IRAN and RUSSIA
Neighbors without Borders
Abbas Maleki
maleki@caspianstudies.com
Presented at
Polish-Iranian Roundtable
IPIS, Tehran
April 19, 2005
Introduction
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Iran and Russia: Their relations and its impacts
on 4 levels
-International
-Regional
-Bilateral
-Provincial
Conclusions
Iran & Russia, Maleki
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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
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Symmetric Interests in Central Asia
-Tajik Civil War
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Asymmetric interests in Caucasia
-Nagorno-Karabakh Conflict
-Chechnya
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Bi-polar Roles in Afghanistan
-Northern Alliance
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Caspian Sea Legal Regime
ECO
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Bilateral Level
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Economic Relations
Non-military ties are not more than $800 millions
in 2004
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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
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Defense Cooperation
Missile Defense Systems
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Provincial Level
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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):
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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
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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
67
69.1
6.00%
22.2
Iran
130.7
130.7
11.40%
92.9
Total World
1146.3
1147.7
100.00%
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US behavior impacts on
Iran and Russia
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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.
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Hurdles of Cooperation between Iran
and Russia’s oil and gas sectors:
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Major oil and gas industries in Russia has been largely
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
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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
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China’s Asymmetric Deterrence: China with
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
Northern part of China causes vast emigration to Russia
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Islamic Fundamentalism: Xinjiang independence
should be a bed for Islamic fundamentalism and a copy for
Central Asia.
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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
The possibility of Russo-Iranian
cooperation in the oil sector is
remote.
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Conclusions (I)
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6.
7.
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 zerosum 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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