On July 6, 2020, Iranian Foreign Minister Javad Zarif announced that Iran was negotiating an agreement with the PRC (People’s Republic of China) for trade and strategic links. Defence and political analysts are seeing the move as a substantive and significant response to India’s success in militarily outmaneuvering the PRC in Kashmir during June 2020.
The PRC-Iran accord means the end of Indian use of the Iranian port of Chah Bahar and the construction of a rail link from that port city northward to link with a new rail spur into Afghanistan. India’s moves into Kashmir in 2019-2020 are widely perceived in Beijing to presage a new move by India to cut off the PRC-Pakistan landbridge through Pakistani-controlled Azad (Free) Kashmir, giving India its own landbridge to Central Asia.
Thus, after the confrontation between the Indian Army and People’s Liberation Army (PLA) troops in the Ladakh region of Kashmir on June 15-16, 2020, Beijing determined it would respond by cutting Indian access to Central Asia through Iran.
The first signs came as the Iran-PRC deal was announced and the Iranian government canceled the Chah Bahar to Zahedan rail link which was to be built by India, citing Indian delays on the 628 km project. The Iranian government said that it would complete the line on its own, with a $400 million investment from the Iranian National Development Fund to the Iranian Railways.
Indian Prime Minister Narendra Modi had gone to Tehran in May 2016 to sign the Chah Bahar deal, but work was indeed delayed as India fretted that the project might invoke U.S. sanctions against India. The PRC-Iran agreement could involve serious military ties and lead to major PRC defense sales to Iran, involve some $400 billion in PRC economic investment over 25 years, and lead to a major PRC role in modernizing Iranian railroads, ports, 5G Networks, and telecommunications generally. In return, the PRC would get discounted supplies of Iranian oil products and gas for the next 25 years.