Russian-Iranian political relations and the views they share on many foreign policy issues have been much closer in the past decade than their economic ties.
President Putin’s recent visit to Tehran was well-timed and highly important for several reasons. The last visit by the Russian head of state to Iran was in 2007, when Putin attended the Second Caspian Summit. The situation around Iran and Russia and in the world as a whole has changed over the past eight years. Sanctions had been wearing Iran’s economy and people out, until a solution was mapped out in the 2015 Vienna agreement.
Iran values Russia’s contribution to the efforts of the P5+1 group of international mediators to settle the Iranian nuclear issue.
While Iran’s relations with the West improved, Russia-West tensions have grown dramatically, and the situation in the Middle East has deteriorated, in particular over ISIS terrorist operations. It is crucial for Russia and Iran to maintain Syria’s integrity, sovereignty, and the principle of the legitimacy of power, with the government being changed exclusively by legitimate means.
Officially, Putin went to Tehran for the third summit of the Gas Exporting Countries Forum. But considering his intensive meetings with President Hassan Rouhani and Supreme Leader Ali Khamenei, the packed agenda of the talks between high-level Russian and Iranian delegations, and the variety of agreements that have been signed as a result, his visit can be better described as a summit meeting.
The sides have discussed a wide range of political, geopolitical and economic issues. Putin has pointed to the importance of coordinating efforts with Iran in regards to Syria and joining forces to prevent the expansion of ISIS and to fight its terrorist activity, which threatens the national security of both Iran and Russia.
Economic cooperation was high on the agenda of the talks. At the 12th meeting of the permanent intergovernmental commission, which was held in Moscow ahead of Putin’s visit to Tehran, the sides reached agreement on many aspects of bilateral cooperation, including such high-tech sectors as space exploration. Last spring, the Russian president removed the ban on the shipment of the S-300 air defense systems to Iran, leading the way for Russia to begin deliveries of its advanced modification in late November.
Intergovernmental ties between Iran and Russia have grown noticeably stronger over the past two years. Moreover, Russian-Iranian political relations and the views they share on many foreign policy issues have been much closer in the past decade than their economic ties. Bilateral trade has plummeted over the past two years to barely $1 billion, along with investment cooperation. If Russia and Iran manage to strengthen their economic ties, this will give a new life to their short-term and strategic cooperation. Iran used to be a major buyer of Russian industrial goods and technical services, unlike many other countries that limited their Russian imports to oil and gas.
Before going to Tehran, President Putin signed an executive order to lift the ban on the delivery of materials and technology to Iran’s Fordo fuel enrichment plant and the import of enriched uranium from it. As sanctions against Iran are lifted or softened, Russian companies can resume their suspended projects and expand their involvement in international energy projects in Iran.
Russia and Iran, which are oil and gas exporting countries, should coordinate their delivery routes under joint projects or within the framework of joint ventures. These issues have been discussed in Moscow and Tehran, namely the shipment of Iranian gas to Pakistan, Iran’s participation in the Trans-Anatolian Natural Gas Pipeline (TANAP) project and Turkish routes, oil swap deals, and so on. The sides have also discussed oil prices and the effect the return of Iranian oil to the global market may have on them. Unlike Western experts, the majority of Russian analysts think the increase of Iranian oil exports by 0.5-1.0 million barrels per day will not collapse the oil market, which has shrunk mostly due to falling demand from importing countries. Some experts even say that the return of Iranian oil will stabilize the legal oil market.
Several months ago, Iran started exporting agricultural products to Russia, a development which is important in view of Russia’s ban on Western food imports. Russia and Iran are discussing additional important issues, including their participation in the North-South and other transport corridors, railway and highway projects, and possibly China’s Silk Road Economic Belt project. This can not only bring bilateral trade back to the pre-sanctions level of $4-$4.5 billion, but also increase it further, perhaps several times over, especially through closer research and military-technical cooperation.