With the Russian food embargo, which prohibits the import of food from the United States, engendered by U.S. imposed sanctions on Russia, it is no wonder Russia’s economy has been in a continued state of recession. Moreover, with Russia’s most profitable export being oil and natural gas, it would make sense that a decrease in global oil prices would affect Russia economically to a greater extent.
Considering these factors, it would seem as though the Iran Nuclear Deal, which Russia has so ardently supported, would effectuate a rivalry between Iran and Russia. Yet this is not the case. The bilateral relationship between Iran and Russia seems to be, if anything, solidifying. During 2010, Russia and Iran signed a contract that entailed an Iran that would supply oil to Russia, in return for certain goods. Today, RT reported that Russia plans to
“…buy ‘much lower than 500,000 barrels day’ in exchange for cash, which Iran will then spend on Russian goods such as steel, wheat and oil byproducts…”
In addition, aside from bolstering one another in the energy division, Russia has helped Iran militarily. It was reported on August 10, 2015 that Russian warships had docked in northern Iran for naval training exercises. Since then, Fox news has reported that Russia has appeared to
“…proceed with the sale of advanced s-300 surface-to-air missiles to the country — in a development triggering objections from the Obama administration.”
The relationship also makes geographical sense. Since Iran and Russia are in close proximity to one another, it is prudent that they strengthen their ties. Russia’s firm stand on the lifting of sanctions is economically smart considering that the relief will allow for the lifting of the oil embargo. Russian Minister of Energy Aleksandr Novak has commented on the Russian and Iran oil-for goods agreement, reported by RT.
“Russia’s participation in the construction of power stations in Iran and the joint development of oil fields are seen in the context of increasing bilateral trade, and the possibility of expanding the presence of Russian companies in the Iranian market…”
Furthermore, Iran Daily has commented on Russia and Iran’s plan to “boost banking relations” stating that:
“Central bank of Iran (CBI) has agreed to open rile accounts for a number of Russian banks… Since Russia has been sanctioned by the west, Iran has the potential to become a major partner for Moscow… Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials… Russia already has a currency swap agreement with China, which could potentially lessen the US dollar’s influence on the global energy and other markets.”
It is apparent Russian President Vladimir Putin is strategically utilizing his geographic advantage and bilateral agreement to make for a more influential relationship. Considering that Iran is part of the GECF (Gas Exporting Countries Forum), its role in exporting oil to European nations has been set. As reported by Press TV:
“Iran and the European Union have already engaged in negotiation that involved in several options for the export [of gas] to the European Union… Of course, this does not mean that Iran intends to substitute Russia for its exports to Europe,” Adeli has been quoted as saying by Sputnik news service… He added that Russia remained the main gas supplier to Europe, but noted that Iran could partially meet the growing EU energy demands both through pipeline supplies and liquefied natural gas deliveries.”
With this taken into account, there is one aspect of the deal that is certain, the Russian and Iranian relationship will strengthen. As Russia is China’s main importer of oil, it is apparent that the European nations have depended on one another for the majority of imports. Russia’s main importer is China, followed by two other European nations. China’s main importer is South Korea, with two Asian countries following. The main importers of the United States are China, Canada and Mexico in descending order. Which is wise, considering that the two countries are geographically closer. The economy of Japan receives the majority of its import from China, and following is the United States. The import strategy of both Russia and the United States is advantageous in respect to geography, along with China having shifted its attention on oil imports from Iran and Saudi Arabia to Russia, it is likely that the relationship between Russia and Iran, and the relationship between Russia and China is becoming economically more profitable, yet politically more contentious, in a global respect.
And that is precisely why Russia isn’t working up a sweat.
