chinese goods.

The economic agreement is to be accompanied by a military partnership. After the first military base outside China in djibouti in east Africa, the second one now follows in Jask, Iran, at the entrance from the Indian Ocean into the Strait of Hormuz. The Strait of Hormuz is considered to be the eye of the needle for the export of oil by ship from the Gulf region. With a military base at this highly sensitive geopolitically, China is also sending a power-political signal to the region.

Overall, Chinese support is likely to allow Iran to survive. The intensification of economic and military cooperation between China and Iran does not automatically enliven conflict, but could, on the contrary, contribute to the stabilisation of this conflict- and war-torn region. Economic support from China in the much-needed development of the country’s infrastructure, telecommunications, agriculture, and tourism could, on the one hand, make decisive progress in modernizing the economy, and, on the other hand, moderate Iran’s foreign policy efforts to build a Shiite power belt from Iran to Syria to Lebanon and threaten Israel’s existence, and prevent a resumption of the nuclear bomb-making program. And effective support for Iran in the fight against the pandemic is urgently needed not only in Iran, but in the health interests of the world’s population.

At the same time, one of the central pillars of US hegemony in the Middle East, Iran’s arch-enemy Saudi Arabia, has also been put on the defensive economically by global economic decline.

The Saudi arch-rival on the defensive

The Saudi economy is suffering massively from the global shutdown of economies. Global travel and delivery, still primarily fossil fuel-based, has collapsed with the outbreak of the pandemic, and the price of oil has plummeted as a result of sharply lower demand for gasoline and kerosene. The price of oil has now risen back to just over US40 US dollars per barrel, but is still well below the previous level of around US70 US dollars.

Saudi Arabia needs an oil price of about US75 US dollars for a balanced budget, almost double the current price level. In the second quarter alone, the country had a budget deficit of USD 29 billion. Even if Saudi Arabia has a high financial cushion, the deep modernization of the Saudi economy, which is envisaged under the “Vision 2030”, in order to become independent of oil, is likely to be stretched and reduced in scope, at least in terms of time.

The alliance for monitoring the production and distribution of fossil fuels, forged by the US in the course of the expansion of its geo-political hegemony after World War II with Saudi Arabia and other Gulf states, had lost importance due to the climate crisis and the burgeoning global debate about a carbon-neutral production and way of life even before the Coronavirus pandemic, which was also reflected in increasing conflicts between the various oil sa, , Opec +, USA) on production volumes and prices. With the pandemic, the loss of importance of these “fossil alliances” is likely to accelerate.

At the same time, a low oil price is preventing an expansion of the US fracking industry, which has been shut down in the crisis, becoming the largest net exporter of oil and natural gas in 2019. As the US also suffers from weak demand for fossil fuels, it is bipartisan in trying to prevent the near-finished Nord Stream 2 gas pipeline through sanctions and to sell the US liquefied natural gas on the European continent.

New Alliances and Lines of Conflict in the Middle East

By agreeing close economic and military cooperation between China and Iran, China has also thwarted India’s efforts to form a greater counterweight to regional rival Pakistan through closer economic cooperation with Iran. Indian Prime Minister Narendra Modi originally wanted to build an alternative to the port of Gwadar in Pakistan with the Iranian port of Chabahar. Tehran, meanwhile, has thrown India out of the Chabahar rail project via Afghanistan to Turkmenistan to link to Central Asia, arguing that India has never fulfilled its funding promise. The trump administration had even removed the originally planned stronger economic cooperation between India and Iran from the list of US sanctions against Iran in order to strengthen India’s economic importance to China. The Indian opposition criticized India’s Sino-Iranian disembarkation as a complete collapse of India’s global strategy.

Pakistan and Iran together offer a huge growth market of more than 300 million people for Chinese goods. With increased economic cooperation with Pakistan and Iran, Beijing is further expanding its Belt and Road Initiative (BRI) project, while gaining further geo-political weight in the Middle East. Moreover, Israel and Turkey have also concluded agreements with China for cooperation within the framework of the BRI.

The US is trying to build an alliance of states against China against such shifts in power. The UK has already pushed Chinese supplier Huawei out of the expansion of the 5G mobile network. India, too, is preparing to become part of this alliance.

India – a new us strategic partner against China?

The fight against Corona in India is particularly concerned with massive structural deficiencies in India’s health care system. The virus appears to be spreading more or less freely in India, even though prime minister Modi’s Indian government had imposed a strict lockdown on the country very early on. India, with a population of 1.3 billion, is the country with the most new Corona infections in the world, behind the US and Brazil. Two million Covid-19 cases have now been detected there. For weeks, there have been more than 50,000 confirmed cases per day. Researchers at the Massachusetts Institute of Technology (MIT) estimate that India could be the country with the world’s worst outbreak by early 2021. In particular, there are far too few doctors, nurses and medical equipment to fight the virus, as well as far too few hospital beds, as pictures of patients lying on cardboard boxes in Delhi or Mumbai hospitals show.

With us backing, the Indian prime minister wants to withdraw supply chains from China and move them to India. But this has a lot to do with wishful thinking, because it requires deep reforms in India. India was already struggling with massive economic, social, and political problems before the Coronavirus pandemic. The country needs a million new jobs every month! Of the promises of double-digit growth, a doubling of economic output, and a job miracle that allowed Modi to extend his absolute majority in the May 2019 elections, while the congress-led opposition won only about a third of modi’s party’s votes, nothing was seen before the pandemic erupted.

India has become the third-largest economic power in Asia, but despite all the economic progress, it is still a country where 90% of the working population has to work without a contract of employment or insurance, where 650 million people are entitled to food rations, and where far too little money has been spent in recent years on the much-needed expansion of health and education systems and social systems. India ranks 145th in the world in terms of access to medical aid and quality. The country spends only 1.6% of its GDP on health care. More than 120 million people have lost their jobs since the Corona pandemic shutdown, and they have no income but to go to their home villages with their belongings, where they have no economic future.

Instead of decisively fighting these increasingly open economic and social problems politically, Modi and his right-wing nationalist party – the Bharatiya Janata Party (BJP) – are gradually undermining the secular character of India’s constitution. India is still a multi-ethnic and multi-religious country, despite the division of the former British colony into India and Pakistan after World War II and a population exchange by religion. India is now home to nearly as many Muslims as Muslim Pakistan. After India’s independence, India’s first prime minister, Jawaharlal Nehru, resisted massive domestic political pressure to declare the country a Hindu Rashtra (Hindu nation), India became a democratic republic. The secular character of the Indian constitution was explicitly enshrined by Indira Ghandi in 1976 with an amendment to the preamble, which included not only the term “socialist” but also the term “secular”. The secular constitution was one of the political preconditions for India’s economic rise to become Asia’s third-largest economy.

With the decline of India’s secular parties and the rapid political rise of Hindu nationalists to the takeover of political power across the country, the secular character of Indian society is increasingly eroded. The aim of the right-wing populist and religiously coloured strategy of Modi and his party is to subjugat the approximately 200 million Muslims and other minorities. In everyday life in India, there are occasional attacks on members of the Muslim faith, some of whom are accused of mistreating or slaughtering holy cows. At the end of 2019, the government passed a new citizenship law that effectively excludes Muslims from certain countries from obtaining Indian citizenship, leading to bloody riots in peripheral areas of Delhi.

In the Muslim-majority region of Kashmir, the Indian government revoked the region’s partial autonomy in August 2019. Exactly one year later, construction of the Rama temple in the northern Indian state of Uttar Pradesh began, skillfully dressed by Modi in a religious opening ceremony. In doing so, he set a clear Hindu symbol against the Muslim minority. The construction of the Hindu temple takes place on a plot of land where fanatical Hindus demolished a mosque built in the 16th century by the then Muslim rulers. In the ensuing unrest, 2,000 people, mostly Muslims, were killed. Hatred between Hindus and Muslims was specifically promoted by 200 years of British colonial rule through a policy of “divide and rule”.

In the political situation in India, now marked by a massive economic, social and health crisis and overshadowed by growing religiously coloured domestic political conflicts, the conflict with China is intensifying at the same time.

India’s economy is more dependent on China than vice versa. If both countries suspended their trade, China would lose 3% of its export market and 1% of its imports. India, however, would lose 5% of its exports and 18% of its imports. With computer chips, plastic cups or raw materials for headache tablets worth 65 billion US dollars, Chinese companies have also supplanted Europe as the largest supplier. China’s direct investment in India is USD 26 billion.

When Chinese business giants such as Alibaba and Tencent took advantage of the crashed Indian stock market at the start of the pandemic to participate in 10 of the top 30 new technology companies, the Indian government responded with an investment law that excluded Chinese firms. At the same time, the Indian government gave in to pressure from the Indian population and banned 59 Chinese apps in India, including TikTok, which has around 200 million users in India alone. Modi’s very ambitious vision is to export India to an organic in just five years. Tripling the US dollar will not be possible without intensive economic cooperation with China.

At the same time, new border conflicts with China occurred on the “roof of the world”, but they were quickly frozen by both sides because of their high risk of escalation and far-reaching geo-political consequences. But as economic problems and conflicts increase, the potential for new, much sharper military conflicts lurks here. And there has long been massive political tensions between India and Pakistan.

Trump’s general attack on Chinese high-tech companies

With increased economic cooperation with Pakistan and Iran, as already mentioned, Beijing is further expanding its Belt and Road Initiative (BRI) project and gaining further geo-political weight in the Middle East. At the same time, China, with its close economic and military cooperation with Iran, is undermining the harsh sanctions regime and the policy of “maximum pressure” from the US on Iran.

The open challenge to the US by Chinese foreign policy comes at a time when the Trump administration is weakening domestically, with the pandemic massively exacerbated and ongoing economic crisis, the contradictory and sum miserable health crisis management, and Trump’s poor poll ratings compared to his Democratic presidential challenger, Joe Biden.

“Trade wars are easy to win,” the US president used to sound. But at the end of his first term, not much remains of this central dimension of his “America First” policy: the much-heralded pact with China is on hold, as is the proposed industrial tariff agreement with the EU.

Instead, the Trump administration, which has been put on the defensive in both domestic and foreign policy, is trying by all means to curb China’s growth strategy and the expansion of its geo-political influence, linking it to the prejudices deeply entrenched in the American population about the supposedly existing “yellow danger” (“China virus” etc.), and on the other hand, it is deeply attacking the ideological moth box of the Cold War. With the recently announced Clean Network Program, the Trump administration is aiming not only at massive restrictions of competition against the IT company Huawei and the video platform TikTok, but also against the entire Chinese high-tech industry, in order to prevent Chinese authorities from accessing American data, a “new tool of the Communist Party”. The Clean Network Program includes five new elements:

In doing so, the US is massively intensifying the trade war against China, especially at the level of the platform and digital economy. One may interpret this general attack by the Trump administration as a line-up for the final battle before its election, but first, its removal is far from certain, and secondly, if elected, the Democratic presidential nominee is likely to continue the US frontline against China built by the Trump administration.

Germany steps up focus on US sanctions pressure

By pursuing a different Iran policy, China has completely fallen behind with its helpless foreign policy strategy of waiting.

At the same time, the Trump administration is increasing pressure, especially on Germany to join the alliance against China and Russia. After various – also bipartisan – threats of sanctions by the USA against Nord Stream 2, three US senators have now taken action: they have threatened the operator of the ferry port Sassnitz in Mecklenburg-Vorpommern with severe sanctions in a letter because of his role in the construction of the Nord Stream 2 Baltic Sea pipeline, which the US wants to prevent by all means, above all out of economic selfishness (sale of its liquefied gas). German politicians have strongly rejected the US action.

So far, the Federal Government has not been prepared to take a massive front position against Russia and especially against China, and especially against China, not because of the high importance of the Chinese sales market for the premium manufacturers of the German car industry, which have suffered massive sales losses in Germany and Europe and are only slowly gaining momentum. But even if there is a change in the US presidency in November, the Gretchen question of German and European foreign policy – “How do we feel about relations with China and the United States” – will remain on the table.

Even a Joe Biden as the new US president will not abandon the frontline position with China in principle, because From the US point of view China has become a threat to the economic-technological, geo-military and thus also geo-political dominance of the USA. The fact is that the hegemonic position of the US has been in an erosion process long before the coronavirus pandemic. It is precisely in such a geo-political situation that there is a high risk of escalation of conflicts.

The federal government can still content itself with relationship structuring formulas such as China as a political partner, economic competitor, and strategic rival. The pressure of the eroding US hegemon to put the level of systemic competition at the expense of the other levels of relations and to accept economic disadvantages will increase, and Germany and the EU will have to position themselves more strongly through a clear decision.

The future relationship with the US and China is also expected to play a significant role in the 2021 federal election campaign. The party DIE LINKE is recommended to adapt to this at an early stage and to position itself accordingly in terms of foreign policy.