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Backgrounders

02.09.2008

Russian-Iranian Relations
The Russian-Iranian relationship is anchored firmly in the respective countries’ perceptions of national self-interest and their desire to challenge the
independence and sovereignty of their neighbors. Iran and Russia are expanding their energy ties. Russia's giants, Gazprom and LUKoil, are involved in Iran's
oil and gas projects and, most likely, will engage further in joint projects despite the fact that the two countries are, to some extent, each other's
competitors for alternative energy routes in the region. With the issue of the North Atlantic Treaty Organization's (NATO's) eastward expansion on every
one's mind, Russia and Iran have found a geostrategic common denominator in the Caspian that, from Iran's point of view, binds Moscow and Tehran to the
extent that Moscow might be willing to accommodate Iran on the thorny issue of legal ownership, perhaps more than in the past. [1]

Furthermore, an energy axis between Russia and Iran could eventually lead to the establishment of a gas monopoly like OPEC. This would have a profound
impact on strategic equations in the region. Russia is keen on directing Iran’s gas exports to Asia and keeping the European market for itself. [2]

he Iranians have given the Russians sizeable sums to support development of the Bushehr nuclear reactors, and have committed at least $700 million for
conventional armaments. In return, Russia has blocked international sanctions tied to Iran’s nulear programme, and supported the Iran-India oil pipeline. [3]
On December 25, Iran signed a contract with Russia for the delivery of advanced S-300 air defense missile systems to Iran. An advanced version of the S-300
missile system, called S-300PMU1 (SA-20 Gargoyle), has a range of over 150 kilometers (about 100 miles) and can intercept ballistic missiles and aircraft at low
and high altitudes, making this system an effective tool for warding off possible air strikes on Iran. Russia earlier supplied Iran with 29 Tor-M1 air defense
systems under a $700-million contract signed in late 2005. [4]

Economic relations

● The Russian ambassador to Iran, Alexander Sadovnikov, told the official IRNA news agency on August 24 that Moscow won't support a new round of
U.N. Security Council sanctions against Iran. [5]

● On August 6, 2008, Russia denied having agreed with the US, UK and other countries to push for another round of economic sanctions against Iran
at the UN. Vitaly Churkin, Russia’s ambassador to the UN, said there had been “no firm agreements or understandings”. [6]

● In July 13, 2008, Gazprom's Chief Executive Alexei Miller met with Ahmadinejad and signed an agreement tor develop Iranian oil and gas fields. Iran,
according to the agreement, offered Gazprom an extended package for the development of oil and gas fields; construction of refineries; transfer of oil
from the Caspian Sea to the Sea of Oman; development of Iran's North Azadegan oil field; exchange of technology and experience; and the possible
participation of Gazprom in the planned pipeline between Iran, India and Pakistan. The accord also includes the future formation of a joint company
between the two countries, for cooperation in oil and gas. [7]

● On May 13, 2008, Ahmadinejad said he thought relations with Moscow would continue to develop following the inauguration of Dmitri Medvedev as
Russian president May 7. [8] On April 30, 2008, National Security Council Acting Secretary Valentin Sobolev said: “[...] Russia confirms the principles of
relations [with Iran] and its policy doesn’t depend on who is in power today." [9]

● On August 28, 2008, Medvedev said that talks with Iran regarding its nuclear programme must go on. At Medvedev's initiative, the two leaders
discussed the Iranian nuclear programme in Dushanbe, where they were attending a Shanghai Cooperation Organisation meeting. [10]

● Russia has agreed to strengthen Iran’s military muscle. Following his talks in Tehran in December 2007, head of the Russian Federal Service for Military
and Technical Cooperation (FSMTC) Mikhail Dmitriyev said defense ties between the two countries “reinforce stability in the region.” [11]

● Consolidation of strategic ties between Russia and Iran was one of the most significant events in 2007. A breakthrough came when Vladimir Putin
visited Tehran in October 2007, becoming the first Russian leader since Joseph Stalin to set foot on Iranian soil. Russia moved to upgrade bilateral
relations with Iran across the board. [12]

● In August 1995, Russia and Iran signed a 10-year contract under which Russia would supply nuclear fuel for the Bushehr plant. [13] Some Western
experts pointed out that the design of the Bushehr reactor allowed it to make weapons-grade nuclear materials. Under the contract terms, Russia
was to train the staff of the power plant which meant that Russia transferred know-how and expertise thus accelerating Iran's nuclear research. [14]
In January 2008, Iran received the final shipment of uranium fuel from Russia for the Bushehr nuclear power plant. [15]

● After the war, especially with the fall of the USSR (and the death of Ayatollah Khomeini), Tehran-Moscow relations witnessed an increase in diplomatic
and commercial relations, especially Iranian weapons purchases from Russia.
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● Relations between Russia and Persia (pre-1935 Iran), officially commenced in 1592 during the reign of the Safavid dynasty.

Trade between Russia and Iran

● For Russia, Iran is a regional power and an important trade partner. Russia needs Iran, for arms sales, as well as maintaining the security of Russia’s
southern borders; Iran needs Russia for military equipment, energy security and political protection at the U.N. and IAEA.

● Russia has increased military shipments to Iran and further complicates efforts to impose punitive sanctions against Tehran for its alleged pursuit of
nuclear weapons. [16]

● Iranian reports announce that the two countries were discussing 130 economic projects worth over $100 billion and aimed at boosting bilateral trade
from the current $2 billion to $200 billion in the next 10 years. Russia and Iran hold between them about 20 per cent of the global oil reserves and 42
per cent of natural gas. Russian oil and gas companies are already involved in Iranian hydrocarbon projects, and at its December 13, 2007 meeting in
Moscow, the Russian-Iranian trade commission discussed plans to set up a joint gas venture to explore deposits in the Persian Gulf and Central Asia.
[17]

● On February 20, 2008, Gazprom Chairman Alexei Miller held talks in Tehran with Iranian Oil Minister Gholam-Hossein Nozari. While little was released
about the meeting, the pair agreed to increase Russian involvement in developing Iran's massive South Pars and North Kish offshore gas fields in the
Persian Gulf. They also agreed to Russia laying oil and natural gas pipelines. Further agreement was apparently reached on mutual cooperation in the
oil and gas sectors in the Caspian Sea. Gazprom also agreed to build a gas reservoir in Iran as well as a refinery in Armenia. Moving swiftly ahead, the
two sides agreed to hold expert-level meetings and sign agreements within the next two months. [18]

● Gazprom is now poised to begin development of two to three additional blocks of South Pars, the world's largest gas condensate deposit, estimated
to hold 450 tcf in reserves. The massive South Pars project consists of 24 phases of development and by 2014 is projected to produce 751 million
cubic meters per day. Gazprom's agreement with Iran reportedly includes exploration, development, transportation, processing and marketing. [19]

● On December 16, 2007, Russia shipped the first consignment of uranium fuel to Bushehr. In the last days of 2007, a second batch of fuel rods was
delivered to the Iranian plant. [20]

● Trade between Russia and Iran more than doubled in January-September 2007 to $2.2 billion. [21]

● Sergei Mironov, Chairman of the Russian Federation Council, stated that, “Throughout recent years, Iran has steadfastly expressed solidarity with
Russia and has spoken together with us on many global and regional issues, including inter-Tajik, Afghan and Iraqi settlements, as well as
strengthening the UN’s role in international affairs”. [22]

● Iran values its relationship with Russia, in terms of energy, defence and regional security issues, dubbing Russia a “strategic neighbour”. [23]

● In 2005, Russia was the seventh largest trading partner of Iran, with 5.33% of all exports to Iran originating from Russia. [24]

● The value of arms transfer agreements between Iran and Russia increased from $300 million between 1998 and 2001 to $1.7 billion between 2002
and 2005.

● Russian exports to Iran last year -- mostly conventional weapons, military equipment and cars -- reached $1.9 billion. [25]

● After China and India, Iran is the third largest buyer of Russian arms: between 1991-2002, Iran bought some $3.6 billion worth of Russian
military equipment, some 54% of Iran’s total arms imports during the period. [26]

● ran has announced a massive rearmament programme, spending $1 billion per year over the next 20-25 years. At the current rate of expenditure this
could amount to $300 million per year which, spread over 25 years, would mean Iran would import Russian weaponry worth $7.5-$8 billion at current
prices. With Russia's arms exports running at around $5bn a year, this is a market, which the Russian government, and its military industry, would not
want to lose. [27]

● Since 1992, Russia has sold Iran hundreds of major weapons systems, including 20 T-72 tanks, 94 air-to-air missiles, and a handful of combat aircraft
such as the MiG-29. [28]

● Late last year (2007), Russia agreed to sell Iran a $700 million surface-to-air missile defense system (SA-15 Gauntlet) along with thirty TOR M-1 air-
defense missile systems, ostensibly to defend its soon-to-be-complete, Russian-built nuclear reactor at Bushehr. Those 30 air-defense missile systems
were delivered to Iran in January 2007. [29]

● During its month-long war with Hezbollah last summer, Israel found Russian-made anti-tank weapons, including RPG-29s, which proved highly effective
against Israel’s Merkava tanks. [30] Russian officials first denied that those were Russian weapons, but finally agreed there could be a possibility that
Syrian officers would have sold them to Hezbollah. [31]

● The work at Bushehr is worth $800 million to Russia and provides profitable and useful employment for approximately 1,500 CIS citizens on site with a
further 20,000 employed inside Russia itself, keeping 300 Russian firms in business. [32]

References

[1] Afrasiabi, Kaveh L.: „Iran homes in on the Caspian,“ Asia Times Online, April 17, 2008, http://www.atimes.com/atimes/Central_Asia/JD17Ag01.html

[2] Radyuhin, Vladimir: „Russia-Iran ties on the upswing,“ The Hindu, January 7, 2007, Generated by www.PDFonFly.com at 11/14/2009 8:48:42 AM
URL: http://www.realite-eu.org/site/apps/nlnet/content3.aspx?c=9dJBLLNkGiF&b=2315291&ct=5868921
http://www.thehindu.com/2008/01/07/stories/2008010762321000.htm
[3] Chorin, Ethan: „Mutually Assured Ambivalence,“ Center for Strategic and International Studies, May 3, 2008, http://forums.csis.org/iran/?p=50

[4] "Russia to sell advanced air defense systems to Iran,“ RIA Novosti, December 26, 2007, http://en.rian.ru/world/20071226/94238985.html

[5] „Syria, Iran wam to Russia as U.S. tensions grow,“ Associated Press, August 27, 2008, http://www.iht.com/articles/ap/2008/08/27/africa/ME-Mideast-
Russia-Fallout.php

[6] Fidler, Stephen: „Russia denies sanctions deal after Iran snub,“ Financial Times, August 6, 008, http://www.ft.com/cms/s/0/50f4fc7e-63e8-11dd-844f-
0000779fd18c.html

[7] „Iran and Russia sign major oil deal,“ Media Line News Agency, July 14, 2008, http://www.jpost.com/servlet/Satellite?
cid=1215330962516&pagename=JPost/JPArticle/ShowFull

[8] „Iran´s president says ties with Russia set to grow further,“ RIA Novosti, May 13, 2008, http://en.rian.ru/world/20080513/107272696.html

[9] „Russia To Maintain Continuity in Relations with Iran,“ Kommersant, April 30, 2008, http://www.kommersant.com/p-12436/r_527/Iran_continuity/

[10] „Russia's Medvedev says Iran nuclear talks must go on,“ Reuters, August 28, 2008, http://uk.reuters.com/article/worldNews/idUKLS59356620080828

[11] Radyuhin, Vladimir: „Russia-Iran ties on the upswing,“ The Hindu, January 7, 2007,
http://www.thehindu.com/2008/01/07/stories/2008010762321000.htm

[12] Ibid.

[13] http://www.nti.org/db/nisprofs/russia/exports/rusiran/react.htm

[14] Hmelik, Natalya: „Russia’s Special Relationship With Iran’s Mullahs,“ Global Politician, March 27, 2006, http://www.globalpolitician.com/21690-russia-iran

[15] „Iran receives final shipment of uranium fuel from Russia for nuclear plant,“ Associated Press, January 28, 2008,
http://www.iht.com/articles/2008/01/28/africa/iran.php

[16] Beehner, Lionel: „Russia-Iran Arms Trade,“ Council on Foreign Relations, November 1, 2006,
http://www.cfr.org/publication/11869/russiairan_arms_trade.html

[17] http://www.cfr.org

[18] Daly, John C.K.: „Analysis: Russia, others eye Iran ties,“ United Press International, February 29, 2008,
http://www.upi.com/International_Security/Energy/Analysis/2008/02/29/analysis_russia_others_eye_iran_ties/8784/

[19] Radyuhin, Vladimir: „Russia-Iran ties on the upswing,“ The Hindu, January 7, 2007,
http://www.thehindu.com/2008/01/07/stories/2008010762321000.htm

[20] „Russia-Iran trade doubles to $2.2 bln in 9M07 – official,“ RIA Novosti, December 13, 2007, http://en.rian.ru/russia/20071213/92206175.html

[21] “Russia, Iran have ‘unique’ co-operation potential, Speaker Mironov tells Majlis”, BBC Monitoring , December 12, 2004

[22] M Belen’kaya, “Iranskiy Gorbachev’ v Moskve,” Nezavisimaya Gazeta, March 13, 2001

[23] „Trade with Russia up,“ IranMania, December 25, 2003, http://www.iranmania.com/News/ArticleView/?NewsCode=20922&NewsKind=Business+%
26+Economy

[24] Interfax news agency reports.

[25] M Kenzhetayev, “VTS Rossii so stranami Blizhnego Vostoka i Srednego Vostoka,” Yadernyy Kontrol’, No 1 (71), Summer 2004, Vol 10, p. 140.

[26] Ibid, p. 143

[27] http://www.cfr.org

[28] „Russia fulfils Iran missile deal,“ BBC News, January 23, 2007, http://news.bbc.co.uk/2/hi/middle_east/6289981.stm

[29] http://www.cfr.org

[30] „Russian minister says Russia, Israel have settled differences over Hezbollah arms,“ Associated Press, October 20, 2006,
http://www.iht.com/articles/ap/2006/10/20/europe/EU_GEN_Russia_Israel_Hezbollah.php

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