Credibility of Iran and Russia�s Newfound Bonhomie

The recent visit by the Russian Defence Minister to Iran and a reciprocal visit by special representative of the President of Iran and International Affairs Advisor Ali Akbar Velayati signals increased warming of relations between Tehran and Moscow. What are the possible ulterior motives behind the partnership between the two nation states: is it merely symbolic or has certain credibility to it as well?

Sanctions on Iran and Russia and the increased threat posed by the West to the regional interests of the two are attributed to be the chief reasons for flurry of activities in office of the Supreme Leader and in the Kremlin. In a bid to circumvent the stranglehold of stringent economic sanctions, both have increasingly adopted ways and means to increase bilateral cooperation in a host of fields. Some of the chief areas of cooperation are:

1. Defence
2. Energy and Nuclear Issues
3. Economics
4. Regional Co-operation

Defence cooperation

In a bid to revive the relations, Iran and Russia signed a deal on military cooperation in January 2015, which is touted as a joint response to US "interference."[1] It implies wider collaboration in personnel training and counter-terrorism activities.[2]

The S 300 Surface to Air Missile system which Russia was to supply to Iran but later cancelled in 2010 citing UN arms embargo on Iran, has once again taken a centre stage in bilateral defence co-operation. This change of heart in Moscow can be chiefly attributed to two reasons.

1. Economic: Iran was one of the biggest defence markets for Russia in the region and the arms embargo on Iran cost the Russian economy an estimated US$ 13 billion. A deal now would ease the economic crunch on Russia. Iran which had demanded US$ 4 Billion as compensation for the cancelled deal is ready to drop the claim if Russia delivers the S 300 system.
2. Political: It further reinforces the idea of deepening Russia- Iran partnership, thus having a significant symbolic value to it.

It is estimated that if the deal succeeds, it will significantly augment Iranian air defence capabilities. Iran, however, has already claimed to have indigenously developed a long range SAM called Bavar 373. [3] In the realm of short and medium range capabilities Iran has tested and also possibly fielded the Sayyad- 1 & 2 respectively.[4] To support the SAM system Iran has also fielded long range early- warning radar network with ranges claiming to cover 1000-3000 km. [5] Thus keeping in mind the Iranian claims of the successes it achieved in its indigenous SAM systems, the need and relevance of the S 300 casts some serious doubts. In addition to this Russia has not been a reliable supplier to Iran as one estimates suggests that from 50 to 70 percent of contracts remained unfulfilled. [6]

Nuclear and Energy Domain

Russia has played a crucial role in Iran’s “peaceful” nuclear energy programme and will continue to do so in the near future. It has not only constructed the operational Bushehr nuclear plant but also plans to provide some assistance with the fabrication of nuclear fuel, under which all of the reactors, like Bushehr,  will essentially use Russian-supplied fuel. All the indications are that when spent, this will be returned to Russia for re-processing. There were many supporters for this idea engaged in negotiating a deal with Iran. However Iran has shown some reservations against this proposal and still wants to retain a significant capacity to produce enriched uranium itself.[7] It can also be argued that existing cooperation in the nuclear field will continue out of necessity, not strategic considerations. With the absence of Western competition for some time to come, Russia and China are the only alternatives which Iran can look up to, for nuclear fuel and technology.[8] It cannot be denied that Russia is using the Iranian negotiations as a bargaining chip to upset Western attempts to sanctions its economy, as Moscow’s cooperation is vital in order to reach any credible outcome on the Iranian issue. In short Russia has exploited the nuclear crisis to obtain economic and political benefits from both Iran and the West.

Conventional energy market: Competition or Cooperation?

Russia and Iran hold the world’s largest and second largest proven gas reserves and are also leading producers of oil, making them natural rivals in the energy sector. Competition for the lucrative European and Asian market thus makes cooperation in this area difficult. The current slump in oil prices is assumed to be engineered by the US and Saudi Arabia to undermine Russian and Iranian power and may aid rapprochement between Moscow and Tehran.

Economics

The much debated “oil for goods” barter deal estimated at approximately USD 1.5 Billion/month which involved Iran selling 5, 00,000 barrels of oil per day to Russia in exchange for goods also seems to have failed to make any headway.[9] Later analysis revealed the estimates put forth were highly inflated and a possible deal could be one tenth the value.[10] The deal, if it sees light of day, will benefit not only Iran but also Russia, who is battling the economic slump, thanks to the Western sanctions. However it is equally true that various other trade deals and measures are being worked upon between the two in order to moderate the impact of sanctions. A “Bilateral monetary treaty” is being planned by creating a joint bank or joint account.[11]Bilateral trade between the two is expected to reach USD 2.5 Billion.

Iran and Russia agreed to use their national currencies in bilateral trade as well as other currencies like China’s Yuan, Turkey’s Lira, Russia’s Rouble and South Korea’s Won in its trade transactions with foreign countries.[12]  A similar deal is already operational between Russia and China. However the bilateral non-oil trade is relatively low and focused primarily on food, poultry, dairy and aquatics. This is further hampered by the high customs tariffs levied by Russia which hinder exports. Both sides are discussing the issue bilaterally. Iran also intends to join the Russian led Eurasian Economic Union (EEU).

Regional Cooperation

Iran and Russia have convergence of interests in the region. Both support the Assad regime in Syria as well as perceive the US presence and influence in the region as detrimental to their interests. But assuming their security, military and economic interactions would pave the way for a greater Russian role in the Persian Gulf region, a traditional sphere of US interest and influence would be too naïve to assume. Iran would certainly not like to trade its strategic space with Russia as a “replacement” for USA. However the interests of the two converge in Afghanistan, the Caspian region and Central Asia.

Conclusion

Though it cannot be completely denied that there are certain areas in which the interests of Moscow and Tehran congregate, the much talked of defence cooperation and possible nuclear agreement between Iran and Russia as well as the oil for goods barter trade seems more to be propaganda driven and over-hyped. Scrutiny of the facts reveal that it is more of a symbolic relation aimed at displaying a united front against increasing Western interference in the affairs of the two nation states. The current UN and Western sanctions imposed on Iran strictly prohibit what Iran and Russia purport to achieve with their partnership, unless Russia has decided to adopt a defiant stance and refuses to adhere to these sanctions. Antagonizing the West may further prove detrimental to its interests, a risk which it cannot afford to take keeping in mind the current stage it is in, both economically and politically. This casts some serious doubts on the sustainability of the momentum in the bilateral relations.