CGI Asks: Is The Iran Deal Bad for Russia?

July 16, 2015

A selection of Western and Russian experts respond to a question from CGI on the latest foreign policy developments affecting Russia and Eurasia.

SAleksashenko.php - CopySergey Aleksashenko, Former Deputy Finance Minister of Russia

While the agreement with Iran lowers tensions on the global scale, it could be seen as a defeat by those Russian politicians who have grown accustomed to viewing the world in black and white. The logic of “if it’s good for the United States, then it must be bad for Russia” reigns supreme in many government offices in Moscow. In that sense, Russia doesn’t see a direct gain from the agreement: the embargo on arms shipments to Iran – the kind of economic cooperation that is most attractive to Russia – will not be lifted for another 5 years. Meanwhile, the lifting of sanctions on Iranian oil will result in an increase of supply on the global market that will push prices down. But in my view, the Iran deal is undoubtedly a win for Russia, whose cooperation with the international community sharply diminished after the annexation of Crimea. Russia’s participation in the negotiations affirmed its status if not as a superpower, then at least as a major power, which the Kremlin desperately wants.

michael_kofman_hr_0Michael Kofman, Public Policy Fellow, Kennan Institute at the Woodrow Wilson International Center for Scholars

From the economic perspective Russia gained in the nuclear agreement by having a fairly lucrative arms market open up, which it will rush in to take advantage of, and lost significantly with Iranian oil entering the international market. Policy wise, Russia has much in common with the West. It does not want to see an Iran with nuclear weapons, its neighbors with their own nuclear arsenals, an American military strike, or a unilateral Israeli one. This deal is the least worst option. It will not cause a genuine rapprochement between Iran and the West, due to a slew of other problems in the relationship, but Russia will use the agreement to try and maximize what transactions it can with Tehran. Looking more broadly, Russia has already benefited from dissatisfaction with U.S. foreign policy among traditional American allies in the Middle East, and it will reap further rewards in transnational opportunities following this agreement.

Photo RogovKirill Rogov, Visiting Fellow, European Council on Foreign Relations

The agreement with Iran sends an important signal to Russia, but one that isn’t likely to hit home with the current Russian leadership. The energy market is under the influence of short-term and long-term trends. A long-term tendency is the decline of relative prices, which is tied to structural changes in the market, as well as to the investment cycle (investment in energy grows during periods of high prices, which leads to a surplus of supply in the following period). The decline in prices began without connection to the Iran deal. But the main signal [to Russia] is not the effect the Iran deal might have on the energy market, but rather the fact that Iran’s leadership has recognized the futility of the isolationist model of development. A country that is weak economically has little use for an atomic bomb; that won’t solve its problems. And this is the same choice that the Kremlin now faces. Sensing its shortcomings in ensuring the conditions for stable economic growth, the Kremlin has decided to concentrate on nuclear weapons as the guarantor of sovereignty. While Iran is turning away from the isolationist model, the [leaders] in the Kremlin are trying to build a new Iran in Russia.

e-wayne-merryE. Wayne Merry, Senior Fellow for Europe and Eurasia, American Foreign Policy Council

The Iran nuclear accord is positive for Russia in reducing the prospects for another American use of force in southern Asia, near to Russia’s strategic periphery. On the negative side, Iran’s full return to global energy markets will maintain downward pressure on prices of oil and gas, at Russia’s expense. More broadly, Iran’s emergence from isolation reduces still further the extent to which Eurasia is Russocentric. For example, while the Shanghai Cooperation Organization (SCO) was a Chinese initiative, Beijing and Russia have till now shared top-tier status in the grouping. No longer. With SCO expansion, China will be the only top-tier country, with Russia sharing the second tier with India and Iran, and perhaps Pakistan. Over time, an empowered Iran will certainly be much more a challenge for Russia than an asset.

 


The Center on Global Interests provides an open platform for discussion. The views expressed here are the authors’ own.