Escalation fears underwrite Russia’s strategy on Iran

In honor of the recently concluded round of negotiations on Iranian nuclear weapons, here’s a brief I wrote back in February for Oxford Analytica.

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In response to Tehran’s announcement of advances in its civilian nuclear capabilities, the Russian Foreign Ministry yesterday urged the international community to re-engage Iran in serious negotiations, with the aim of forestalling the development of a credible nuclear weapons programme. While Russia is often portrayed as uncritically supportive of Iran, the bilateral relationship is more complicated than it appears. Moscow’s resistance to strong UN Security Council sanctions reflects its strategy of trying to maintain a relatively robust economic relationship with Tehran, while also hoping that Iran can serve as a bulwark against other Middle Eastern states that Russia views as hostile to its own interests. Yet Russia does not want Iran to acquire nuclear weapons, as this would threaten its own national security.

What next

Russia would like to see a comprehensive agreement, whereby Tehran agrees to stop its nuclear weapons programme in return for the end of sanctions and reintegration of Iran into the international community. Should Iran make the first aggressive move by following through on its threat to close the Strait of Hormuz, Russia will benefit in the short term from higher oil prices. However, this would be more than off-set by a subsequent intensification of regional instability. Over the longer term, Russia would be best served by stable oil prices, not extremely high ones.

Analysis

Most Russian corporates have complied with international sanctions, which have made it difficult for multinationals to pursue opportunities in Iran: large contracts have been repeatedly called off or postponed. Yet economic cooperation remains significant, and Russian civilian aviation manufacturers (such as Tupolev and Sukhoi) regard Iran as an important growth market, though there has been some criticism from the Iranian side that Russian companies have been slow to deliver on their promises. Russian telecommunications major Megafon occasionally has been linked to efforts to expand Iran’s cellular network, but has repeatedly denied any interest in operating there.

Oil and gas opportunities?

Russian firms are actively interested in the Iranian hydrocarbons sector — but results have usually fallen short of ambitions:

o   The two countries have signed various treaties to cooperate in gas and oil extraction, and were part of an effort (along with Qatar) to establish a gas cartel that could parallel the OPEC in oil markets.

o   Russian firms have also sought to play a role in Iran’s efforts to boost production and build new pipelines. However, this relationship has recently soured, culminating last autumn with Iran removing Gazprom Neft from the development of the Azar oilfield. Earlier, Lukoil withdrew from a project to develop the Anaran oilfield as a result of US sanctions against Iran.

o   Mooted gas-swap arrangements have never moved beyond the discussion stage.

o   The Iranian National Petrochemical Company and Sibur are considering possibilities for the latter to build several major petrochemical plants in Iran.

Civilian nuclear engagement

The long-delayed Bushehr power plant finally came online last September, and will continue to be operated by a Russian-Iranian joint venture for at least the next two years before passing to sole Iranian control. Russia receives all spent fuel from the reactor, thus helping to ensure that it cannot be weaponised. Since the completion of Bushehr, there have been discussions about Russia helping Iran build another reactor. So far, these talks have not progressed; given that Iran is now working on its own reactor at Darkhovin, Tehran may believe that it no longer needs Russian assistance.

Dwindling military-technical ties

While Iran used to be one of Russia’s leading defence industry customers, this relationship has almost completely collapsed in the wake of President Dmitry Medvedev’s September 2010 decision to ban sales of missile systems, armoured vehicles, warplanes, helicopters and ships to Iran. This decision — which went beyond the UN-mandated sanctions — ended the long-standing saga of whether Russia would transfer S-300 missile systems (a contract for which had been signed in 2007) to Iran. Since then, Russian military sales have been limited to equipment needed to modernise previously transferred anti-aircraft defence systems and electronic warfare and reconnaissance systems.

Recent discussions between Deputy Prime Minister Dmitry Rogozin and the Iranian ambassador to Moscow have resulted in a verbal agreement to restore military cooperation, but this is unlikely to result in significant arms sales and will not lead to the revival of the S-300 deal.

Russia’s strategic calculus

While bilateral ties have been periodically difficult, Moscow is well aware of Iran’s important geopolitical role — not just in the Middle East, but also Central Asia and the Caucasus. Russian leaders have long believed that protests such as the 2009 Green Movement could destabilise a great many states in Russia’s ‘south’, and this view has only been confirmed by the ‘Arab awakenings’. They also fear that an Israeli strike on Iran would be the first step in a regional conflict that could engulf the entire Middle East and generate massive refugee flows into Russia via Azerbaijan.

At the same time, Russian policymakers are also concerned about the possibility of Iran creating instability on Russia’s southern border, especially in light of difficult relations between Iran and Azerbaijan. In autumn 2011, Russia and Kazakhstan conducted a military exercise designed to defend offshore oil and natural gas platforms from an attack by state-sponsored sabotage teams. Though no specific opposing state was named in the scenario, the potential adversary could only have been Iran. Russian military planners recently announced that next autumn’s large-scale military exercise would take place in the Caucasus and involve the premise of a war that begins with an attack on Iran, but turns into a regional conflict that draws in Russia.

Nuclear perceptions

Russian leaders believe that Iran already has the technical ability and materials to build a nuclear weapon should it choose to do so. For this reason, it opposes the use of air strikes (or other military means) to damage the Iranian nuclear programme. The logic is that while military strikes would certainly set back the programme in the short term, they would only reinforce Iran’s determination to acquire a nuclear weapon in order to deter potential future attacks. From Russia’s perspective, negotiations are thus the only means to prevent Iran from developing a nuclear arsenal.

Impact

o   If talks with Tehran were to fail, Russian leaders perceive that Israel and the United States would attack Iranian nuclear facilities.

o   The concern is that such a course of action would lead to wider destabilisation — and would not deter Iran from obtaining nuclear weapons.

o   In the event of an Israeli strike on Iran, Russian interests would be best served by remaining on the sidelines.

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