Russia, Iran, and the Eurasian Economic Union
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Janko Šćepanović

Ph.D. Post-doctoral Researcher School of Advanced International and Area Studies, East China Normal University, Shanghai, PRC.

Giving Iran a full-fledged membership in the Eurasian Economic Union is risky proposition that will reshape Russia’s regional integration strategy, the nature of post-Soviet institutions, and Moscow’s relations with other Middle Eastern and non-Middle Eastern states.

In early February, the speaker of the Parliament of the Islamic Republic of Iran, Mr. Mohammad Baqer Qalibaf, visited Moscow. On this occasion, he made a surprisingly bold statement that his country had already started talks on obtaining a permanent membership in a Russia-led Eurasian Economic Union (EAEU). He predicted that the preparatory works would be completed in two weeks’ time. It was a striking announcement coming from one of the influential Iranian political figures. EAEU is essentially a Russia-led trade bloc and customs bloc, which started in January 2015 and, apart from Russia, also includes Kazakhstan, Belarus, Armenia, and Kyrgyzstan.

The Union is arguably Russia’s most advanced and ambitious regional integrative framework in the former Soviet space.

With its population of around 184 million people, a cumulative GDP of 1,967 trillion USD, and vast reserves of gas and oil, EAEU is a considerable economic, and especially energy actor. Iran has a population of around 84 million, GDP of 628 billion USD (2020/2021 projection), and the world’s second-largest gas reserves and fourth oil reserves. The prospect of unification of such vast resources could indeed be very appealing. EAEU’s common market for gas, oil and petroleum products was not scheduled to enter force before January 2025. Furthermore, Iran is strategically located and connects Central Asia with the rest of the Middle East and the Indian Ocean. Therefore, it could be a considerable addition to the EAEU if admitted as a member on the paper.

Following Mr. Qalibaf’s comments, there were no announcements of a similar scale coming from the Russian side. Nonetheless, certain important figures in Russia’s foreign ministry did clarify the general nature of the membership in the EAEU. For instance, Russia’s Deputy Foreign Minister Pankin emphasized that states who decide to join the organization do so exclusively on economic considerations. Despite the challenging 2020, Russian officials believe that the EAEU remained strong given the resilience of its institutions and the nature of its foreign trade policy, which make it an attractive partner with many applications for preferential trade relations. Iran has had an interim agreement with EAEU since May 2018 (it entered force in October 2019). According to Foreign Minister Sergey Lavrov, the mutual trade between EAEU and Iran increased by 15% in the first six months. Mr. Pankin also stated that during 2021 further work would be taken to transform the interim agreement into a full-format one. At the December 2020 meeting of the heads of states of the member states, EAEU agreed to such a move. More recently in Mach 2021, EAEU’s Minister in charge of Integration and Macroeconomics, Sergei Glazyev, and Iran’s ambassador to Russia discussed further areas of cooperation including investment, services and trade.

This intriguing idea of Iran’s future membership triggered speculations about Russia’s motives, as well as about the possible impact this would have on the future of the EAEU.

The Union had not expanded its membership since Kyrgyzstan joined in August 2015, which was the same year when the EAEU officially started. In December 2020, Uzbekistan was added as an observer alongside Cuba. Tashkent’s eventual membership is what Russia really wants, given that Uzbekistan lies within the area of the former Soviet Union. It is also population-wise the largest of the former Soviet Central Asian Republics and is strategically located at the center of Central Asia. For the past three decades, Russia mainly had unsuccessfully courted Uzbekistan to join its regional integration projects in the former Soviet space. It was only briefly a member of the Collective Security Treaty Organization (CSTO), 2006-2012, and Eurasian Economic Community (EurAsEC), 2006-2008. Interestingly, Uzbekistan remained a member of the Shanghai Cooperation Organization (SCO) since its inception in 2001.  While Russia is one SCO’s leaders, the organization is considered China’s project and an instrument for managing its relations with the former Soviet Central Asia. 

 On the other hand, Iran lies beyond what Russia had once proclaimed as its regions of privileged interests. More importantly, it is not a country that Russia could easily influence. Despite of its very complicated international situation and years of U.N. Security Council sanctions, Iran is a significant and powerful regional player, with vast resources of hydrocarbons, a rich past, and a very distinct identity. Russia and Iran have had a long and complicated history of relations, both during imperial times and more recently. Russia was one of two great European powers (the other one being Britain) that frequently meddled in Iranian domestic affairs during the nineteenth century. These geopolitical maneuvers and plots became popularized as the Great Game but were also a source of Iran’s resentment towards external players. After the end of the Cold War, Russo-Iranian relations generally improved, but even then, there were difficult moments. The two countries converged in their intent to keep the Caucasus stable and not allow the dominance of extra-regional actors in Central Asia. The nuclear program issue remained problematic, and Russia supported U.N. Security Council resolutions that imposed sanctions on Iran. Later, it became a signatory and supporter of the 2015 nuclear deal (the so-called Joint Comprehensive Plan of Action or JCPOA). In a recent meeting with Iran’s foreign minister, his Russian counterpart Mr. Lavrov called upon all other signatories to the JCPOA to return to the deal, and repeatedly criticized the United States for withdrawing from the agreement. In the broader Middle East, Russia and Iran found a common cause in assisting President Assad’s government in his fight against both the Islamic State and other factions in Syria’s civil war.

Despite this expedient political partnership on specific foreign policy issues, the prospects of Iran’s membership in the EAEU could be far more reaching.

While some Russian experts suggest that it might take months and years to happen, they do not discount it. In weeks following Mr. Qalibaf’s proclamation, some Russian commentators opined that it would be a historic victory in breaking the Western attempts to curtail Russia’s push to the southern seas. Others believe that its ports bring economic opportunities for more convenient export of Russian goods to other parts of the world. Some Western analysts see that such developments could potentially increase geopolitical competition in the Caspian Sea region and the Persian Gulf.

However, what it could also do is fundamentally change the nature of the Eurasian Economic Union. On the paper, the project was never closed to the aspirants from every part of the world. In 2011 when he announced the Eurasian (Economic) Union, President  Putin asserted that the project was open to all states. At the same time though, he added that the countries of the former Soviet bloc would be particularly welcome. However, despite this, many considerable issues stand in the way of Iranian membership. I want to point out six potential obstacles.

One has to do with probable repercussions this would have on Russia’s relations with other Middle Eastern states and the United States. Russo-Iranian convergence in Syria prevented the collapse of Mr. Assad’s regime and ultimately allowed him to regain control over much of the country. While this pragmatic partnership has had its benefits and positioned Russia to exercise the influence in Syria and beyond, further close cooperation with Iran and its membership in the EAEU is risky. For instance, wider considerations, such as relations with Israel and improving ties with several Arab states, would make such a move counterproductive. Iran has several powerful regional (and extra-regional) adversaries. In the past years Russia’s policymakers approached the Middle East believing that they can attain solid political and/or economic outcomes by mediating with all parties, including also those that are usually unacceptable to the West. Moscow has had visible success and developed constructive relations with nearly all  relevant parties, including Iran, its Arab neighbors, Turkey, Israelis and the Palestinians.

Hence, admitting Iran into a very Russia-led economic bloc would send a powerful message to others about its orientation.

Even successes like the one in Syria came with some political costs. Russian analyst Alexey Khlebnikov points out that Russia’s image among the majority of the Arab population might have been damaged by its overreliance on politically expedient partnership with Iran, and sporadically cordial, while generally competitive, relations with another non-Arab state – Turkey. Also, some suggest that once a member of the EAEU, Iran might eventually seek Russia’s advanced weaponry such as S-400 surface to air missiles and even advanced Sukhoi SU-30 jets, which Moscow has thus far resisted selling to it. While there is little to suggest that Russia would be obliged to change its position on the issue, given that EAEU is not a military alliance like the CSTO, closer economic ties could lead to improved political ones and ultimately open a door to military ones.

Another impactful, long-lasting issue of Iran’s possible membership in the Eurasian Economic Union has to do with specific integrative nature of EAEU. It is essentially Russia’s most advanced and ambitious regional integrative project. Unlike other regional bodies that the Russian Federation is a founder and a (co)-leader of, such as the Collective Security Treaty Organization (CSTO) and Shanghai Cooperation Organization (SCO), the two of which focus on hard and soft security matters, EAEU was envisioned as primarily a tool for regional economic integration. Moreover, unlike the exclusively intergovernmental CSTO and SCO, EAEU combines intergovernmentalism with supranational elements, such as majority voting, inside of its decision-making structures (viz. the Eurasian Economic Commission). It even has a dispute-settlement body such as the Court of the EAEU, which can rule against some of its member states. This led scholars like Alexander Cooley to note how EAEU (and its predecessor EurAsEC) was essentially modelled to mimic the Western bodies like the European Union (EU) ( Russian scholar Evgeny Vinokurov believes that comparisons with NAFTA or MERCOSUR are more adequate). It took some serious effort and desire from especially the three core states behind this economic integration – Russia, Kazakhstan, and Belarus – to achieve this level of integration and willingness to delegate some powers to the Commission. While the members usually strive to reach consensus, there is a possibility of outvoting others on certain issues. It needs to be stressed that even close partners like Kazakhstan and Belarus jealously guard their national sovereignty and were averse to the suggestions that EAEU could follow integration at a political level sometime in the future. Attaining this level of integration with supranational decision-making was a hard-won success. The question of whether Iran, a country outside of Russian and Soviet historic zones, would be prepared for any of this power-sharing is highly questionable.

Furthermore, EAEU is essentially a product of a rather specific post-Soviet experience, which Iran was never a part of. The formation of the EAEU gained speed following the decline of regional economies in an effort to reverse the process of the collapse of regional economies by stimulating economic cooperation and integration. EAEU thus became a continuation of integrative processes in the former Soviet space that started in the late 1990s and were transformed first by the creation of the EurAsEC in 2000, and then continued with the declaration on the establishment of the Customs Union in 2009, and then in 2012 the creation of the Single Economic Space. Moreover, there are specificities of local economies that make this process feasible. As scholars Alexander Libman and Evgeny Vinokurov pointed out, the post-Soviet reintegration of post-Soviet economies was facilitated by the fact that they were once part of the highly integrated economy under the USSR. Even in the years after the collapse of the Soviet Union, the level of their interdependence remained high. Furthermore, as President Putin highlighted in his 2011 article, the regional economic integration in the former Soviet space was precipitated by specific economic developments, which affected the region itself. For instance, the financial crisis of 2008-2009, compelled the regional states to “seek new resources for economic growth.”

Fourthly, what also makes EAEU specific is that it is part of Russia’s vision of a multipolar world where it plays one of the key roles. For many years now, Russian politicians repeatedly criticized the U.S.-led world order and argued that unipolarity does not reflect a reality of the world. Instead, what Moscow posited was that there was a growing multipolarity, or what it frequently referred to as polycentrism. The term appeared in Russia’s foreign policy concept of 2013, where it was suggested that international relations were changing and transitioning into a polycentric system. As part of this, regional governance emerged, and the new centers of power had to undertake responsibility in their respective regions. This was done through regional economic integration as a way of boosting growth and providing security and stability. These arguments were in part based on Russia’s own plans to create a Russia-led global pole. As scholar Igor Torbakov explains, Moscow recognized that it would be a precondition for it to effectively participate on par with other great powers in global governance. Russia’s role as one of the key centers or “poles” of such a multipolar world was justified by virtue of its “military, geographical and economic capabilities, its culture and human potential.” Groupings like EAEU, which are centered on the former Soviet space, were seen as foundations for the construction of a Russia-led regional pole.

A further issue is related to the civilizational aspect of Russia-led regional bodies. While this does not stand in any formal treaty documents, it has figured prominently in speeches by some Russian officials. Since Mr. Putin’s return as a head of the Russian state in 2012, he kept reemphasizing Russia’s distinct uniqueness as a civilization and a need to protect it. He went even further and sought to elevate Russia to the status of a defender of conservative values. Russian scholar Andrei Tsygankov explains that this policy had both domestic policy objectives and also foreign policy implications. It allowed Russia to present itself as a truly unique civilization at the intersection of Western, Asian and Muslim worlds and thus capable of preserving ties with various parts of the world, as well as those countries with shared historic experience with Russia. These were predominantly former Soviet Republics, which Russia recognized in its 2013 foreign policy concept by emphasizing that it intended to “actively contribute to the development of interaction among the CIS Member States…on the ground of preserving and increasing common cultural and civilizational heritage which is an essential resource for the CIS as a whole.” Eurasian (Economic) Union as proposed by Mr. Putin in 2011 would serve as a “cross-ethnic community” between European Union and Asia, and also would shore up Russia’s aspirations as a state-civilization. While the project was ultimately scaled down (due to objections by Kazakhstan and Belarus who were unprepared or unwilling to give up their hard-won sovereignty) to mainly economic integration, there is little to suggest that Russia abandoned its claims of civilizational distinctiveness. The Russia-led bloc is ultimately built around what we can consider the Russian world. At the 2013 Valdai Club meeting, Mr. Putin warned that the current century would become not just a time of the creation of geopolitical zones, but also of areas of cultural and civilizational regions. For that reason, the states in the former Soviet space, which according to the Russian President had a unique identity of nations in the history Eurasian space, should make a priority of integration not only for economic benefits but also for maintaining the identity.

Being a distinct civilization in its own right, Iran has little to search for in a Russia-led world. Instead, it could cooperate with it as a non-member.

Finally, even if Iran’s membership would be accepted based purely on economic expediency and possible strategic considerations, Russia and other EAEU member states might find it difficult to officially welcome as a fully-fledged member a country that is still officially a U.N. Security Council sanctioned state. They would need to consider possible reputational and other impact of such a decision. Since 2006 Iran has been hit with United Nations sanctions (some of which were supported by Russia), and it has also become more internationally isolated, and even decried by some as a rogue for some of its controversial activities like seizures of oil tankers off its coast. While the 2015 JCPOA opened a door for the removal of some of the sanctions, Iran’s relations with some of its regional rivals remained strained and further exacerbated once the U.S. unilaterally withdrew from the JCPOA and applied “maximum pressure” strategy against the Islamic Republic. While Russia’s relations with the West have hardly improved during the same period, Moscow has been trying hard to gain wider recognition and acceptance of its regional integrative projects. It has had some visible success. For instance, in 2004 the military alliance CSTO was recognized by the United Nations General Assembly as an observer. It now has protocols of cooperation and memoranda of understanding signed with, among others, the UN Department of peace operations. On the other hand, EAEU is fast becoming an attractive free trade partner for states from all parts of the world including, among others, Viet Nam, Argentina, Egypt, India, and Israel. While Russia’s relations with Iran will continue to be chiefly based on pragmatism, which is visible in the already signed and mutually beneficial free-trade association between the Islamic Republic and EAEU, more ambitious steps remain a possibility. However, giving Iran a full-fledged membership in the Eurasian Economic Union is risky proposition that will reshape Russia’s regional integration strategy, the nature of post-Soviet institutions, and Moscow’s relations with other Middle Eastern and non-Middle Eastern states.

Russia and Its Near Abroad: Challenges and Prospects
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Moscow’s greatest success in the near abroad will be the transformation of the region into a real strategic resource, and its biggest failure will be its transformation into a strategic burden for Russia.

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