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China announces $280bn Iran investment as Iran set to violate nuclear deal

What happened: According to a report in the Times, China will invest $280bn in Iran’s oil, gas and petrochemicals sector.

  • The announcement was apparently agreed during Iranian Foreign Minister Mohammad Javad Zarif’s August visit to Beijing.
  • The cash injection is a new element of the China-Iran comprehensive strategic partnership agreed in 2016.
  • While the details of the investment have not been confirmed by Beijing or Iran – for fear of US retaliation – China is expected to carefully plan its investment to avoid US sanctions.
  • An Iranian delegate on Zarif’s team in Beijing shared details of the investment earlier this week and said: “In order to circumvent any further ramping up of sanctions—and over time encourage the US to come back to the negotiating table—Iran now has two out of five UN Security Council votes on its side.”

The context: Iran is due to announce on Saturday that it will further violate the terms of the JCPOA nuclear agreement in what it describes as a “third step” in retaliation for US sanctions.

  • Iranian President Hassan Rouhani indicated that after Saturday’s announcement, Iran will issue another two month deadline for Germany, France and the UK to help facilitate trade with Iran or there will be further violations of the nuclear agreement.
  • Israel’s Prime Minister Benjamin Netanyahu met with Prime Minister Boris Johnson on Thursday and reportedly urged Britain to spurn a French $15bn (£12bn) credit line to help Iran sell oil in exchange for Iran’s full compliance with the JCPOA.
  • The Foreign Office expressed its concern over Iran’s decision to suspend JCPOA limitations on nuclear research and development. In a statement released on Thursday, a FCO spokesperson said: “This third step away from its commitments under the nuclear deal is particularly disappointing at a time when we and our European and international partners are working hard to de-escalate tensions with Iran”

What happens next: Iran is expected to announce on Saturday that it will increase uranium enrichment up to 20 per cent (the JCPOA limit is 3.67 per cent) and begin research on advanced IR-6 centrifuges. A centrifuge is a device that enriches uranium by rapidly spinning uranium hexafluoride gas.

  • Under the JCPOA, Iran has been limited to operating 5,060 older-model IR-1 centrifuges. The nuclear deal prohibits Iran from using more advanced IR-6 centrifuges until 2023.
  • There are rumours that President Trump could meet with Iranian President Hassan Rouhani at the UN General Assembly later this month. The Israeli Prime Minister said yesterday : “A meeting between Trump and Rouhani is a possibility. I don’t tell the president of the US who he should meet and who he shouldn’t meet. But I am sure that Trump will take a much more open-eyed and a tougher stance against Iran.”