Credit: Global Due Diligence Market Trends News & Media

China Provides US$10 Billion Credit Line to Five Iranian Banks

China's US$10 Billion Credit Line
The abandonment of the Iran Nuclear Deal and imposition of US sanctions will further strengthen the global hold on oil reserves that China has been slowly but surely building up throughout the years through direct investment, specialised government loans and the provision of friendly contracts which fall under what China likes to call ‘agreements of strategic intent’.

Reportedly Chinese business is set to further increase on the current US$33 billion investment in Iran whilst their western counterparts find themselves caught between honouring their legal and international commitments and safeguarding hard won investments in a country where it is not easy to establish one’s self in the first place.

True, China had also invested heavily in such countries as Libya and lost a lot when the Arab spring tore through, unsettling the Ghaddafi regime, but then so did most other countries such as Britain, Italy and France who had made similar investments in the oil rich nation. The question of Libya is a question of time and China is a master at the game of patience.

The South China Morning Post quotes Ferial Mostofi, Head of the Iran Chamber of Commerce’s investment commission, saying that Western firms had better come quickly to Iran as otherwise China might take over. With a US$10 billion investment credit line from the Chinese state owned investment arm CITIC Group already in hand since September and the China Development Bank considering extending an additional US$ 15 billion credit, such words carry weight.

The West is listening and European partners are working hard both to avoid the Iran Nuclear Deal falling through as well as to create a climate where their own businesses are able to participate in the lucrative market that Iran represents. It is also a question of geopolitics as Iran is seen as a key to influence a large proportion of Islamic opinion and definitely a crucial actor in the area’s politics. It is this geopolitical dimension that may represent an area of concern for China if it allows itself to become so closely aligned to Iran that it becomes identified as a major sympathiser of the ‘Shia’ which is led by Iran. This could provoke ‘Sunni’ countries, led by Saudi Arabia, to distance themselves from public alignment with Chinese interests. Furthermore, as The Diplomat notes, new turmoil in the region could be further fuelled by the sanctions, posing a challenge to China to decide whom it supports.

Sources:

The Diplomat 

The New Straight Times

The Straits Times

SCMP

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 Written by Hubert Mugliett Group HR Manager

 

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

 

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About the author

Hubert Mugliett

Hubert Mugliett

I have been working for Cedar Rose since, 5th march 2018 and I have over 20 years experience in the international Society for Human Resource Management (SHRM).
Additionally, I am relatively new to business intelligence.