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IRAN and RUSSIA Neighbors without Borders

IRAN and RUSSIA Neighbors without Borders. Abbas Maleki maleki@caspianstudies.com Presented at Polish-Iranian Roundtable IPIS, Tehran April 19, 2005. Introduction. Iran and Russia: Their relations and its impacts on 4 levels -International -Regional

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IRAN and RUSSIA Neighbors without Borders

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  1. IRAN and RUSSIANeighbors without Borders Abbas Maleki maleki@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 Iran & Russia, Maleki

  3. Russia: The Biggest Country in the World Iran and the North, Abbas Maleki

  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) Iran & Russia, Maleki

  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) Iran & Russia, Maleki

  6. International Level • World New Order • NATO expansion to the East • UN Security Council • Nuclear Issue • Asian Identity • North-South Corridor Iran & Russia, Maleki

  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 Iran & Russia, Maleki

  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 Iran & Russia, Maleki

  9. Provincial Level • Connections between Iranian provinces and Russian Federation’s Republics: -Gilan and Astrakhan -East Azerbaijan and Dagestan -Kerman and Moscow Iran & Russia, Maleki

  10. Soviet’s Foreign Policy • 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 Iran & Russia, Maleki

  11. Russia’s 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 Iran & Russia, Maleki

  12. Russia’s 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: Kozyrov’s Followers: Assertive to the West Liberal Politicians: Civilized dialogue both with the West and CIS Iran & Russia, Maleki

  13. 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) Iran and the North, Abbas Maleki

  14. Countries with Oil Reserves >1 bill. t and Strategic Ellipse Iran & Russia, Maleki

  15. Oil Proved Reserves Iran & Russia, Maleki

  16. 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”. Iran & Russia, Maleki

  17. 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, Iran & Russia, Maleki

  18. 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 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

  19. Hurdles of Cooperation between Iran and Russia’s oil and gas sectors: • 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. Iran & Russia, Maleki

  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. Iran & Russia, Maleki

  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. Iran & Russia, Maleki

  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 Iran & Russia, Maleki

  23. Relations with China • China’s 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 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. Iran and the North, Abbas Maleki

  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. Iran & Russia, Maleki

  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. Iran & Russia, Maleki

  26. Conclusions (II) • 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. Iran & Russia, Maleki

  27. Conclusions (III) • 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. Iran & Russia, Maleki

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