Big loser in any nuclear deal with Iran may be Russia

July 10, 2015
General view of Bushehr nuclear power plant, 1,200 km south of Tehran

A general view of Iran’s Bushehr nuclear power plant, built by Russia, October 26, 2010. REUTERS/IRNA/Mohammad Babaie

As Iran and six world powers edge closer to solidifying an accord that puts limits on Tehran’s nuclear program in return for sanctions relief, a unique opportunity presents itself for the West. The United States and its European partners could begin to decouple the unnatural Iranian-Russian alliance to reign in Moscow’s hegemonic ambitions, as well as bring Iran back into the global economic fold. Competition between Moscow and Tehran would reduce Russia’s influence in the Middle East, unlock Iran and may even serve Europe’s future interest as it looks for alternatives to Russian gas.

Iran and Russia share a complicated history rooted in both countries’ imperial past. In fact, over the past two centuries, Iran has ceded more territory to Russia than any other country. After the Second World War, the Soviet Union destabilized and encouraged separatist movements in the province of Iranian Azerbaijan, similar to what Moscow is doing in Ukraine. As recently as the 1980s, Iran backed Afghan rebels in their conflict against the Soviet Union.

The recent Russo-Iranian alliance has been more a marriage of convenience than a genuine partnership. Russia uses Iran as a geopolitical foothold in the energy-rich Persian Gulf and to poke a finger in the eye of U.S. allies in the region. In return, Iran takes advantage of Moscow’s veto power at multinational forums such as the United Nations. An Iran that is engaged with the West in areas such as energy, trade and peaceful nuclear power generation would no longer see Russia as protector of its interests. It is a fact that Iran’s fractured and vitriolic relationship with the West has driven it to form political, commercial and military ties with Russia. Those ties are still fragile, at best.

Russian companies have signed deals that underwhelmed the Iranian market in contentious areas such as energy and nuclear power. Iran’s Russian-built Bushehr nuclear reactor was riddled by delays and cost overruns. Over the past year, Russian firms have been quick to sign all sorts of long-term agreements in aviation, commercial shipping and agricultural trade out of a fear they would be pushed aside by superior Western firms as a nuclear deal looked more likely.

Russia and Iran have competing interests in energy more so than in any other area of strategic importance. If Iran is able to sell its oil unencumbered by sanctions, it would result in downward pressure on global oil prices and hurt Moscow’s bottom line. Furthermore, Iran holds the second-largest natural-gas reserves in the world, which could eventually compete with Russia to meet Europe’s demand. Over the years, Russia has supplied some 40 percent of European gas imports, but Moscow’s use of energy as a weapon and its increasingly belligerent foreign policy have strengthened the European Union’s resolve to pursue energy diversification.

The EU’s gas strategy currently involves a host of solutions, including gas deliveries by pipeline from Azerbaijan and from as far away as Turkmenistan. Iran’s proximity and vast reserves could make it a more likely contender for the European market. But due to the lack of pipeline infrastructure and years of sanctions, Iran has never had the capability to entertain such an opportunity. It has instead settled on mainly delivering gas to its immediate neighbors — Turkey, Armenia and Azerbaijan.

Discussions have recently reemerged on plans to build the Persian Pipeline to supply Europe via Turkey. However, optimism for quick fixes should be tempered. Pipelines are costly projects that can take decades to build and require a unique mix of commercial interests, political will and sizable investments. Iran would have to improve its lukewarm relations with Turkey, which have been strained by the conflict in Syria. It would also have to offer compelling terms to an international consortium of investors that would be initially reluctant to take on Iran as a risk.

Iran’s plans for a liquid-natural-gas export terminal, which to date have been hindered by existing sanctions, are also likely to be revived. While the project may depend less on political accords than the Persian Pipeline, the need for technology and investment would be vital. If Iran adheres to the terms of its nuclear agreement, it is more likely to receive such support from the West rather than financially strapped Moscow.

The pending deal between Iran and the six world powers has the potential to be a net loss for Russia. The West should grasp the opportunity and encourage Iran’s drift away from Moscow’s economic orbit. Fostering economic competition between the two historical rivals would eventually reduce their political collaboration. In the long run, this deal may result in achieving a strategic win for the United States and Europe.

14 comments

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Our legislators are plain idiots in fighting the Iranian nuclear deal.

With a good deal, Iran could be a profitable venture for the West.

Posted by Flash1022 | Report as abusive

Weak analysis

Posted by Zubel | Report as abusive

“In fact, over the past two centuries, Iran has ceded more territory to Russia than any other country.”

I’m not so sure about this. Imperial China ceded over 600,000 square km of territories to Russia in 1858 through the Treaty of Aigun. That’s more than the size of modern day France.

Posted by pianofreak | Report as abusive

Russia is a big loser, period. Under Putin, their economy has shrunk to become smaller than Italy’s. That’s worth repeating. The largest country on earth, now produces fewer goods and services than sleepy little Italy. The GDP per capita in Russia is now lower than Czech Republic or Greece. Russia is in serious economic trouble. Their chief exports now are orphans and herpes. Half the country lacks the technology and infrastructure to treat basic sewage. Russia is literally becoming the broken toilet in the house of the world.

Posted by Solidar | Report as abusive

Of course, one of the “six world powers” involved in the deal making is Russia. Conveniently, this article does not mention that fact. If Russia senses that the unstated purpose of any Iranian nuclear deal is to undermine Russia, as advocated by this article, we can be sure that there won’t be any deal. The Russians aren’t quite as dumb as the authors are hoping for. And I also can’t see the Chinese “carrying the water” for US/European geo-political gains.

Posted by Squeamish | Report as abusive

China knows who butters their bread. America, as a customer, spends 17 times more money in China than Russia does. You think China is going to give that up? Russia is broke. And therefore their leverage is broke. Saw this coming 20 years ago.

Posted by Solidar | Report as abusive

I am not sure a deal is necessary. In my opinion a nuclear war that wipes out human existence might be preferable to a continued existence under the psycho-spastic secret police retards.

Posted by brotherkenny4 | Report as abusive

Resonse to Solidar: If you look at PPP values of GDP, Russia is actually No. 6 way ahead of Italy which is No. 12. Also, after some decline due to the ridiculous sanctions, the Russian GDP is growing and the Ruble has recovered much of its value. As part of BRICS and SCO, Russian influence will grow actually. It has already signed agreements to build two new nuclear reactors in Iran and at least one in Saudi Arabia. Its arms sales are also booming. So, you are just in delusion.

Posted by Logical123 | Report as abusive

” .. competition between Moscow and Tehran ..”

Baseless premise. Reality is that they are in-bed. Nice try on the trade-push though.

Posted by Mottjr | Report as abusive

The last foreign occupation troops on Iranian soil were the Soviet army who only left in 1950.

Posted by pbgd | Report as abusive

Well maybe and maybe not. Supreme leader Khomeini is not in love with Russia at all. But he is no friend with America either. That could go either way.

Posted by touch128 | Report as abusive

I am not sure Russia is as clueless as the author suggests. Also, one should not forget the intense and perpetual rivalry and hostility between Iran and Israel. The West has to throw its weight behind Israel and Iran is all too aware of that. I expect their relations with Russia to remain carefully approached as they know under their theocracy they will never be able to achieve the same status and alliance they had with the west prior to 1979.

Posted by ObserverOnly | Report as abusive

Russia is a capitalist nation now. Are we worried they will take over neighboring countries and spread…. capitalism? This rivalry is silly and outdated. Who cares what Russia does in and around Chernobyl (Ukraine). Not our problem, and Russia poses no threat to any Western power. Because western is an arbitrary term to begin with. Ask Turkey.

Posted by Solidar | Report as abusive

Love the posts here so far. They are not in harmonious agreement, but there is none of the all too common name calling. There are also lots of facts that back up the posters’ points.

Posted by relmasian1 | Report as abusive