The war in Ukraine has made Iran and Russia economically isolated allies. Here’s how.

Iran Source

August 25, 2022 • 11:27 a.m. ET

The war in Ukraine has made Iran and Russia economically isolated allies. Here’s how.

Alam Saleh and Zakiyeh Yazdanshenas

Russia’s invasion of Ukraine turned the country into a heavily ostracized state and opened up new opportunities for Iran to forge closer relations with the world’s great power.

The United States, the European Union and the Group of Seven (G7) have imposed severe sanctions on Russia. These punitive multilateral sanctions have placed Russia in a situation familiar to Iran, which has extensive experience circumventing their harmful effects.

From the start of the war, Iran declared the invasion a legitimate Russian response to security concerns about US and NATO actions. The new administration of Ebrahim Raisi admires Russia’s action-oriented foreign policy. Iranian officials have also grown weary of exercising strategic patience and have grown more assertive in light of longstanding animosity between Iran and the United States, coupled with the failure of the 2015 nuclear deal. to reintegrate Iran into the international community.

On July 22, Ali Akbar Velayati, former foreign policy adviser to Supreme Leader Ayatollah Ali Khamenei, said that instead of trying to appease the West, Tehran should look to Russia for support and strategic alignment. Russia, Velayati noted, has a strong track record of supporting the Islamic Republic.

Iranian leaders and politicians believe that Russia’s invasion of Ukraine could undermine the architecture of the international system in a way that ultimately benefits Iran’s national interests. During a high-level meeting with Russian President Vladimir Putin in Tehran on July 19, Ayatollah Khamenei clarified Iran’s position on the war in Ukraine, describing the motives for the Russian invasion as similar to those from Iran to the Middle East: [Russia] not take the initiative, the other side would have taken the initiative and provoked war,” Khamenei said.

A now heavily sanctioned Russia may seem like a weakened strategic partner for Iran; however, the imposition of Western sanctions and the demonization of Russia could bring Moscow and Tehran together as mutual enemies of the United States and the NATO-led international framework.

The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in 2018 by the Donald Trump administration led many Iranian officials – and even a March report by the Parliamentary Research Center – to conclude that lifting the restrictions is impossible. economic sanctions against Iran. in a way that would ensure long-term normalization of trade relations with other countries. Instead, officials have placed the neutralization of sanctions at the forefront of their agenda. This involves expanding relations with other sanctioned countries to ensure resilient foreign trade.

The imposition of severe sanctions against Russia marks the entry of a major power into the club of international outcasts, which could unlock major opportunities for the Iranian economy, as evidenced by the agreement of Moscow and Tehran to replace SWIFT with national financial messaging systems. Iran and Russia can now rely on their trade to try to offset the sanctions. According to Iranian Minister of Petroleum and co-chairman of the Iran-Russia Joint Economic Commission, Javad Owji, the volume of trade between the two countries has already increased significantly in 2022, reaching an unprecedented level of 40 billion dollars in the past ten- last eight months, while 2021 the numbers were $4 billion. Iran and Russia recently signed a memorandum of understanding to establish two trade centers, in Tehran and St. Petersburg, to facilitate trade. On the sidelines of Putin’s recent visit to Tehran, the National Iranian Oil Company and Russian gas producer Gazprom signed a memorandum of understanding worth around $40 billion. Iranian authorities claim that Gazprom will support Iran in developing the Kish and North Pars gas fields.

Recent reports on the expansion of military cooperation between the two countries also indicate that bilateral relations are reaching a new level. According to US National Security Advisor Jake Sullivan, Iran is about to deliver hundreds of drones to Russia. Although Iranian officials have not confirmed this, the expiration of a UN arms embargo against Iran means that Tehran and Moscow have no restrictions on this cooperation. Iranian drones have already been used in the Middle East and Russia’s interest in them demonstrates their effectiveness.

Additionally, on August 9, Russia launched an Iranian intelligence satellite into orbit from Kazakhstan. Iranian officials said the satellite was designed by Iranian engineers and built by Russian companies and that new generations of the satellite would be jointly built by the two countries. Undoubtedly, this can improve Iran’s intelligence capabilities and power projection.

Last year, Tehran and Moscow agreed to update a twenty-year cooperation agreement. During a recent visit to Moscow, President Raisi presented a new project to Putin. Faced with increasing isolation, Russia could be receptive. It would be a landmark achievement of the Raisi administration’s foreign policy, as it has prioritized a “look East” policy since its inception. Iran’s long track record of circumventing sanctions can also provide valuable lessons for Moscow, which was highlighted by the recent trip by Russian businessmen to Tehran.

The war in Ukraine is fracturing and reshaping the geopolitical and geoeconomic dynamics of the world, and Iran sees these changes in its favor. Contrary to advice from the West that Iran should quickly agree to return to JCPOA compliance and seek to replace Russia as Europe’s main energy supplier, Iran is aiming for a role beyond beyond the global energy market to position itself as an essential interregional partner. center. Iran is seeking influence beyond the Middle East to extend its strategic depth, establishing new economic relations with states like Russia and broader ties with Asian countries, such as China and Pakistan.

Russia now has new incentives to complete a long-delayed International North-South Transport Corridor (INSTC) project. It is a 7,200 kilometer network of sea, rail and land routes that starts from Mumbai in India, crosses Azerbaijan and reaches Russia after crossing Iran. Only a 164 kilometer stretch between Astara and Rasht in northern Iran remains unfinished. During a visit to Moscow by Iran’s Minister of Roads and Urban Development in April, the two countries signed a comprehensive transport cooperation agreement.

According to Owji, the corridor will be operational in the second half of 2022. The project is expected to strengthen Iran’s position in Central Asia and provide a competitive route to India’s Arab-Mediterranean corridor. This corridor, a product of the normalization of ties between the United Arab Emirates and Israel in 2020, connects Mumbai to Haifa via an Emirates rail network that passes through Saudi Arabia and Jordan, with only three hundred kilometers to be built. The international North-South transport corridor will allow Iran to compete with Arab states and Israel to attract trade and investment.

Tehran is also seeking to implement the Ashgabat Agreement, an international multimodal transport agreement to facilitate the transport of goods between landlocked Central Asia and the Persian Gulf, in order to strengthen transport links between Iran and the Central Asian countries. Ashgabat was one of the most important issues raised during President Raisi’s recent visit to Oman.

The extent to which Iran can capitalize on these potential opportunities remains to be seen. Iran still faces critical political obstacles from the West, Israel and neighboring Arab states. Regional rivals, such as Turkey, are also trying to use geopolitical shocks and shifts to their advantage. Yet heightened tensions between the West and Russia give Iran a new opportunity to maximize its interests and advance its political, economic and military ambitions.

Alam Saleh is a Senior Lecturer in Iranian Studies at the Center for Arab and Islamic Studies at the Australian National University.

Zakiyeh Yazdanshenas is a researcher at the Middle East Center for Strategic Studies in Tehran.

Further reading

Image: Iranian President Ebrahim Raisi and Russian President Vladimir Putin attend a press conference following the Astana Process summit in Tehran, Iran, July 19, 2022. Majid Asgaripour/WANA (WANA News Agency West Asia)/Handout via REUTERS

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