Russia and Iran, which was officially called Persia before 1935, established diplomatic relations back in the 15th century. The two countries have gone through different periods since then, with better relations giving way to worse ones, and contentions and animosity replacing cooperation.

Relations between Moscow and Teheran warmed noticeably in the final years of the Soviet Union. A weighty contribution to this was made by the 1990 visit to Moscow of the then speaker of the Iranian parliament, Ali Akbar Hashemi Rafsanjani. However, the icy relations only melted after the Soviet Union’s collapse and after Moscow reduced its global claims. There was more mutual understanding between the two countries and cooperation unfolded in politics, in culture and in the economy. This was the most dramatic change to take place in Iranian-Russian relations over the span of several centuries. The two countries stopped viewing each other as a threat and recognized some common dangers facing both of them.

THE FORMAT AND SIGNIFICANCE OF COOPERATION

Over the past fifteen years the Islamic Republic of Iran, whose foreign policy has been characterized by a realistic approach, attached significance to its relations with Russia. This relationship is acquiring a new quality, since Iran has begun to see military and economic ties with Russia as an opportunity to make up for complex relations with the West. Iran is seeking to regain the position of a powerful state that stands between Russia and Europe (the West) that it had in the 19th century. This time, however, the U.S. occupies Europe’s former place on the political chessboard and Iran is no longer the passive pawn that it used to be.

Yevgeny Primakov, who became Russian prime minister in 1998, dispelled the remainder of Moscow’s doubts as to the importance of working relations with Teheran. Russia abandoned its exclusively pro-Western orientation, which was typical of its policies after the Soviet Union’s collapse.

When Russian President Vladimir Putin came to power, a vision of the panorama encompassing the West and the East, including cooperation with Iran, became an indisputable feature of Russia’s foreign policy. Teheran, with its huge influence in the Islamic world, can be a valuable partner for Moscow that shows a willingness for rapprochement with the Islamic community and has even gained observer status in the Organization of the Islamic Conference.

Russia and Iran maintain a coordinated and close eye on global strategic and regional problems. Both countries believe in the importance of efforts to eradicate the practice of double standards, to fight terrorism, to resolve international problems through dialog, and to work together to stamp out drug trafficking.

Russia’s concept of foreign policy adopted in 2000 says Moscow supports the establishment of a multipolar world and does not accept U.S. hegemony. President Putin explicitly formulated this position in a speech he gave in Munich in February 2007. Iran has a fully identical vision. Foreign policy principles that the country’s former President Seyyed Mohammad Khatami embedded in his concept of a “dialog among civilizations” and the current policy course of President Mahmoud Ahmadinejad strongly reject a one-sided approach in the international arena, both in the geopolitical and cultural/civilization aspects.

A new political alignment of forces in the Middle East, Central Asia, the Caucasus, the area around the Caspian Sea and Afghanistan is exerting a noticeable effect on the agenda of Iranian-Russian dialog. Interaction between Russia, with a population of 145 million, and Iran, with a population of 65 million, can play a fruitful role in settling regional conflicts. Both Moscow and Teheran speak against any outside pressure on the Caucasus and Central Asia and against the presence of external forces there.

The Arab-Israeli conflict is another area where the positions of the two countries are very close. The approach Russia took toward the Hamas movement that headed the government of the Palestinian Authority and toward the Israeli-Lebanese war of 2006, the reluctance to list Hezbollah among terrorist organizations, and the demand to pull out foreign military bases from Central Asian countries, which Moscow made public at the Shanghai Cooperation Organization (SCO), expand the field for Iranian-Russian political interaction.

Iran hopes to see Moscow as a strategic partner, but the positions of the two countries diverge in this aspect, since they seem to look at cooperation from somewhat different angles. While Iran perceives its relations with Russia through the prism of international politics and gives secondary importance to purely bilateral issues, Moscow emphasizes bilateralism and does not need Teheran as a strong international partner. The Russian authorities have put an upper limit on relations with Iran even at the regional level. Evidence of it is found in their reluctance to consider Iran’s full membership in the SCO.

Russian leaders keep reiterating that the ideology of pragmatism forms the backbone of their political course. An analysis of the Kremlin’s actions shows even more strongly that there is hardly any other country in the world that is so focused on getting practical benefits from its policy than Russia. Moscow has fully shaken off the ideological approach to international policies, typical of the Cold War era. As it makes decisions today, the Russian government seeks to avoid excess obligations and expenses. Although the country tries to fight many tendencies of global development, it does not have insurmountable differences with the existing structure of the international community. In essence, Russia even bids to consolidate it. The country’s historic routes go deep into the Byzantine civilization, which means that it belongs to the ‘Western Front’ by virtue of its cultural and psychological characteristics.

Moscow’s balanced position on the Iranian nuclear dossier on the UN Security Council and especially the agreement on sales of Tor M-1 surface-to-air missiles testify to its productive attitude toward Iran. Yet Russia has a limited capability to support Iran. The pragmatic Russian government has indicated that it can cooperate with Teheran only to a degree that does not impede the promotion of its other interests or international integration processes.

Such an approach has always made it impossible for the Russian leaders to regard Iran as a genuine strategic partner. It is quite noticeable that officials in Moscow never mention Iran as they expound their ideas about a multipolar world and the rise of new centers of power. President Putin’s visits to Egypt, Algeria, Saudi Arabia, Qatar, and Jordan have attracted worldwide attention in recent years, but he has never visited Teheran, although President Seyyed Mohammad Khatami made a visit to Moscow as far back as in 2001.

ECONOMIC COOPERATION

Actively expanding economic and cultural contacts also facilitate the strengthening of bilateral cooperation. They embrace a wide variety of sectors from the nuclear and thermal power industry to the oil and gas industry, and they also include the manufacturing sector, agriculture, forestry, fisheries, telecommunications, ecology and science. Farsi departments have been opened at Russian universities, while Iranian universities have opened Russian departments. There have been festivals and exhibitions of the other country’s movies and arts organized in Moscow, St. Petersburg, Teheran, Isfahan, as well as in places quite distant from the capital cities.

There has been considerable success in Iranian-Russian cooperation through Russia’s participation in the Iranian satellite Zohre-1 project. In October 2005, a Russian carrier rocket was launched from the Plesetsk space center near Arkhangelsk to take into orbit the Russian-Iranian satellite Sina-1, designed to transmit television programs.

Russian-Iranian trade grew to about $2 billion in 2004 from $600 million in the mid-1990s – a growth that both countries can scarcely be content with. The growth exceeds Soviet-Iranian trade in 1974, but only by a small margin. There is a considerable potential for a much greater growth, considering the volumes of Russia’s trade with Turkey ($10 billion) or with Israel ($6 billion), and even more so because Iranian exports to Russia make up just one-twentieth of overall bilateral trade. Russian exports dominate bilateral trade and mostly consist of metallurgical products, paper, cardboard, defense equipment, as well as equipment for the nuclear power industry, wharfs and floating platforms.

Iranian companies sell Russia fruits, pistachio nuts, processed horticultural products, tobacco, minerals and some kinds of construction materials. Iran Khodro Industrial Group, Iran’s biggest carmaker, has designed a Samand sedan adjusted to the Russian climate. The company exported 3,000 cars in 2006, but Iran Khodro plans to increase sales to 20,000 units in the next three to five years.

Russian exports to Iran are typically sent by rail to Astrakhan near the Volga River delta and then shipped to Iran across the Caspian Sea. Iranian exports are taken by ship to the port of Makhachkala. Direct rail freight between the two countries is possible only via the Serahs border crossing in Turkmenistan, where the wheels of the train have to be changed, since the railway tracks have a different gauge in the former Soviet Union. However, the Serahs wheel-changing capacity does not exceed 200 wagons a day.

These facts have moved the issue of a North-South transport corridor to the top of Russian-Iranian agenda. The route is expected to ensure commodity deliveries from Europe to South and Southeast Asia and the other way round via Russia and Iran. It will help quadruple the volume of cargo transits via Iran to about 10 million tons a year. Also, the project presupposes that a commercial shipping route will be opened on the Caspian Sea, seaport facilities in both countries will be overhauled, and the littoral area countries will build new highways around the Caspian Sea and will upgrade the railway network. An agreement on the North-South transport corridor has already been signed by Belarus, India, Iran, Kazakhstan, Oman, Russia, and Tajikistan. Moreover, more than ten European and Asian countries have said they would be ready to join it.

Since the possible routes of commodity transportation between Asian countries and Russia via Iran are 65 to 75 percent shorter than the ones existing today, Moscow finds them to be quite promising. With the current ratio of Russian-Iranian exports standing at 20:1, the ships that take Russian cargoes to Iranian ports have to return empty. Instead, they could carry transit cargoes from India and Southeast Asia. If the North-South transport corridor is actually established, the delivery time from Southeast Asia to Western Europe will be reduced by at least three to four days, and costs will drop by 15-20 percent.

It has not been ruled out that a navigable canal might be built in the future between the Caspian Sea and the Persian Gulf. A project of this kind (incidentally, Iran has already drafted one) will revamp the geography of international navigation in much the same way as the construction of Panama and Suez Canals did in the past.

An inland waterway from Iranian ports on the Caspian Sea to southern Europe (along the Volga-Don canal), as well as to Scandinavian countries and Northern Europe via the Belomorkanal waterway system in northwest Russia and the Baltic Sea, may have a great future. The commissioning and maintenance of Caspian navigation lines is an important objective of the NOSTRAC transport project drafted under the auspices of the United Nations Industrial Development Organization (UNIDO).

Cooperation in the energy sector can be found in a number of milestone events like Russian investment in the South Pars natural gas field, the participation of the Russian state-controlled company Tekhnopromexport in the construction of the Shahid Mohammad Montazeri thermal power plant in Isfahan and the Ramin power plant in Ahvaz, and also the construction of Iran’s first coal-burning power plant Tabas. Russian energy giant Unified Energy System (UES) and the Iranian company Tavanir signed a memorandum of cooperation in the energy industry in 2004. The document envisions that the sides will synchronize operations of their energy systems and emphasizes cooperation among Russian, Iranian and Azerbaijani power plants.

In the meantime, Russia views Iran as a possible competitor in supplying energy resources, and in this light, a proposal by Iranian spiritual leader Seyyed Ali Khamenei to set up a natural gas alliance, which could enhance both countries’ influence in the world, has special significance. Moscow has had a mixed reaction to the idea, but if Teheran continues exerting efforts to explain and promote the project, the gas factor will turn from a source of contention into a tool of regional and international cooperation.

COOPERATION IN ATOMIC ENERGY

Iran launched its own nuclear program as early as during the rule of the shah. It presupposed a broad development of nuclear power facilities, including the construction of 23 reactor units and research centers and the training of personnel. Its authors proposed reaching these goals through extensive financial and technical assistance from abroad and to spend some $30 billion on it.

Interest in atomic energy reemerged in Iran in the early 1980s owing to purely economic considerations. The plan for the development of the Islamic Republic of Iran from 1989-1994 stipulated a rapid modernization of the economy and its industrialization with the aid of advanced technologies and an increase in the exports of manufactured goods, along with energy resources. Iranian and foreign experts said then that the objective required an increase in electricity production, which was impossible to achieve due to the scarcity of water resources in the country. Atomic energy offered the only clue to the solution of the problem. It was then that Teheran University’s nuclear research center went back into operation with a 5 megawatt experimental reactor unit. Iranian specialists built another nuclear center in Isfahan in the mid-1980s. Now it has a small experimental reactor made in China. At the same time, the mining of uranium ore began in the Yazd province.

Iranian-Russian cooperation in atomic energy is focused on the construction of the Bushehr nuclear power plant. The project was produced by Siemens in 1972, and the company was also the first building contractor in Bushehr. However, its workers left Iran after the Islamic Revolution in 1979. The unfinished project was mothballed. Thus, the money allotted for construction work did not bring any beneficial results for Iran. Russia expressed its readiness to complete construction on the nuclear power plant and proposed terms that were acceptable to Iran.

On January 8, 1995, Moscow and Teheran signed an $800-million agreement to build the first power unit in Bushehr and to install a VVER-1000 water-cooled water-moderated reactor. The event signaled the start of practical cooperation between the two countries in nuclear power.

Atomic energy is one of the main areas of bilateral cooperation today. Iranian-Russian activity in nuclear energy from the viewpoint of international and Russian law fully conforms to the letter and spirit of the Nuclear Nonproliferation Treaty, the Charter of the International Atomic Energy Agency (IAEA) and the trade rules of the Nuclear Suppliers Group.

Interaction between Moscow and Teheran in the nuclear sector relies on the following documents:

– The August 17, 1992, Agreement on Utilization of Atomic Energy for Civilian Purposes;

– A contract for completing construction of power unit No. 1 in Bushehr that executives of Russia’s foreign-trade company Zarubezhatomenergostroi and Iran’s Atomic Energy Organization signed on January 8, 1995;

– A protocol of negotiations between the Minister of Atomic Energy of the Russian Federation, Dr. V.N. Mikhailov, and the Vice-President of the Islamic Republic of Iran, the president of the Atomic Energy Organization, Dr. Reza Amrollahi, signed on January 8, 1995;

– A supplementary agreement signed in spring 1998 during a visit by Russian Deputy Prime Minister Vladimir Bulgak to Teheran.

About 300 Russian companies and 2,000 specialists currently work at Bushehr. Talks between the two countries on the construction of a second power unit are also underway.

The deal triggered sharp discontent in the U.S., which perceived it as a threat to its national interests. Washington claimed that a nuclear reactor would enable the Iranians to obtain the materials necessary for making a nuclear bomb and this, in turn, would break the terms of the nonproliferation treaty. In response, Teheran assured the international community that its defense concept does not imply development and/or use of nuclear weapons but emphasizes totally different means of deterrence.

The U.S. Administration has issued open ultimatums and threats regarding Bushehr at times. Washington has accused Moscow on many occasions of passing missile and nuclear technology to Iran. And yet the Russians and Iranians never veered from the path they had chosen.

Russia believes that a mutually beneficial cooperation in the energy sector meets its long-term interests. The Russians think that one of the goals of U.S. policy toward Iran is to squeeze Russia out of Iran and to take over its position as an exporter of high technologies.

To allay Western fears, Russia pledged to reaccept all the spent nuclear fuel from Bushehr for reprocessing on the basis of international rules and under IAEA supervision. Experts say Moscow issued reliable guarantees this way that nuclear waste will not be used to obtain enriched radioactive materials. The Kremlin reiterated afterwards that it does not see any signs of a situation in which Teheran could produce nuclear weapons.

At this moment, neither Russia nor Iran plan to renounce cooperation in atomic energy. However, they have to consider the fact that cooperation in an area as sensitive as nuclear power usually comes under the impact of economic, strategic and political factors. This means that the destiny of Iranian-Russian cooperation will be contingent on the political and strategic situation in the region and the world at large.

OBSTACLES AND CONSTRICTIONS

One of the biggest obstacles is the absence of working mechanisms of cooperation between the Russian and Iranian banking systems, which leaves many important agreements shelved. Another unfavorable factor is the scarce or unreliable information that businesses can receive about each other.

The majority of the political, cultural, economic and trade institutions in Iran have a shortage of employees that can speak Russian and that have a good knowledge of Russian culture, although a number of universities and companies have taken steps to rectify this situation, and the state will hopefully support them.

However, there are deeper-lying problems and constrictions too. Even though Iranian-Russian ties have been growing over the past twenty or so years, both countries have people who criticize this trend.

For instance, a range of Iranian observers and politicians (albeit few of them make political decisions) have voiced doubts about Russia’s reliability as a long-term partner. They indicate that the Russian Empire and then the Soviet Union played a deplorable role in Iran in periods in the past, and that today’s Russia, too, plays the Iranian card in order to fortify its positions in relations with Europe and America – in other words, it has turned Iran into an instrument to help it gain more weight in U.S. opinion.

These people cite arguments like delays in completing the Bushehr plant. Some of these analysts assert that Russia may succumb to lucrative dividends or benefits in the future and turn its back on the Iranians. Developments in recent months and Moscow’s claims that Teheran has fallen short of meeting its financial obligations add to their list of evidence. Given the general mood among the Iranian elite, it would be good if Moscow realizes that a suspension of contacts in atomic energy would unavoidably hurt bilateral relations.

On the Russian side, those who oppose closer cooperation with Teheran claim that bilateral trade, although small enough in volume, includes some delicate strategic items that cause a lot of headaches. They say Iran has taken a selective approach to the Russian market and only buys from Russia commodities that other countries refuse to sell to it. But if Teheran’s relations with Washington improve, Russia will cease to be an important political and trading partner for it.

Russian politics has an extremely complex structure, where decision-making resembles a chess game where various political and especially economic players make crucial moves. Iran will fail to work out a realistic effective policy toward Russia unless it takes a realistic account of the variegated interests existing there. Teheran needs strategic relations with Russia that will help to consolidate the international positions of the Islamic Republic of Iran.

The prospects for Iranian-Russian relations look quite favorable despite the current problems. The situation where the two countries’ economies complement each other creates a strong base for strengthening bilateral ties. Iran and Russia have all the necessary prerequisites for boosting trade, mutual investment and cooperation in the transport and energy sectors.