Relations between Russia and Iran have developed in recent years through an underlying communality of geopolitical interests. It is based on the need to maintain stability in Central Asia and the Caucasus and the desire to forestall separatist tendencies in the two multiethnic countries. While Tehran has taken a wait-and-see attitude toward recognition of the independence of South Ossetia and Abkhazia, during the actual conflict there it virtually backed Moscow. Moscow and Tehran are objectively interested in countering both the strengthened economic clout of China and the United States’ attempts to reroute the flow of goods from Central Asian countries to Asian markets via Afghanistan.
This said, one can hardly speak of a strategic partnership between Iran and Russia. True, such a partnership could increase Russia’s chances to enlarge its influence in the Gulf. Yet the risks of an alliance with a nation confronting the world’s leading countries outweigh the dividends.
Cooperation through regional organizations remains more effective for Russia. The Eurasian Economic Community is the most well-established organization working in the Central Asia and Caucasus regions, and it cannot be ruled out that Iran will get involved in its work. At present, cooperation is implemented within the Shanghai Cooperation Organization where Iran was admitted as an observer in 2005.
For Russia, Iran is an advantageous economic partner enjoying significant potential and a sufficiently diversified economy. Despite the unfolding crisis, Iran remains a solvent state: as of early 2009, its reserves stood at $81.7 billion – more than a quarter of GDP – while foreign debt amounted to just 6.3 percent of GDP. Russia is interested in trade with Iran, allowing it to diversify its exports, while Iran’s interest in Russia is conditioned both by decades-long economic ties and by sanctions curtailing the presence of American and European companies in Iran. Russia, a raw material supplier to the world market, supplies to Iran chiefly its industrial products and sci-tech services.
But Iran’s share in Russian foreign trade is extremely small – less than 1 percent. In 2008, the trade turnover totaled $3.7 billion, mostly accounted for by Russian exports ($3.3 billion). Iran is one of the principal markets for Russia’s military technological products. While observing its international obligations, Russia supplies Iran with defensive equipment. In 2008-2009, an agreement to supply Iran S-300 anti-aircraft missile systems aroused US and Israeli anxiety, but the shipment has not yet been made. Judging by Iranian media, Tehran is extremely dissatisfied with the delays. These delays can be used to pressure Iran to scale back its nuclear program. But there is also a small possibility that, in response, Iran would support radical Islamists in the North Caucasus – a scenario fraught with danger for Russia.
For Russia it is not trade but economic cooperation that has always been of the utmost significance. The main focus of Russo-Iranian cooperation is on energy projects. The nuclear power plant in Bushehr was practically completed in 2008, fueling is now coming to an end and the plant’s start-up is in the offing. Fresh contracts for nuclear power plant construction have not been concluded, however. The main accent in energy dialogue has been on cooperation in the production and distribution of electricity and the generation of energy resources and their means of transport.
The oil and gas industry is a promising area of cooperation. The presence of Russian companies in Iran’s oil and gas market remains limited. However, negotiations are proceeding on joint development of new phases of the South Pars gas deposit and the creation of joint ventures with the participation of third countries. Once the world economic crisis ends and demand and gas prices begin to grow, routes for bringing gas to world markets will take on particular relevance. Russia deems it most reasonable to use Turkmen gas to fill the Caspian project and the South Stream. But in the absence of competitors in the Iranian market, it may be promising to share in the use of Iranian gas – both in these projects and in the Nabucco pipeline. Iran is likewise extremely interested in export routes, as almost a third of the gas it produces is injected into wells, a part is burned, and gas is used chiefly for internal consumption. Pipelines built to take gas to Turkey and Armenia have not resolved export problems.
There are promising prospects for Russian participation in construction and reconstruction of Iranian railroad lines and cooperation in air transport, including Iranian purchase of licenses for the assembly of aircraft and helicopters. But the volume of Russo-Iranian cooperation and foreign trade is small and lags behind political relations.
Despite positive momentum in the development of Russo-Iranian ties that some Iranian officials characterize as strategic, many problems remain unsettled. Due to Iran’s position, the issue of defining the status of the Caspian Sea has not been resolved. Closer political and economic contacts are hindered by Iran’s confrontation with Europe and the United States – both important economic partners of Russia. This being so, reliance on the anti-American factor in bilateral relations cannot be considered a central factor. Indeed, in Iran it is often written that Russia is an unreliable partner as it yields to US pressure.
It is regarding Iran’s nuclear program that Russia finds it most difficult to take decisions. Russia has no interest in a new nuclear power on its borders. But in view of the situation in Iraq and Afghanistan, forceful action against Iran may have even more negative consequences. When lasting progress in the negotiating process has not been reached, the preferable option for Russia would be for Iran to sign an additional IAEA protocol. Had Iran not concealed the construction of a new plant for uranium enrichment in Qom, Russia would have had more confidence in its nuclear program. The very fact of this concealment, given existing contacts between Russia and Iran in nuclear energy development, cast a shadow over Russia’s relations with the international community as well.
Despite Tehran’s critique of Russia’s position, Moscow remains Iran’s principal defender against economic sanctions, although China, which has a much greater economic stake in Iran, is more interested in alleviating pressure. That Moscow seeks to drag out the existing standoff due to the softening of competition in the energy market does not stand up. What is more important for Russia is to preserve Iran’s stability. In the event of a military strike or revolutionary upheaval, Iran’s fragmentation would inevitably aggravate the situation in Russia’s southern border area.
Generally speaking, for Russia the two countries’ interest in broadening political and economic ties outweighs the existing contradictions.
N. M. Mamedova heads the Department of Iranian Studies, Oriental Studies Institute, Moscow, and is a professor at Moscow State Institute of International Relations. This commentary first appeared at bitterlemons-international.org, an online newsletter.
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