The mixed signals on Iran that Russia has been sending in recent days have puzzled many western analysts. A little over a month after it went along with the United States in supporting tougher sanctions on Iran, Moscow signed a framework pact on wide-ranging cooperation with Tehran in hydrocarbons and announced a similar plan for nuclear energy projects.
A road map for long-term cooperation in oil, gas and petrochemicals that Russia and Iran signed last week calls for interaction and partnership in transportation, swaps and marketing of natural gas, as well as sales of petroleum products and petrochemicals, according to the Russian Energy Ministry. Russia will help Iran set up a $100 million LNG plant to supply the natural gas to 8,000 settlements in remote regions of Iran. The two sides agreed to negotiate concrete projects in the energy field before the end of the year. They will also look into setting up a joint bank to finance projects in hydrocarbons and to evolve mechanisms to use the respective national currencies in bilateral deals.
In another zigzag move, Russia apparently helped set up and strongly backed a Turkey-Brazil brokered deal with Iran in mid-May to swap Iranian low-enriched uranium for higher enriched fuel for use in medical reactors. A little later, however, Moscow threw its weight behind the Washington-championed United Nations sanctions.
Russia's Energy Minister Sergei Shmatko said last week that he saw “practically no limits” to cooperation with Iran in the energy field. “No sanctions will hinder our cooperation in hydrocarbons. It does not contradict either the U.N. Security Council sanctions or international law,” he said after signing the road map document on Wednesday with Iranian Oil Minister Masoud Mir-Kazemi. He also said the two sides had agreed to draft road maps for cooperation in the fields of nuclear energy and conventional electricity generation as well. Russian companies were “ready to supply oil products to Iran without any doubt,” provided the commercial terms were attractive.
The sanctions that were voted on on June 9 do not ban the kind of projects Russia and Iran agreed to launch under the road map, but they fly in the face of additional unilateral penalties the U.S. and the European Union slapped on Iran. U.S. laws punish any company that exports refined oil products to Iran.
Russian officials have stated several times that they disapproved of the unilateral sanctions, but two weeks ago Russia's President Dmitry Medvedev did not rule out further U.N. sanctions if a CIA report claiming that Iran may have enough fuel for two nuclear weapons proved correct. Mr. Medvedev said he was alarmed by the report.
Two weeks ago, Mr. Medvedev warned for the first time that Iran was moving closer to acquiring the “potential to build nuclear weapons.” The same week, he urged Iran to explain the “military components” of its nuclear programme. On the same day, a top Russian defence industry official, however, said a contract to supply S-300 air defence missiles to Iran, which the U.S. and Israel vehemently objected to, had not been cancelled even though Moscow conceded that the deal fell under the sanctions regime.
U.S. Defence Secretary Robert Gates termed Russia's policy on Iran “schizophrenic” because Moscow viewed Tehran as a security threat and, at the same time, pursued commercial deals with the country. “The Kremlin appears once again to be playing both sides;” “Moscow is trying to sit on two chairs;” “Russia and China go back and forth between Iran and the West” — these are some of the typical comments in the western media. The West's frustration seems to come from the expectation that after it signed on to new sanctions against Iran, Russia would toe the U.S. line as part of the ongoing resetting process in U.S.-Russian ties.
Russia's vote for the sanctions last month was, in part, an act of balancing its improved relations with the U.S. against its interest of closer ties with Tehran. A Russian veto would have made President Barack Obama extremely vulnerable to opposition attacks in Congress for hitting the “reset” button with Moscow. Russia also felt the new censure of Iran could serve a useful purpose in prodding Tehran to open up more of its nuclear programme.
Moscow has repeatedly said it is in a very different position vis-à-vis Iran, compared with the U.S. “Let's face the truth: the United States has no cooperation with Iran and has nothing to lose. Iran is not your partner,” Mr. Medvedev said in an interview to U.S. journalists last month.
Iran is an important partner of Russia on security issues in Afghanistan, Central Asia, the Caucasus and the Caspian. Russia is Iran's main source for arms and technology. In the past 15 years, Russia has supplied Iran with combat aircraft, helicopters, diesel submarines, tanks and air defence systems. The Bushehr nuclear plant in Russia that is preparing to start up later this year may be the first of a number of nuclear power projects that Iran plans to build with Russian help.
The two countries, which hold about 20 per cent of the global oil reserves and 42 per cent of natural gas between them, have been steadily expanding cooperation in the energy field. They were the principal movers behind the establishment two years ago of the 11-member Gas Exporting Countries Forum, dubbed the “Gas OPEC.” Russia's natural gas monopoly, Gazprom, has offered technical support and indicated its willingness to help finance a planned gas pipeline from Iran to Pakistan and India (IPI).
Russia's biggest private oil major LukOil pulled out from the Anaran project in Iran and halted gasoline deliveries to that country in April in order to safeguard its investments in the U.S. However, Russia's state-owned companies which have no business going in the U.S. have not severed ties with Iran. Late last year, Gazpromneft, an oil subsidiary of Gazprom, signed an agreement with the National Iranian Oil Company (NIOC) to jointly develop two oilfields in Iran. Gazprom also has an agreement with the NIOC to develop the South Pars gas field and build an oil refinery in Iran.
That said, the Russian-Iranian energy road map has seemingly come at the wrong time as it could conceivably jeopardise the Kremlin's plans to extend the “reset” in relations with the U.S. to the sphere of high technologies. In a keynote speech to Russian ambassadors earlier this month, Mr. Medvedev called for building “modernisation alliances” with Europe and the U.S. to facilitate the economic modernisation of Russia.
Moscow, however, appears confident that its pledge of energy cooperation with Iran would not derail the new partnership with the West. It is of course in Washington's interests for Moscow to maintain ties with Iran as it gives a lever of influence on Teheran and provides a back channel for communication with its leadership. But the massive projects outlined in the Russian-Iranian road map go far beyond the tactical needs of keeping Tehran engaged.
The Kremlin appears to have taken quite seriously Mr. Obama's election promise of solving the Iranian problem through a bold outreach to Tehran. The past 18 months of intensive contacts with Mr. Obama have also convinced Mr. Medvedev that the new U.S. President may be more open to Russia's arguments on Iran than his predecessor was. “He is a thinker, he thinks when he speaks,” and “tries to listen to his partner,” Mr. Medvedev famously said in an interview this year.
The Russian President has been urging his American counterpart to adopt a new approach to Iran by creating “a system of incentives” for Iran to give up its nuclear ambitions. Russia's Foreign Minister Sergei Lavrov said in an interview this year that any settlement of the Iranian nuclear problem must include full-fledged security guarantees to Iran and its broad involvement in all regional issues. “The previous U.S. administration was reluctant to give such promises to Iran… but I think now a solution will be found,” Mr. Lavrov told the Echo of Moscow radio station in February.
At the Nuclear Non-Proliferation Treaty review conference in May, the five permanent U.N. Security Council members issued a statement in support of making the Middle East a nuclear weapons-free zone, which would ultimately force Israel to scrap its atomic arms. This could be a signal that the Obama administration is taking a broader view of the problem of Iran's nuclear programme.
However, the unilateral U.S. sanctions on Iran that go far beyond the U.N. penalties do not suggest any new thinking in the White House. Unless of course it is a manoeuvre to silence Mr. Obama's critics at home and jockey for position before launching a new dialogue with Iran.
If the Russian leadership's calculus is correct, it will be a win-win situation for Moscow. If, however, it is wrong about Mr. Obama, Russia will face a painful choice between backtracking on its promises to Iran — for a third time after repeatedly postponing the start-up of the Bushehr nuclear plant and freezing the S-300 contract — and risking its “reset” with the U.S.
