A significant shift is underway in U.S. defense posture. Over the past year, the Obama administration has carried out a public pivot in strategic focus toward the Asia Pacific theater. The reorientation has been driven in large part by concerns over China’s “peaceful” (or not so peaceful) rise to regional prominence—and by an effort to exploit the opportunities that have been created by it. Widespread regional unease over China’s growing footprint among Asian countries has paved the way for stronger relationships between Asia and the United States, as well as a growing willingness to partner with Washington on matters of regional security and politics.
America is not the only country pivoting toward Asia, however. In recent times, the Islamic Republic of Iran has carried out its own distinct “rebalancing” toward the East. The most immediate reason for Iran’s reorientation has to do with widening Western pressure over its nuclear program, which has constrained Iranian trade with the European Union and Persian Gulf and forced Tehran to seek partners beyond its immediate periphery. Asia has emerged as a key economic lifeline in this regard and now accounts for more than half of the Iranian regime’s total energy trade. Beyond energy, Iran also has come to rely on regional actors (primarily China and North Korea) for defense technology, including critical assistance to its nuclear program. And, consistent with Iran’s modus operandi in other parts of the world, the expansion of Iran’s formal outreach in Asia has been mirrored by an uptick in covert, asymmetric activities propagated through Iran’s proxies and surrogates.
A Strategic Partnership with China...
Iran’s Asian strategy centers on China. Over the past decade, China’s tremendous economic growth (averaging some 8% annually) has generated a voracious appetite for energy. According to informed estimates, in the coming decade, China could surpass the United States as the world’s largest oil consumer. Iran plays a key role in China’s energy fortunes; supplying 12% of China’s total imports, Iran is currently one of China’s largest oil suppliers, playing a role roughly analogous to that played by Saudi Arabia in U.S. energy demand.
China’s energy needs, in turn, have become an economic lifeline for Iran. Oil supplies to China now account for around 54% of Iran’s total global oil exports. This dependence will only increase as Iran’s economy is further impacted by U.S. and European sanctions.
Iranian and Chinese collaboration extends beyond energy resources. China has long assisted Iran in the defense arena, serving as an early supplier to Iran’s nuclear program and more recently as a contributor to the regime’s military modernization efforts during the early 2000s. This collaboration continues; Chinese firms remain a critical source of nuclear commerce for the Iranian regime. Indeed, nonproliferation experts estimate that a crackdown by Beijing on Chinese entities engaged in such trade would likely cripple the Iranian regime’s atomic program, at least in the near term.
...and Defense Cooperation with North Korea
If China serves as Iran’s most important economic partner in Asia, North Korea represents Iran’s most important defense-industrial ally. Iran long has modeled its nuclear program after Pyongyang’s and sought to follow what can be termed the “North Korean model” of rapid, covert nuclearization. North Korean-Iranian ties extend to ballistic missile collaboration as well; most notably, the mainstay of Iran’s strategic arsenal, the medium-range Shahab-3, is of North Korean origin. In 2012, Pyongyang and Tehran signed a deal for further technological collaboration—one that will likely extend to additional missile research and information sharing.
North Korea’s recent political transition has reinforced this cooperation. The assumption and subsequent consolidation of power by North Korea’s “Young Leader,” Kim Jong Un, has gone better than expected. Nevertheless, for a number of reasons—from his youth to his lack of on-the-job training—the new North Korean head is under pressure to prove his authenticity as a Stalinist ruler. As a result, it is reasonable to expect that Pyongyang’s relations with rogue state actors, including Iran, will intensify in the short to medium term.
India’s Shifting Role
India, by contrast, has begun to distance itself from Iran. Contrary to popular perceptions, the Indian government has been among the most helpful and compliant international actors with regard to reducing its reliance on Iranian energy. Indian imports of Iranian oil have dipped significantly—from around 16% in 2008/2009 to just over 10% today—and additional drawdowns are expected. However, India, like China, is faced with a growing domestic energy demand that may make it prohibitive to completely sever energy links with the Islamic Republic.
India, moreover, has a latent strategic vulnerability vis-à-vis Iran. With the largest Shia population outside of Iran, India’s ethnic and demographic composition could make compliance with international sanctions a real risk to the country’s homeland security. Already, Iranian covert activity in the country has taken a toll; in February 2012, members of Iran’s Islamic Revolutionary Guard Corps (IRGC) attempted to assassinate an Israeli diplomat in New Delhi via car bomb. Although this attack might be an isolated one, Iranian Supreme Leader Ali Khamenei’s call for Islamic engagement in the Kashmir issue suggests that future Iranian or Iranian-supported operational activities in India remain a distinct possibility. So do potential Iranian attempts to garner greater influence among India’s Shia, something that is of significant concern to policy makers in New Delhi.
Other Asian Actors
Beyond China, North Korea, and India, a number of smaller Asian states have emerged as notable players in Iran’s evolving regional strategy.
Malaysia, for example, has drifted toward an expanded economic and political partnership with the Islamic Republic. Trade between the two countries has grown in recent years and now includes collaboration on a number of energy-related projects (most significantly a $6 billion deal to develop Iran’s offshore natural gas fields). Equally important, however, are the informal links between Tehran and Kuala Lumpur. Malaysia long has served as a hub for international smuggling, and Iran is known to use Malaysian territory, citizens, and firms to smuggle materials for its nuclear program. Malaysia’s permissive regulatory environment, porous borders, and large Muslim population sympathetic to Iranian objectives have further bolstered contacts between the two countries.
Iran’s ties to Thailand are similarly problematic. Formally, the two countries have sought to expand economic and political cooperation, and Bangkok has facilitated Iran’s sanction-busting activities by bartering goods for oil. Meanwhile, at the subnational level, Iranian proxy Hizballah is known to use drugs produced in the “Golden Triangle” (which includes Thailand) to raise money for its activities. Similarly, Iranian criminal syndicates reportedly have inserted themselves into the region’s booming methamphetamine trade, smuggling drugs into Thailand.
Yet recent instability linked to Iran has thrown relations between the two countries into turmoil. In January 2012, acting on intelligence provided by the government of Israel, Thai authorities arrested Hizballah operatives planning to carry out attacks on Western tourists. The following month, Iranian nationals linked to the IRGC carried out a botched attempt to assassinate Israeli diplomats in the country. These incidents suggest that Iran has begun to exploit Thailand’s permissive environment for tactical operations, to the detriment of that country’s security (and, potentially, its ties to the West).
A New Battleground
Nearly simultaneously, both the United States and Iran have turned their gazes to the Asian region. The United States, with a watchful eye toward Chinese expansionism, is strengthening its presence and strategic partnerships in the region. Iran, meanwhile, is working to preserve its energy and defense trade with Asian partners while simultaneously erecting an asymmetric presence to facilitate illicit trade, proliferation, and proxy activity.
As the strategic rivalry between Washington and Tehran continues to intensify, it is likely that Asia will emerge as a distinct arena of competition. Should Iran’s nuclear ambitions lead to outright military conflict with the West, the Asia Pacific region could see a surge of destabilizing activity by the Islamic Republic or its proxies.
Ilan Berman is vice president of the American Foreign Policy Council in Washington, DC.
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