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Illustration: Aïda Amer/Axios

China and Iran have negotiated a deal that would see massive investments flow into Iran, oil flow out, and collaboration increase on defense and intelligence.

Why it matters: If the proposals become reality, Chinese cash, telecom infrastructure, railways and ports could offer new life to Iran’s sanctions-choked economy — or, critics fear, leave it inescapably beholden to Beijing.

  • The deal has not yet been finalized, but both sides acknowledge it’s in the works (though China has been more circumspect).
  • A leaked draft envisions Chinese-built "airports, high-speed railways and subways," as well as "free-trade zones" in regions of Iran, per the NYT. The deal extends to cyberspace — with China offering "greater control over what circulates" — as well as to defense.
  • The projects total an eye-watering $400 billion over 25 years.

Reality check: If that figure sounds implausibly high, that’s because it probably is.

  • “This sounds like a wishlist of all the projects that could conceivably be in play, rather than a realistic estimate of anything that China’s been able to do anywhere,” says Andrew Small of the German Marshall Fund’s Asia Program.
  • China is already “running into problems in innumerable locations trying to do project clusters on a much smaller scale than this,” Small says, referring to elements of China’s Belt and Road Initiative.

Between the lines: Both sides have clear incentives here: China locks in a cheap oil supply and deepens its strategic links in the Middle East, while Iran — which has virtually nowhere else to turn for foreign investment — gets economic benefits and a big flashing sign that it’s not as isolated as America claims.

  • But such a dramatic bet from Beijing would be a surprise. It's been dialing back on controversial Belt and Road mega-deals, has historically been careful to balance its relationships in the Middle East (including with Saudi Arabia), and may see uncomfortable parallels with Venezuela, which can't pump enough oil to cover its debts to China.
  • Meanwhile, while Iran does need Chinese cash, they've found recent reliance on China "a painful experience" and "they absolutely don’t want to have the economy so beholden to the Chinese over that kind of time frame," Small says.

The latest: Domestic critics are already sounding the alarm in Iran, with former President Mahmoud Ahmadinejad accusing the government of handing Iran's “purse to other countries without informing the nation."

  • Foreign Minister Javad Zarif defended the deal, while denying that Iran would offer discounted oil or sell Kish Island, as some critics had claimed.

What to watch: Even if only a fraction of what has been proposed comes to fruition, this a clear challenge to the Trump administration's "maximum pressure" campaign towards Iran, and another sign of America's geopolitical foes aligning.

Flashback: Tuesday marks the five-year anniversary of the Iran nuclear deal. While President Trump is nowhere near replacing it with a broader deal, a potential President Biden would also struggle to wind the clock back to 2015 and put a deal back together again.

Go deeper

Jan 26, 2021 - World

Former Google CEO and others call for U.S.-China tech "bifurcation"

Illustration: Aïda Amer/Axios

A new set of proposals by a group of influential D.C. insiders and tech industry practitioners calling for a degree of "bifurcation" in the U.S. and Chinese tech sectors is circulating in the Biden administration. Axios has obtained a copy.

Why it matters: The idea of "decoupling" certain sectors of the U.S. and Chinese economies felt radical three years ago, when Trump's trade war brought the term into common parlance. But now the strategy has growing bipartisan and even industry support.

VA first federal agency to require COVID vaccines for employees

A medical doctor gives the thumbs-up sign to a COVID-19 patient who is no longer using a respirator at the Veterans Affairs Medical Center in New York City. Photo: Robert Nickelsberg/Getty Images

The Department of Veterans Affairs said Monday it would require its frontline health care workers to get vaccinated against the coronavirus within the next two months, the New York Times reports.

Why it matters: The VA is the first federal agency to mandate that employees receive the vaccine. The decision comes as cases of the Delta variant in the U.S. have increased dramatically.

3 hours ago - Health

Biden: Americans with long-COVID symptoms may qualify for disability resources

President Biden speaking in Arlington, Virginia, on July 23. Photo: Oliver Contreras/Sipa/Bloomberg via Getty Images

Americans experiencing long-term symptoms of COVID-19 may qualify for disability resources from the federal government, President Biden announced Monday during an event to mark the 31st anniversary of the Americans with Disabilities Act.

Driving the news: The departments of Justice and Health and Human Services released new guidance Monday that categorizes “long COVID" as a physical or mental impairment, entitling people with the illness to discrimination protections under the the ADA.