Russia and Iran don't see eye-to-eye on oil matters
The amount of upbeat rhetoric by incumbent politicians on the state of play and prospects of Iranian-Russian interaction is sometimes reminiscent of rain spells. The sheer volume of goodwill condensed in these optimistic prophecies just mesmerizes.
Last November, Iran’s ambassador to Russia, Mehdi Sanaei, declared that a “new chapter” in bilateral relations had been opened. The conclusion has been backed by reference to the diplomatic support rendered by Moscow to Tehran in helping to strike a balanced nuclear deal with the West, a $5 billion credit line to boost trade, and operational coordination of military actions in Syria.
Not long ago, in mid-March, Russian presidential press secretary Dmitry Peskov made a statement that relations have surged to a “new level” and intoned that Moscow has “been persistently developing friendly relations with Iran.”
Iranian Parliamentary Speaker Ali Larijani, who wound up a visit to Moscow on April 20, emphasized the benefits and importance of the current interaction, saying that “last year about 10 of our ministers came to Russia and 10 Russian ministers visited Iran. Our countries are cooperating in the regulation of crises.”
Moreover, in the wake of Larijani’s trip Iranian Defense Minister Dehghan arrived to Moscow to take part in the International Security Conference, thus supporting the assumption that the military chiefs of the two countries are keeping all channels open.
Nevertheless, the compatibility of the long-term strategies of Russia and Iran is being put to the test on a daily basis. Several recent developments are bringing the two countries onto either a collision course (at worst) or simply slowing down or even freezing the current pace of cooperation (at best).
Oily banana skin
Iran’s uncooperative stance on the idea of freezing oil production at mid-January levels in order to rebalance the supply/demand equation and drive up prices has been one of the key factors that derailed the Doha pre-sealed agreement of April 17.
The preliminary deal, reached with a lot of sweat and pain by Russia, Saudi Arabia, Qatar, and Venezuela, was supposed to be signed in Doha, but Iran’s opposition led Saudi Arabia to torpedo the move, which might have been the first step to set up a more effective alliance to regulate the global oil market, sort of an OPEC-2.
Iranian Oil Minister Bijan Zanganeh was intransigent on the Doha accord and fully committed to the proclaimed goal to up domestic oil production, thus boosting hard currency revenues.
Viewed in perspective, the imminent return of Iran as a major exporter of hydrocarbons, be it oil or pipeline gas or LNG, would increase overall supply, put downward pressure on prices, and, in theory, enhance competition by challenging Russia, for instance, on its traditional European oil markets.
Cooperation in the energy field and, consequently, economic ties between Russia and Iran might slip on this oily banana skin.
No preferential treatment
In March, the Russian news agency TASS reported that “Iran is impeding implementation of contracts with Russia on construction of a
thermal power plant in Bandar Abbas and railway electrification by setting new price conditions.”
Nothing really big and similar to the Bushehr nuclear power plant project is in the pipeline for the moment. Furthermore, there does not seem to be any willingness on the part of Tehran to reward Moscow for mediation with the West on the nuclear dossier and for propping up Bashar al-Assad’s regime in Syria by rolling out the red carpet of preferential treatment in trade and economic cooperation.
Was it mere wishful thinking? Are misplaced expectations cooling the enthusiasm and prospects for a surge in economic interaction? Here is a comment by Nina Mamedova, senior research fellow, head of the Department of Iranian Studies, Institute of Oriental Studies, Russian Academy of Sciences:
“Why would Iran give preferences to any foreign investor or business entity now that there is a formidable queue of those who would like to enter the lucrative domestic market of an 80-million nation? Basically, there are windows of opportunities to be capitalized on; these are the special economic zones offering concessions and comfortable terms and conditions for newcomers.”
– Would Russia business be welcomed as a “newcomer”?
“By all means. The Iranian government is eager to engage with Russia on many tracks, including business endeavors. For the moment, the stumbling block is the absence of a working parliament, since the election process is not over yet, and Majlis is not at full capacity. Once it is in place, we might expect proper legislation to be passed stipulating preferential regimes, including tax holidays for foreign investors, etc.”
– There have been rumors that Tehran is not ruling out joining the Russia-led Customs Union, is this a fact?
“It is true. A high Iranian official even predicted that this process might take 1-2 years, although it’s an improbably short timeline.”
Ambivalent alliance over Syria
Moscow duly consulted Tehran before launching air-strikes against Islamic State (ISIS) militants in Syria being formally invited by the legitimate regime in Damascus. The Iranian military was briefed on the launching of Caliber sea-launched missiles from Russian battleships in the Caspian Sea. Coordination of these military activities became standard procedure. Surprisingly for many, it worked well.
This might look good, especially in reports, but it hides the divergence of geopolitical objectives being pursued by Russia and Iran on Syrian soil. Moscow wants to prove its point: Foreign interventions in conflict zones and in states torn apart by civil war that are carried out without the mandate of the U.S. Security Council and without approval of the legitimate governments, are unacceptable. Moscow wants to prove that this is already a multi-polar world, and the interests of all nations, big or small, should be respected.
In this context, Moscow does not care much about whether Assad remains president of Syria or is replaced by someone who would honor the principles of secularism, fight unrepentant jihadists, thus curtailing the spread of radical Islam, and accept the benefits of having Russian naval and air force bases on its territory.
Iran, on the contrary, has a stake in keeping the Alawite (Shiite) clan in power in Syria. The collapse of Assad’s regime might lead to the emergence of a Sunni-led government, sponsored and supported by Iran’s archrivals in the region, Saudi Arabia and the Gulf monarchies.
For this reason, Tehran is taking into consideration the diplomatic maneuvers Moscow is undertaking with the aim of not alienating Sunni Arab states. Tehran is also displeased that Russia has established almost privileged relations with the State of Israel.
It adds ambivalence to the alliance of convenience forged by Iran and Russia, since the latter is not keen to get involved in the formation of a so-called Shiite Crescent. At the stage of finding a formula for inter-Syrian reconciliation, the disagreements over where is the “final destination” would almost certainly surface.
Past haunting the present
It is hard to dismiss the feeling that old skeletons from the closet may hound the champions of rapprochement between Iran and Russia. The burden of the turbulent past is not easily laid to rest, as revealed by Lana Ravandi-Fadei, senior research fellow at the Institute of Oriental Studies, Russian Academy of Sciences, who made this comment:
“I have been regularly lecturing in Iran, and have concluded that it is hard to cultivate warm feelings for Russia. Iranians have a strong sense of history. Whenever you say something good about Russia, they would retort with one word: ‘Turkmenchay!’”
The 1813 Gulistan Treaty and the 1828 Treaty of Turkmenchay sealed the expansion of Russia by conquering all Iran’s Caucasian territories, comprising modern-day Dagestan, eastern Georgia, Azerbaijan, and Armenia. Russia obtained the full right to navigate all of the Caspian Sea. Iran had to pay the contribution of 20 million rubles in silver, later decreased to 10 million rubles.
– Probably, the Soviet troops deployed in northern regions of Iran in World War II to prevent a Nazi invasion were also not very welcome.
“This is regarded as occupation. No less irritating was the support for the Tudeh, Iran’s Communist Party, during the times of the Soviet Union, and military assistance given by Moscow to Baghdad during the 1980-1988 war with Iran.”
The fundamental differences are evident, and give ground for doomsday predictions. “Despite their numerous anti-Western interests, Russia and Iran are not allies,” Mark N. Katz, professor of government and politics at George Mason University, claimed.
Yet the American professor seems to underestimate the voluntary decision by Iran to join the Shanghai Cooperation Organization (SCO), a Eurasian political, military and economic organization with China and Russia as the architects and locomotives.
But past grievances die hard. The “downshifted” periods in the black-and-white history of bilateral relations were reviewed by Samuel Ramani, master of philosophy student in Russian and East European studies at St. Antony’s College, University of Oxford, a specialist in post-1991 Russian foreign policy, who asserts that due to the past hostilities “Russian elites saw Iran as untrustworthy; Iranian elites saw Russia as imperial and arrogant.”
So do the demons of the past still haunt the present? Is it irrevocable? Here is what Ravandi-Fadei has to say:
“I used to think so too, until my last two visits to Iran this year. The change of mood is truly amazing. I have never before come across people saying ‘Russians, well done!’ and ‘Putin is a hero.’ The Syrian campaign must have been a breakthrough, nothing else.”
Yet according to Lana Ravandi-Fadei, there was never a strong anti-Russian sentiment in Iran. The dominant feeling can be described as “distrust,” with a faint chance that it is now starting to fade.
(NEWSBRED ADDS: It's in India's interest to do its bit in keeping Iran and Russia together. India has varied interests in Middle East but Iran alone is vital for the gas pipeline it has in mind. Besides, if Asia is is to survive, the coming together of Russia, Iran, China and India is paramount. Each one needs to keep the flock together--if Eurasia is to be saved from imperialist designs).
(This article originally appeared in Russia Beyond The Headlines).