IRAN and RUSSIA Neighbors without Borders

1
IRAN and RUSSIANeighbors without Borders

• Abbas Maleki
• maleki_at_caspianstudies.com
• Presented at
• Polish-Iranian Roundtable
• IPIS, Tehran
• April 19, 2005

2
Introduction

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

3
Russia The Biggest Country in the World
4
Russia at a glance

• 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)

5
Iran at a glance

• 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)

6
International Level

• World New Order
• NATO expansion to the East
• UN Security Council
• Nuclear Issue
• Asian Identity
• North-South Corridor

7
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
• Caspian Sea Legal Regime
• ECO

8
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
• Nuclear Technology
• Air Space Technology
• Energy
• -Electricity
• -Oil and Gas
• Defense Cooperation
• Missile Defense Systems

9
Provincial Level

• Connections between Iranian provinces and Russian
  Federations Republics
• -Gilan and Astrakhan
• -East Azerbaijan and Dagestan
• -Kerman and Moscow

10
Soviets Foreign Policy

• Soviets Foreign Policy was the conclusion of
  interaction between national interests and
  Communism ideology
• Marx Proletariat doesnt 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

11
Russias Foreign Policy (1)

• 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

12
Russias Foreign Policy (2)Schools of Thoughts

• 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
• Kozyrovs Followers Assertive
  to the West
• Liberal Politicians Civilized
  dialogue both with
• the West and CIS

13
Russias Foreign Policy (3)Schools of Thoughts

• Eurasianists
• Response to the Westerners.
• Focus on Russians Geopolitics
• TWO GROUPS
• -The Democratic Version (Reformists)
• -The Slavophil Version
• Derzhavniki (National Power)

14
Countries with Oil Reserves gt1 bill. t and
Strategic Ellipse
15
Oil Proved Reserves
16
US behavior impacts on Iran and Russia

• United States is the worlds 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.

17
Russias 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 MemberRussia a non-OPEC

• 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 Russias share in global oil
  markets is at the expense of OPEC.
• But OPEC and Russia have sought Moscows
  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.

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Hurdles of Cooperation between Iran and Russias
oil and gas sectors

• Major oil and gas industries in Russia has been
  largely privatized.
• 5 companies have 70 of countrys 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.

20
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.

21
Agreements among 5 Littoral States

• 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.

22
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

23
Relations with China

• Chinas Asymmetric Deterrence China with
  modernized military is ready to fight along its
  border without permit the third party to
  intervene.
• Instability inside China Socio-economic crisis
  in Northern part of China causes vast emigration
  to Russia
• Islamic Fundamentalism Xinjiang independence
  should be a bed for Islamic fundamentalism and a
  copy for Central Asia.
• Future of Relations Russians dont 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.

24
Differences

• Caspian Sea Legal Affairs
• Military presence in Caspian Sea
• Interactions with US, Israel
• The possibility of Russo-Iranian cooperation in
  the oil sector is remote.

25
Conclusions (I)

• 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.

26
Conclusions (II)

• Iran could join to Shanghai Cooperation
  Organization
• Two countries benefit from keeping prices at a
  certain level (roughly between 25-30).
• OPECs policy of reduced production benefits
  Russia by keeping prices high and enabling Moscow
  to sell more of its oil.
• Irans share of the worlds proven reserves
  (11.4) higher than Russia (6), encourages
  Russian companies to invest in Iran.
• Irans Transportation network is complimentary of
  Russian system and can support more oil
  production in Russia.

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Conclusions (III)

• NorthSouth 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.