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IRAN and RUSSIA

Abbas Maleki

Relations after Cold WAr

maleki@caspianstudies.com

IPIS
Feb. 26, 2008

Introduction

Iran and Russia: Their relations and its impacts on 4 levels -International -Regional -Bilateral -Provincial Conclusions

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Russia: The Biggest Country in the World

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Russia at a glance
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Population: 143.2 million (UN, 2003) Capital: Moscow Major language: Russian Major religions: Christianity, Islam Life expectancy: 61 years (men), 73 years (women) (UN) Monetary unit: 1 ruble = 100 kopecks Main exports: Oil and oil products, natural gas, wood and wood products, metals, chemicals, weapons and military equipment GNI per capita: US $2,130 (World Bank, 2002)

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Iran at a glance
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Population: 68.9 million (UN, 2003) Capital: Tehran Area: 1.65m sq km (636,313 sq miles) Major language: Persian Major religion: Islam Life expectancy: 69 years (men), 72 years (women) (UN) Monetary unit: 10 Iranian Rials = 1 Toman Main exports: Petroleum, carpets, agricultural products GNI per capita: US $1,720 (World Bank, 2002)
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International Level
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World New Order NATO expansion to the East UN Security Council Nuclear Issue Asian Identity North-South Corridor

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Regional Level

Symmetric Interests in Central Asia
-Tajik Civil War

Asymmetric interests in Caucasia
-Nagorno-Karabakh Conflict -Chechnya

Bi-polar Roles in Afghanistan
-Northern Alliance

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Caspian Sea Legal Regime ECO
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Bilateral Level

Economic Relations

Non-military ties are not more than $800 millions in 2004

Educational and Scientific ties
Launching Satellite Assembling airplanes, textiles, heavy industries Pharmaceutical, Biotechnology, Polymers

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Nuclear Technology Air Space Technology Energy
-Electricity -Oil and Gas

Defense Cooperation
Missile Defense Systems
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Provincial Level

Connections between Iranian provinces and Russian Federation’s Republics:
-Gilan and Astrakhan -East Azerbaijan and Dagestan -Kerman and Moscow

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Soviet’s Foreign Policy
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Soviet’s Foreign Policy was the conclusion of interaction between national interests and Communism ideology Marx: Proletariat doesn’t have the country. From 1947, Soviet competition with US: -Cold War -Peaceful Coexistence -Detent -Deterrence Gorbachev and Regan meeting in Iceland, 1986: -2 superpowers nuclear weapons reduction -Soviet economic deterioration

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Russia’s Foreign Policy (1)
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1992-1996: Full coordination with US, idealism and democracy 1996-2000: Strategic alliance with China and India, focus to Asia, Middle East 2000-Sep. 20001: Eurasianism Sep. 2001-now: acceptance of unipolar system
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Russia’s Foreign Policy (2) Schools of Thoughts

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Westerners (Atlanticism):

Andrea Kozyrov (Aug. 1991-Dec. 1992) Jion to Democratic Club, Cooperation with EU, NATO, IMF, WB, OECD, G7 Reduction of relations with Near Abroad TWO GROUPS: Kozyrov’s Followers: Assertive to the West Liberal Politicians: Civilized dialogue both with the West and CIS

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Russia’s Foreign Policy (3) Schools of Thoughts

Eurasianists Response to the Westerners. Focus on Russian’s Geopolitics TWO GROUPS: -The Democratic Version (Reformists) -The Slavophil Version Derzhavniki (National Power)
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Countries with Oil Reserves >1 bill. t and Strategic Ellipse

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Oil Proved Reserves
At end 2002 At end 2003

Proved reserves

Thousands million barrels

Thousands million barrels

Share of total

R/P ratio

Russian Federation Iran Total World

67 130.7 1146.3

69.1 130.7 1147.7
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6.00% 11.40% 100.00%

22.2 92.9 41
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US behavior impacts on Iran and Russia

United States is the world’s largest energy producer, consumer, and importer as respectively 7.45, 20.07, 12.85 mbd US various sanctions on Iran like ILSA May 2002 Summit between Bush and Putin: Signing an agreement on “Energy Partnership”.
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Russia’s Policies after 9/11
-Each country has its specific terrorists -Russian long-term Cooperation with US in energy market -New Terminals in Murmansk, Primorsk,
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Iran: an OPEC Member Russia: a non-OPEC
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Iran is obliged to OPEC share and therefore is avoiding flooding the market with its oil. Russia is not obligated to abide by any quota system. Russia as a non-OPEC producer, has produces and export more of its oil since the late 1990s and most of the increase in non-OPEC production has come from Russia This surge in Russia’s share in global oil markets is at the expense of OPEC. But OPEC and Russia have sought Moscow’s cooperation. -To restrain production to a certain level to prevent a collapse of oil prices -The investment in Siberia was very high -Russian oil companies wanted to recover market shares lost since the demise of the Soviet Union. Russia cut only 150,000 bd in the first quarter of 2002. Iran & Russia, Maleki 18

Hurdles of Cooperation between Iran and Russia’s oil and gas sectors: industries in Russia has been largely Major oil and gas
privatized. 5 companies have 70% of country’s oil production: Yokus, LUKoil, Surgutneftegaz, TNK and Sibneft. All of Iranian oil and gas companies are SOEs. Mergers like TNK-BP means more barriers for Russian companies for investing in Iran. Production costs are much higher in Russia than in Iran. Iran makes money at $10 per barrel, but production becomes unprofitable for Russian companies at this low price.
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Caspian importance for US

Caspian is not important for US as it was before 11/9 -War against terrorism -The change in US strategy in the region from political-economic to security-military approach -The importance of countries with strong ability to fight against terrorism instead of rich energy countries.

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Agreements among 5 Littoral States
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The Convention on Environment was signed in November 2003 in Tehran. Consensus over transportation as 1940 agreement says The different agreement on species of the Caspian, 50% of sturgeon trade is for Iran The next summit will be in Iran in 2006?? 14 round of negotiations among littoral states Several bilateral, trilateral discussions.
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PIPELINE ROUTES: AN IMPRESSION
Bottlenecks and Pipelines  11 oil pipeline projects/ 6 operational  6 natural gas pipeline projects/2 operational.  Of particular notice:  CPC  BTC  TCP
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Relations with China

China’s Asymmetric Deterrence: China with
Northern part of China causes vast emigration to Russia

modernized military is ready to fight along its border without permit the third party to intervene.
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Instability inside China: Socio-economic crisis in Islamic Fundamentalism: Xinjiang independence
should be a bed for Islamic fundamentalism and a copy for Central Asia.

Future of Relations: Russians don’t know Chinese

tendency after economic growth and solving Taiwan problem: -Shift to the South, no threats on Russian borders -Shift to the North, tension increases in China-CIS borders.

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Differences
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Caspian Sea Legal Affairs Military presence in Caspian Sea Interactions with US, Israel Iran’s Nuclear file Energy Security concerning Supply to Europe

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Conclusions (I)
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Russia wants to have good relations with Islamic countries. Iran is frontier of Islamic countries. Iran is eager to show to the US, Policies such ‘regime change’ is not working. The large hydrocarbon reserves can be used as a basis for either cooperation or rivalry between Russia and Iran. Iran-Russia energy policies should not be seen in zero-sum terms. More cooperation between two countries means enhancing global energy security. Both countries are heavily dependent on oil revenues Both countries are dangerously vulnerable to the fluctuations of oil prices.
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Conclusions (II)
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Iran could join to Shanghai Cooperation Organization Two countries benefit from keeping prices at a certain level (roughly between $25-30). OPEC’s policy of reduced production benefits Russia by keeping prices high and enabling Moscow to sell more of its oil. Iran’s share of the world’s proven reserves (11.4%) higher than Russia (6%), encourages Russian companies to invest in Iran. Iran’s Transportation network is complimentary of Russian system and can support more oil production in Russia.
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Conclusions (III)
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North–South Corridor should embrace new members Partnership on gas industries between the first and second gas owners: Iran has huge underexplored and unused gas deposits. Russia has the technological skills and expertise to develop them.

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