Personal relations between the Russian President Vladimir Putin and Iran\u2019s Supreme Leader Ali Khamenei should not be overlooked. In the 2010s, Russian diplomacy started to put greater emphasis on developing ties between the Kremlin and the Supreme Leader\u2019s administration. Putin\u2019s first visit to Tehran was in 2007. If his meeting with Khamenei then was more about protocol, in his subsequent trips, the agenda of the meetings have substantially widened to encompass concrete questions about the strategic directions of Russian-Iranian cooperation. Moreover, the Kremlin sought to emphasize Putin\u2019s personal appreciation of these contacts. Thus, in November 2015 (his second trip to Tehran), Putin presented an old manuscript of the Holy Qur\u2019an as a gift to the Supreme Leader. The positive response in Tehran prompted experts to debate the emergence of a special chemistry between Putin and Khamenei.[vi]<\/a> The personal views of the two figures have also played a role: Putin positions himself as a defender of traditional values and has strong anti-Western sentiments. At their meeting in July 2022 in Tehran, Khamenei voiced support for Putin regarding his decision to invade Ukraine. The Supreme Leader essentially reiterated the Russian narrative that this was a preemptive strike to avoid NATO aggression against Russia itself.[vii]<\/a><\/p>\n In 2021, the election of Ebrahim Raisi as president of Iran became another predisposing factor for the rapprochement of the two countries. The rise of ultra-conservative and nationalist forces with sympathies towards the traditionalist rhetoric of the Kremlin, with both sharing an intuitive mistrust of the West, helped to marginalize the role of Iranian pragmatists and moderates who were more sceptical about the value of ties with Russia.[viii]<\/a> The power duo of Khamenei and Raisi has chosen Moscow as a partner of Tehran. This has resulted in the coordination of positions and the exchange of information on a number of key issues, including the situation around the Joint Comprehensive Plan of Action (JCPOA), the future of Syria, security of the Persian Gulf region, work in regional organizations (the Shanghai Cooperation Organisation (SCO), the Summit of the Caspian States, Eurasian Economic Union (EEU)), as well as the implementation of transnational economic projects (such as the North\u2013South corridor).<\/p>\n Changing perceptions of the JCPOA in Iran also facilitated a shift in Tehran\u2019s calculus. The country\u2019s leadership no longer saw the revival of a new nuclear deal as a solution to all its economic and political problems including confrontation with the West and sluggish economic development. Raisi\u2019s team had no confidence that the revival of the JCPOA would lead to an influx of European foreign investment or would guarantee that the US will never leave the nuclear deal again. In other words, signing the JCPOA (although desirable) ceased to be the crucial goal for Iran, becoming instead a tool of foreign policy to ease external pressures. Under these circumstances, hopes for a rapprochement with the West have lost their relevance for Tehran \u2013 which is why contacts with non-Western countries such as Russia have become more important.[ix]<\/a><\/p>\n Finally, Putin\u2019s war in Ukraine was seen in Tehran as an opportunity to strengthen relations with Moscow as well as bolster Iran\u2019s international standing. The invasion provided Tehran with a long-term guarantee that Moscow would not ally with the West. This prevents Russia from using Iran as a bargaining chip with the US and Europe. Tehran also interpreted the Russian invasion as the start of a transformation of the international system of relations, with new blocs and coalitions emerging that would enable Tehran to break out of its isolation.<\/p>\n Russia\u2019s leadership began to appreciate the importance of bilateral relations with Iran at about the same time as Iranian counterparts, in 2012\u201315. During this period, various factors were pushing Russia closer to Iran. Among these were Putin\u2019s disappointment in the prospect for Russia\u2019s rapprochement with the West determined by the actual failed attempt by then presidents Barack Obama and Dmitry Medvedev to \u2018reset\u2019 US\u2013Russia relations; Moscow\u2019s concerns that it would lose its standing in the Middle East as the Arab Spring was wiping its old allies off the regional map; plus the Kremlin\u2019s fears that Tehran could drift towards the West and leave the Russian sphere of influence. The two countries reconsidered their economic cooperation plans and managed to find common cause on a set of regional issues. In 2015, Russia\u2019s military deployment in Syria boosted the practical dialogue between the two countries. However, while Iran initially saw the February 2022 invasion as a chance to strengthen existing ties with Russia (i.e. acting as a catalyst for the processes already started), the Kremlin saw its war as one of the main drivers for dialogue with Iran.<\/p>\n Since the invasion, Tehran has become increasingly important to Moscow. It is one of the few remaining political partners to provide supplies of military equipment for the Russian army in Ukraine. It is also offering assistance on circumventing sanctions, providing transport connections with the Indian Ocean region (as part of Putin\u2019s strategy of \u2018turning to the east\u2019, which has acquired extra importance since February 2022), and is even a limited source of income for the Russian war-hit economy. The result is that Moscow\u2019s dependence on Tehran has increased \u2013 and this shift has changed the balance in relations between the two countries. For the first time, Tehran is no longer perceived as a junior partner, but is now equal in the dialogue.<\/p>\n Even before Putin\u2019s invasion of Ukraine, Russia\u2019s turn to the east and persistent efforts by Moscow and Tehran to improve their dialogue were starting to strengthen what was traditionally a weak point in their relations: trade and economic ties. Since 2019, their trade has showed positive growth. The war in Ukraine will speed up the process of Russian economic reorientation towards Asia, inevitably affecting economic ties with Iran. Faced with sanctions, the reorientation could significantly expand the volume (and, presumably, the range) of goods moving to and from Russia through Iran. Moscow is expected to increase its exports of agricultural and petrochemical products, machinery and fertilizers to Iran and further afield to Asia.[x]<\/a> Russia is also trying to develop its economic cooperation with Iran not only bilaterally, but in multilateral forums like the EEU and the SCO. The involvement of third parties helps to resolve the lack of financial and other resources on both the Russian and Iranian sides for developing the bilateral dialogue. This, in turn, creates opportunity for economic cooperation between Russia, Iran and China (as a country that can compensate for the lack of resources) \u2013 although the prospects for Chinese involvement remains unclear.[xi]<\/a><\/p>\n The North\u2013South transport corridor connecting Russia to the Indian region via Iran is set to become an important element of the Russian economic turn towards Asia. It also allows Russia to circumvent sanctions by importing sanctioned goods as well as products that disappeared when Western companies quit the country (known as \u2018parallel imports\u2019).[xii]<\/a> Iran acts both as a transit country and as a supplier of items that Russia can no longer purchase directly. Russian-Iranian agreements on cooperation in the aviation sector was signed as a cover for importing aircraft parts and avionics through Iran.[xiii]<\/a> At the same time, Tehran is able to fulfil the agreement to supply gas turbines to Russia.[xiv]<\/a><\/p>\n Sanctions have placed Iranian and Russian businesses in a similar situation. Russians no longer need to consider the reaction of the West when building business contacts with Iran. Russian firms are actively studying the experience of Iranian businesses in circumventing sanctions. Iranian companies have become part of sanctions evasion schemes used by Moscow. The two countries are now approaching bilateral cooperation with a greater degree of seriousness. The emphasis is now on quality, not quantity. Instead of launching new projects, both nations are trying to revive old projects such as the oil and gas swap deal or Russian railways\u2019 involvement in developing Iran\u2019s transport infrastructure. Serious work is also under way to eliminate obstacles such as tariff and non-tariff trade barriers.[xv]<\/a><\/p>\n Over the past two years, bilateral trade has grown steadily. In 2021, it reached a record $4 billion compared to $1.6 billion in 2020. In 2022 it equalled $4.6 billion (see Figure 1).<\/p>\n \u00a0<\/p>\n Figure 1. <\/strong>Russian-Iranian trade in USD ($) billions by year, 2013\u201322. Source: [xviii]<\/a><\/p>\n \u00a0<\/p>\n Transport and military-industrial cooperation between Russia and Iran have become the main areas where the Ukrainian conflict has had the most obvious impact. For instance, Iran is no longer perceived as just a potential consumer market for Russian arms sales, but also as a source of weapons supplies. During summer 2022, the delivery of Iranian attack and reconnaissance drones to Russia not only resolved the Russian army\u2019s shortage of this equipment, but also significantly improved the situation on the battlefront in Russia\u2019s favour.[xvi]<\/a> The next stage may be the supply of short- and medium-range missiles to the Russian army. Such cooperation would have a positive effect on the Iranian trade balance. There is also information to suggest that the drones were \u2018exchanged\u2019 for Russian SU-35 fighter jets soon to be exported to Iran.[xvii]<\/a><\/p>\n The Ukraine war has also created conditions that are conducive to Russian energy companies entering Iran. Russia has begun to revive old plans to strengthen its presence in the Iranian upstream and downstream sectors. The framework agreement signed in 2022 with Gazprom is gradually being expanded. Gazprom should be allowed to develop the South Pars field and participate in the enhanced oil recovery (EOR) programmes. Negotiations on implementing swap deals with oil and gas between the two countries are also under way together with discussions on the joint development of Iran\u2019s liquefied natural gas (LNG) production complex.[xviii]<\/a> Iran is also now regarded as a transport hub through which Russian energy resources could reach the Indian Ocean region and Asia more widely.[xix]<\/a><\/p>\n Since Russia\u2019s entry into OPEC+ in 2016 (or perhaps prior to this), Moscow has worried about Iran being a \u2018wild card\u2019 in the oil and gas market. However, at the moment it is not perceived as a threat. The general opinion in Russian political circles is that the return of Iranian oil to the market when (and if) sanctions limiting its exports are lifted is not a factor that can strategically influence oil prices in the long run and harm Russia\u2019s interests. Moreover, since February 2022, Russian oil and petrochemical products are now challenging Iran\u2019s interests on the global market. Thus, by summer 2022, Iran was complaining that a substantial part of its oil was being squeezed out of the Chinese market by Russian suppliers.[xx]<\/a> Russian liquefied petroleum gas (LPG) also became a significant competitor to Iranian LPG in Turkey, Pakistan and Afghanistan.[xxi]<\/a><\/p>\n Various obstacles stand in the way of developing Russian-Iranian ties.<\/p>\n First, neither Russia nor Tehran has enough liquidity to develop their relations at a fast pace, forcing each to operate with limited resources. The current high oil and gas prices compensate for these limitations, but they are a temporary solution. There is also a shortage of foreign currency (especially on the Iranian side). Switching to transactions in national currencies or even bartering is a necessary measure, but is not seen as attractive for most businesses.<\/p>\n Second, technological problems are negatively affecting economic relations. Both states are trying to cooperate actively over the development of the oil and gas sector and related infrastructure. However, the lack of necessary technologies means the most popular and promising projects exist only on paper. For example, Russia\u2019s lack of effective technologies for the large-scale liquefaction of natural gas will clearly prevent it from fulfilling its promises to help Iran develop LNG production capacities. Without the creation of these capacities, the expediency of swap exchanges of natural gas will be in doubt.[xxii]<\/a><\/p>\n Third, there are transport and logistics problems. Large queues often form at the Iranian-Azerbaijani border, which is both a consequence of technical failures and the result of an increase in mutual supplies. The route through the Caspian Sea remains a narrow neck in the North\u2013South transport corridor. There are not enough modern vessels in circulation, and the ports of the Astrakhan region are only just starting to be modernized.<\/p>\n Finally, although being subject to sanctions brings the two states closer together, the restrictions themselves block the implementation of cooperation plans. Iran cannot fully be used as a transit hub therefore, without the lifting of sanctions restrictions.<\/p>\n On the political track, the future of Russian-Iranian ties is also uncertain. Tehran already is paying a certain price for its rapprochement with Russia, while the profit from this shift is not yet fully clear. Iran has become a natural enemy of Ukraine, which has been effectively and persistently lobbying against Tehran. Taking advantage of the sympathy of a significant part of the international community, Kiev will not find it difficult to engage partners in taking more decisive steps against the Iranian regime.<\/p>\n Increased military-technical cooperation with Russia has also significantly aggravated the confrontation between Iran and Israel, and has become a cause of concern for the US. The cooperation with Russia has expanded the list of reasons for increasing sanctions pressure on Tehran, and has made Iranian military infrastructure (in addition to its nuclear facilities and facilities for the production and storage of missiles) a reasonable target for attacks in the eyes of Iran\u2019s opponents. In this regard, the January 2023 drone attack on a military facility in Isfahan in central Iran was a first sign of such change.[xxiii]<\/a> Within Iran itself, public opinion regarding cooperation with Russia differs significantly from the views of the country\u2019s leadership. This creates a small but significant source of tension in the internal political situation in Iran. Given these circumstances, Iran\u2019s readiness to pay a price for better relations with Russia might gradually weaken.<\/p>\n In weighing the opportunities and challenges, it is difficult to conclude that Russian-Iranian relations will be durable. Circumstances themselves are driving closer ties and the current leaders of both countries also act as guarantors of a positive dialogue. Yet, several obstacles threaten the sustainability of their relations. Nor is it clear long-term that Iran will remain keen to pay a political price internationally for backing Russia. As such, despite an improved overall dialogue between Moscow and Tehran, and obvious positive shifts in bilateral and regional trade and economic cooperation, current relations are far from constituting a full-fledged axis of allies.<\/p>\n \u00a0<\/p>\n This blog is cross-posted from Kalam, part of the Middle East and North Africa Programme (MENAP) at Chatham House. The PeaceRep programme supported this research.<\/p>\n Access the original blog post<\/a><\/p>\n Nikolay Kozhanov is Research Associate Professor at the Gulf Studies Center, Qatar University.<\/p>\n Learn more about the author<\/a><\/p>\n [i]<\/a> In 2011, the RQ170 Sentinel was a brand-new secret unmanned aerial vehicle (UAV) used by the US for reconnaissance and intelligence-gathering in Afghanistan. In December 2011, Iran\u2019s air defence forces managed to take control of one of the RQ170s and land it on Iranian territory (according to the Iranians, the RQ170 Sentinel violated the airspace of the Islamic Republic from the Afghan side).<\/p>\n [ii]<\/a> Mikhalev, A. (2011), \u2018Sobstvennost Islamskoy Respubliki. Iran Otkazalsya Vernut\u2019 SShA Sverkhsekretniy Bespilotnik\u2019, [The Property of Islamic Republic. Iran Refused to Return a Top-Secret UAV to the US], Lenta.Ru, 13 December 2011, https:\/\/lenta.ru\/articles\/2011\/12\/13\/sentinel\/<\/a>; author interviews with Russian military experts (conducted on conditions of anonymity), St Petersburg, May 2015 and Moscow, June 2016.<\/p>\n [iii]<\/a> Mikhalev (2011), \u2018Sobstvennost Islamskoy Respubliki\u2019.<\/p>\n [iv]<\/a> Truyevtcev, K. (2019), \u2018Rossiya \u2013 Iran: V Sirii i na Blizhnem Vostoke\u2019, [Russia-Iran: in Syria and the Middle East], Valdai, <\/em>3 July 2019, https:\/\/ru.valdaiclub.com\/a\/highlights\/rossiya-iran-v-sirii-i-na-blizhnem-vostoke\/<\/a><\/p>\n [v]<\/a> Author interviews with Russian military experts (conducted on conditions of anonymity), Moscow, June 2016, December 2021, March 2022.<\/p>\n [vi]<\/a> Souchkov, M. (2017), \u2018Iran\u2019s Khamenei has Three Main Messages for Putin\u2019, Al Monitor<\/em>, 3 November 2017, https:\/\/www.al-monitor.com\/originals\/2017\/11\/iran-khamenei-messages-russia-putin-summit-syria.html<\/a><\/p>\n [vii]<\/a> Motamedi, M. (2022), \u2018NATO would have eventually started Ukraine war: Khamenei to Putin\u2019, Al Jazeera<\/em>, 19 July 2022, https:\/\/www.aljazeera.com\/news\/2022\/7\/19\/russia-putin-meeting-iran-khamenei-and-raisi-tehran<\/p>\n [viii]<\/a> Interview with an Iranian diplomat, Doha, May 2022.<\/p>\n [ix]<\/a> Farsnews Agency (2023), \u2018Lead Negotiator: Iran Not Relying on West Based on JCPOA Experiences\u2019, 5 February 2023, https:\/\/www.farsnews.ir\/en\/news\/14011116000218\/Lead-Negiar-Iran-N-Relying-n-Wes-Based-n-JCPOA-Experiences<\/a><\/p>\n [x]<\/a> Zadorozhniy, M. (2022), \u2018Kakiye Perspektivy u Novogo Torgovogo Puti \u201cRossya \u2013 Iran\u201d\u2019, [What are the prospects for new trade route \u201cRussia \u2013 Iran\u201d], BFM, 24 December 2022, https:\/\/www.bfm.ru\/news\/515773<\/a><\/p>\n [xi]<\/a> Interviews with Russian experts on Iran (conducted on condition of anonymity). Moscow, December 2022.<\/p>\n [xii]<\/a> Tirone, J. and Motevalli, G. (2022), \u2018Russia, Iran Defy Western Sanctions By Building New Trade Route\u2019, Bloomberg<\/em>, 21 December 2022, https:\/\/www.bloomberg.com\/graphics\/2022-russia-iran-trade-corridor\/<\/a><\/p>\n [xiii]<\/a> Interviews with Russian experts on Iran (conducted on condition of anonymity). Moscow, December 2022.<\/p>\n [xiv]<\/a> Sovina, M. (2022), \u2018Iran Postavit Rossii 40 Gazovykh Turbin\u2019, [Iran will Supply Russia with 40 Gas Turbines], Lenta.ru, 23 October 2022, https:\/\/lenta.ru\/news\/2022\/10\/23\/turbiny\/<\/a><\/p>\n [xv]<\/a> PrimaMedia (2022), \u2018Vostok s Vostokom Vsegda Dogovoryatsya\u2019, [The East Will Always Come to Terms with the East], 23 December 2022, https:\/\/primamedia.ru\/news\/1423272\/<\/a><\/p>\n [xvi]<\/a> Arabnews (2023), \u2018Iran smuggles advanced drones to Russia for use in Ukraine: Report\u2019, 12 February 2023, https:\/\/www.arabnews.com\/node\/2249816\/middle-east<\/a><\/p>\n [xvii]<\/a> Kaleji, V. (2023), \u2018Iran\u2019s Purchase of Russian Fighter Jets Underlines Shifting Regional Geopolitics\u2019, Jamestown<\/em>, 13 February 2023, https:\/\/jamestown.org\/program\/irans-purchase-of-russian-fighter-jets-underlines-shifting-regional-geopolitics\/#:~:text=Some%20sources%20have%20alleged%20that,and%20Tehran%20regarding%20the%20purchase<\/a><\/p>\n [xviii]<\/a> CDU (2023), \u2018Na Fone Sanktciy Ukreplyaetsya Partnerstvo\u2019, [Sanctions Set the Context for Strengthening the Partnership], 10 January 2023, https:\/\/www.cdu.ru\/tek_russia\/articles\/11\/1082\/<\/a><\/p>\n [xix]<\/a> Smagin, N. (2022), \u2018Could a Russia-Iran Gas Partnership Bear Fruit?\u2019, Carnegie Endowment for International Peace, 28 November 2022, https:\/\/carnegieendowment.org\/politika\/88497<\/a><\/p>\n [xx]<\/a> Russia was able to offer faster delivery, more appealing discounts and was less risky in terms of sanction restrictions on oil supplies to China.<\/p>\n [xxi]<\/a> Reuters (2022), \u2018More Russian oil going east squeezes Iranian crude sales to China\u2019, Al Jazeera<\/em>, 19 May 2022, https:\/\/www.aljazeera.com\/news\/2022\/5\/19\/more-russian-oil-going-east-squeezes-iranian-crude-sales-to-china<\/a><\/p>\n [xxii]<\/a>\u00a0 Smagin (2022), \u2018Could a Russia-Iran Gas Partnership Bear Fruit?\u2019<\/p>\n [xxiii]<\/a> Chulov, M. (2023), \u2018Drones target Iranian weapons factory in central city of Isfahan\u2019, The Guardian<\/em>, 29 January 2023, https:\/\/www.theguardian.com\/world\/2023\/jan\/29\/drone-attack-hits-iran-ammunition-factory-reports<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Nikolay Kozhanov analyzes factors behind the recent shift in Russian-Iranian relations, including Ukraine, and potential obstacles to dialogue.<\/p>\n","protected":false},"author":166,"featured_media":20171,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[233,1834,1959],"tags":[],"class_list":["post-20170","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-geopolitical-transitions","category-iran"],"acf":[],"yoast_head":"\nRussia turns east<\/h3>\n
Russian-Iranian economic relations: a deep dive<\/h3>\n
![\"Graph](\"https:\/\/peacerep.org\/wp-content\/uploads\/2023\/04\/Russian-Iranian-Trade-graph-300x176.png\")
<\/a><\/p>\nLong road ahead<\/h3>\n
Paying a political price<\/h3>\n
\nAbout<\/h3>\n
References<\/h3>\n