RUSSIA AND IRAN HAVE INTERESTS, NOT LOVE
By N. M. Mamedova

Daily Star – Lebanon
Friday, January 29, 2010

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.