Connectivity
Integration of Iraq and Iran's railways, China-Syria bilateral relations and international and regional issues of common concern, made-in-China 7-nanometer (nm) chip
UPDATE: After decades of setbacks, the upcoming integration of Iraq and Iran's railways promises to boost bilateral trade, religious and cultural tourism, and economic prosperity - with significant regional and global implications.
The two heads of state met in a cordial and friendly atmosphere, exchanged in-depth views on China-Syria bilateral relations and international and regional issues of common concern, and reached a broad consensus.
News of the made-in-China 7-nanometer (nm) chip produced by top domestic chipmaker, Semiconductor Manufacturing International Corporation (SMIC) broke just days after Commerce Secretary Gina Raimondo’s trip to China.
Iran-Iraq railway: prosperity & markets
By Mohammad Salami (amended)
The groundbreaking cross-border railway project connecting Shalamcheh in Iran to Basra in Iraq relaunched on 2 September. The news came a belated 46 years after it was first announced in 1978 - a year before Iran's Islamic Revolution took the world by storm.
Upon its completion in two years, the Shalamcheh-Basra Railway will span 32 kilometers, include three stations, and a bridge connecting Iran with Iraq across the Shatt al-Arab - all constructed with Iran's support.
Iraq and Iran share a border that stretches approximately 1600 kilometres, as well as numerous religious, cultural, and tourism similarities. Each year, around 3 million Iranians make pilgrimages to the Shia holy shrines in Iraq, while 2 to 3 million Iraqis visit Iran, home to the Imam Reza shrine in Mashhad and the influential Qom seminary.
In 2018, about 24 percent of all tourists visiting Iran came from Iraq, the largest of any country. Iran also boasts a significant health tourism industry - ranking 46th globally - and Iraqis constitute the second-largest group of health tourists to Iran after Afghanistan.
Despite these significant cultural ties, the volume of trade between the two countries has remained dismal. Even in the most optimistic scenario, Tehran and Baghdad have achieved only 50 percent of their targeted $20 billion in trade.
Several factors have contributed to this: a decline in electricity trade; reductions in gasoline and diesel exports; competition from Iran's commercial rivals like China, India, the US, Turkiye, and the UAE; excessive commercial bureaucracy between the two states; and a lack of efficient and rapid transit capabilities to Iraq.
Iran-Iraq trade decline
According to the latest statistics, non-oil trade between Iraq and Iran reached $8.9 billion in 2021, but over the past two years, Iran's exports to Iraq have declined in 20 different categories. Farzad Pilten, head of the West Asia office of the Iran Trade Development Organization, noted a 60 percent decrease in gas exports and an 80 percent decrease in gasoline exports to Iraq.
Iran's performance has lagged behind other exporters, slipping to fourth place in exports to Iraq after the UAE, Turkiye, and China. The decrease in exports between Iran and Iraq can be attributed to various factors, notably the insufficient transportation infrastructure connecting the two countries.
"In this mode of interaction, trucks carrying cargo due to congestion sometimes have to wait for more than four days at the borders to receive their turn and unload their cargo, while the cost of stopping them at the border is more than $200 per day."
The completion of the Shalamcheh-Basra Railway project promises to significantly boost trade by reducing transit costs by up to 20 percent, and help Iraq offset its staggering trade imbalance. In 2018, Iran exported approximately $9 billion worth of goods to Iraq, while Iraq's exports to Iran amounted to a mere $58 million.
Iran's transit hub ambition
Iran's strategic goal of becoming a key regional transit hub is closely tied to its ideal geographical location at the crossroads of Asia and Europe. Recognizing this geopolitical opportunity, the Raisi administration - which has heavily prioritized the "Looking to the East" and "Neighborhood" policies - has embarked on ambitious plans to harness this potential.
Iran already has a domestic railway network that spans 14,300 kilometers, with plans to add an additional 10,000 kilometers via 36 ongoing rail projects. Impressively, the country has established seven cross-border connections to neighboring railway networks and achieved self-sufficiency in engineering services, railway construction, and rail production - even exporting domestically-produced railroad cars and train engines.
Iran is currently strategically positioned along two international railway routes: the East-West and International North-South Transport Corridors (INSTC). The east-west route connects ASEAN countries and China to European markets, while the INSTC transit route links Russia to India via Iran.
The Shalamcheh-Basra rail project particularly complements the East-West railway connection. Via Iraq, Iran will be able to connect to the Syrian port of Latakia and its transit capacities, which might be vital to Europe.
The Iran-Iran railway also opens up the possibility of connecting with other Persian Gulf states like Saudi Arabia and Kuwait. There are reports that Saudi Arabia is exploring the idea of linking railroads to Iran through Kuwait and Basra, which would create a direct rail connection between Iran and the Gulf Cooperation Council (GCC) countries.
Iraq's role in global transport
Iraq, on the other hand, stands to benefit from improved access to markets in Central Asian countries, Afghanistan, and Azerbaijan via its rail link to Iran. A southern Iraqi railway which already transports more than 6 million tons of cargo, could boost the exchange of goods to over 20 million tons upon completion of the Iran-Iraq rail connection.
Furthermore, Shia pilgrims from Azerbaijan would have easier access to the holy city of Karbala via this railway, generating transit and tourism income for Iraq. Hafez Sadatnejad, manager of the Shalamcheh-Basra railway project, adds that the rail link with allow for the transportation of 4 million pilgrims to the pilgrimage cities of Mashhad, Qom, and Karbala in both countries.
By integrating this railway with Iran's considerable capacities in the Khorramshahr and Imam Khomeini ports, cargo from different countries can be efficiently transported to the country's southern waters. Iran's extensive port infrastructure plays a crucial role in its foreign trade, with a target of achieving a cargo handling capacity of 500 million tons within the next five years.
For Iraq, the railway link with Iran is part of a broader and more ambitious project that extends from China to Europe. As economist Maitham al-Amili explains:
“Despite what is said that the goal of the project is to facilitate the transportation of travelers between Iraq and Iran, it is part of a larger project that will contribute to diversifying Iraq's financial resources by making it a transit corridor for millions of tons of goods if completed.”
On 20 August, the Iraqi Ministry of Transport announced an agreement with Turkiye to link Iraqi railways to Turkish railways via a 133-kilometre line, with the aim of linking the grand port of Al-Faw to Europe, all within what is known as the “Development Road.”
Amili believes that Iraq has a role in the new global transportation project that “extends from China through Iraq to Syria, by land and sea through the port of Al-Faw.”
A hard American veto
Iraq's geostrategic location as a bridge between West Asia and Europe favors its position as “a major complement to the global transportation map linking Asian countries to the European Union.”
These ambitions come with notable challenges and geopolitical complexities. Political analyst Mahmoud al-Hashemi says that “there are major American obstacles that Iraq’s plans for sea and land connectivity with Iran and China will face.”
“The US is well aware of the positive impact of these projects on Iraq, but it wants this country to be part of its conflict with China, Iran, and Russia.”
A senior government source revealed “there has been an international conflict going on for more than ten years to control international transport lines, at the center of which are Iraq and Syria, and its main poles are China, Russia, Iran, and the United States.”
He says that a transportation project is being sought by some countries to link China with Iraq and Iran, all the way to the port of Latakia on the Mediterranean Sea, to shorten the sea transport route via the Red Sea or the Atlantic Ocean to Europe, “But we cannot say that the Basra-Shalamcheh railway line is part of this project.”
The same source attributes the mobilization of US forces along the Iraqi-Syrian border and the arming of local tribes to “Washington’s attempts to block the railway project from Basra to the port of Latakia via the Syrian cities of Albukamal and Deir ez-Zor.”
This is in addition to the express land line that will connect Iran to Syria via Al-Qaim border crossing, as it will constitute a new victory in the soft economic war ongoing between China and Russia on the one hand and the US on the other hand.
Shalamcheh-Basra Railway and the region
Iraqi journalist Hassan al-Shammari points out that both “local and international media are subject to an American media machine to direct public opinion in accordance with its policies.” They welcome, or at least turn a blind eye to, any projects between Iraq and Saudi Arabia, Jordan or Turkiye, for example, while an organised media attack is launched against any similar project with Iran.” He adds:
“This is what accompanied the announcement of the railway connection project with Iran, while there is no criticism of the railway connection with Turkiye within the development road project, or of the railway connection with Saudi Arabia.”
Opponents of the railway connection with Iran often express concerns about its potential impact on the grand port of Al-Faw. Former Basra governor Wael Abdul Latif and former Minister of Transport Amer Abdul-Jabbar have warned that the railway may divert shipping traffic to Iranian ports, leading to increased prices and a reduction in port efficiency.
However, as Iraqi government spokesman Bassem al-Awadi confirmed in a recent press conference:
“The government laid the foundation stone for the project after an economic feasibility study, ensuring Iraq’s economic and political security, and not compromising the country’s sovereignty and economy.”
As the Shalamcheh-Basra Railway project advances, it serves as a poignant symbol of progress toward enhanced shared prosperity for, and a new level of connectivity between, Iraq and Iran.
This often-overlooked region within West Asia is poised to leave an indelible mark on global trade and transportation in the years ahead, contributing to broader regional integration and ushering in a new era of economic and logistical cooperation.
Read The Cradle article here.
Bashar al-Assad in China
(Translation, Tuvia Gering)
The two heads of state praised China and Syria's traditional friendship and agreed that China and Syria share a relationship of trust and justice 信义之交, coming to each other's aid in times of need 患难之交.
They unanimously proclaimed that China and Syria should establish a strategic partnership and comprehensively promote friendship and cooperation in various fields for the betterment of the two peoples.
First, the two sides will continue to firmly support each other on issues involving each other's core interests and issues of great concern 重大关切问题. The Syrian side firmly adheres to the one-China principle. It recognizes that the Government of the People's Republic of China is the sole legitimate government representing the whole of China and that Taiwan is an inalienable part of China. It supports China in safeguarding its national sovereignty, unity, and territorial integrity, and firmly opposes interference by any force in China's internal affairs.
It supports all efforts made by the Chinese Government to realize national reunification, China's position on Hong Kong-related issues, and its efforts to safeguard national security under the framework of "one country, two systems". It firmly believes that Hong Kong affairs are purely an internal affair of China, and strongly condemns the illegal acts of outside forces interfering in Hong Kong affairs and China's internal affairs.
Syria firmly supports China's position on Xinjiang, reaffirming that Xinjiang-related issues are not human rights issues, but rather counter-terrorism, de-radicalization, and anti-secession issues [The Palestinian Authority President Mahmoud Abbas expressed the same support in June when he signed a similar Strategic Partnership declaration with Xi. No strings attached, right?]. The Syrian side firmly supports China's counter-terrorism and de-radicalization efforts and resolutely opposes interference in China's internal affairs under the pretext of Xinjiang-related issues.
China firmly supports Syria in safeguarding its national independence, sovereignty, unity, and territorial integrity. It supports the Syrian people in taking the path of development in line with its national conditions, supports the policies and initiatives adopted by the Syrian government aimed at safeguarding the country's security, stability, and development, and opposes interference in Syria's internal affairs by external forces.
China rejects undermining Syria's security and stability and opposes the unlawful military presence, illegal military operations, and illegal plundering 掠夺 of Syria's natural resources. It urges the countries concerned to immediately lift all illegal unilateral sanctions against Syria.
Second, the Syrian side highly values and actively supports the Global Development Initiative (GDI), the Global Security Initiative (GSI), and the Global Civilization Initiative (GCI) proposed by Chinese President Xi Jinping. The two sides will actively cooperate in the implementation of these initiatives, join hands to promote the high-quality construction of the Belt and Road Initiative (BRI), and jointly promote the building of a Community with a Shared Destiny for Mankind.
Third, the two sides are eager to expand exchanges and cooperation between their respective political parties, including parliaments and local governments, and to strengthen mutual exchanges of governance experience. The two sides will strengthen friendship and cooperation in various fields such as economy and trade, agriculture, culture, youth, and data.
China will continue to provide assistance to the Syrian side to the best of its ability and support the Syrian side in reconstruction and development. The Syrian side is grateful to China for its political support and selfless help, and for speaking up for the Syrian side in the UN Security Council. The two sides agreed to continue to strengthen counter-terrorism security cooperation and make joint efforts to combat terrorism.
Fourth, China supports and welcomes Syria's return to the League of Arab States (LAS), supports Syria in improving its relations with other Arab countries, and supports the unity and self-improvement of Arab countries in the region, including Syria.
The Syrian side highly appreciates China's diplomatic efforts to promote the resumption of diplomatic relations between the Kingdom of Saudi Arabia and the Islamic Republic of Iran and is grateful for China's active contribution to promoting the resolution of hot-spot issues in the Middle East and the maintenance of peace and stability in the region.
Fifth, the two sides highly valued the important role played by the China-Arab States Cooperation Forum (CASCF) mechanism in promoting collective cooperation between China and the Arab countries. They emphasized that they would actively cooperate in promoting the implementation of the outcomes of the first China-Arab Summit, carry forward the spirit of Sino-Arab friendship, and join hands in building a China-Arab Community of Shared Destiny in the New Era.
Sixth, the two sides support the promotion of the shared values of peace, development, fairness, justice, democracy, and freedom of all mankind. They respect the independent choice of peoples of all countries for their own paths of development and social systems suited to their national conditions and are firmly opposed to the politicization and instrumentalization of human rights, and to interference in the internal affairs of other countries on the pretext of democracy and human rights by any country.
The two sides will strengthen coordination and cooperation in regional and international affairs, jointly adhere to genuine multilateralism, defend the international system with the United Nations at its core, the international order based on international law, and the basic norms of international relations based on the purposes and principles of the Charter of the United Nations.
[China and Syria] resolutely oppose all forms of hegemony and power politics, including the imposition of unlawful unilateral sanctions and restrictive measures on other countries. In doing so, they promote the construction of a new type of international relations and join hands in the building of a Community with a Shared Destiny for Mankind. (PRC Embassy in Syria).
Read Chinese Government original here.
Concerns over China’s High-End Chip
National Security Advisor Jake Sullivan announced that the United States would be seeking “more information” on the specifics of the new tech. Secretary Raimondo confirmed there was “no evidence” that China could produce these chips at scale.
Q1: How was the chip manufactured, and how does it compare to other models?
A1: The Kirin 9000s—the chip found in the Huawei Mate 60 Pro—was produced by China’s SMIC. DUV lithography machines can produce 7 nm chips using a technique called “multi-patterning.” Huawei is signaling that it is confident in SMIC’s ability to scale the chip into wide commercial availability. However, there is still a substantial gap between 7 nm and the world’s cutting-edge chips. Taiwan-based TSMC had fully scaled up 7 nm production as early as 2019, Samsung and Taiwan’s TSMC can both produce 3 nm chips at scale using extreme ultraviolet (EUV) lithography.
Q2: How believable is the suggestion that Chinese firms can produce 7 nm chips at scale?
A2: Semiconductor industry experts have long been skeptical of China’s ability to produce 7 nm chips at commercial scale. Creating chips at the 7 nm level using DUV lithography is a challenging process that poses two problems: low manufacturing yield and high rates of machine use. As the usage of each machine increases, energy cost and maintenance requirements also become an issue.
Without advanced EUV machines, SMIC and other Chinese firms need to make use of DUV lithography machines to make 7 nm semiconductors, raising doubts about widespread profitable commercialization of chips like the Kirin 9000s. This suggests that the shipments of Huawei’s new 7 nm powered phone could be limited to a small fraction of its total offering.
Q3: How do U.S. chip export controls work to curb China’s access to semiconductors?
A3: To prevent Chinese companies from getting an edge over the United States and its allies in developing cutting-edge semiconductors, Washington has extensively leveraged export controls. In September 2022, the Biden administration adopted a policy to “maintain as large of a lead as possible” and put into place a landmark set of restrictions on Chinese business to purchase and/or manufacture high-end chips.
The October 7 export controls targeted two areas of the semiconductor supply chain: high-end semiconductor manufacturing equipment (SME) and electronic design automation (EDA). The United States and its allies control critical swaths of the SME and EDA industries, making Chinese chipmakers reliant on imports to scale up fabrication.
One of the few avenues of influence for the U.S. government is the use of the foreign-direct product rule, which allows the United States to effectively expand export controls over technologies that are manufactured with U.S.-made inputs. In the end, through extensive diplomatic efforts, the United States secured commitments from Japan and the Netherlands to implement strong semiconductor-related export controls earlier this year.
Q4: What kinds of systems would benefit from a 7 nm chip?
A4: Advanced semiconductors like the Kirin 9000s found in the new Huawei smartphone, have applications across a variety of sectors if produced at scale.
An immediately obvious benefit to a 7 nm chip is a consumer-facing product: running smartphones on 5G networks. Taiwan-based TSMC stopped producing7 nm 5G chips for Huawei in September 2020 in response to U.S. sanctions. With the new SMIC chip, Huawei was able to announce that its Mate 60 Pro would connect to 5G networks.
As for military uses, these 7 nm chips would not be particularly useful for traditional military applications, as most military applications—aside from cutting-edge technology, like AI—rely on legacy chips with much larger transistor sizes.
Q5: How have U.S. policymakers responded to the news?
A5: Jake Sullivan said that the United States would investigate the details of the new chip. On September 19, Commerce Secretary Gina Raimondo announced that the United States has seen “no evidence” that China could produce 7 nm chips at scale.
Republican lawmakers on the Hill have had an angry public reaction authoring a letter calling for a full economic blockade of Huawei and SMIC, as well as criminal prosecutions of their executives.
Conclusion
While it is, on the surface, concerning for U.S. lawmakers to see SMIC produce a 7 nm chip for Huawei, a deeper analysis suggests that U.S.-led export controls are limiting China’s domestic semiconductor production capabilities. SMIC’s reliance on imported DUV lithography machines—in the absence of well-controlled EUV machines—is likely to make 7 nm chip production unprofitable and unsustainable in the long term. Additionally, preventing the import of ASML’s EUV machines by Chinese firms puts a hard stop on attempts to go smaller than 7 nm. Policymakers justifiably concerned about China’s access to advanced semiconductors should track the ongoing rollout of the Mate 60 Pro to understand China’s true chipmaking capabilities, which will most likely be limited at best.
Read more here.