Vladimir Sazhin
Orientalist, Professor

The steel mill in the province of Isfahan (with the production capacity between 500,000 and 600,000 tons of steel a year) built with the assistance of the USSR

Vladimir Sazhin

F

rom Russia’s point of view, all problems of the Middle East, Caucasus and Caspian Sea, such as ethnic, religious, military, economic, drug trafficking, terrorist and separatist, can be dealt with effectively only with the participation of Iran. With a population of 65 million people this country has one of the world’s largest armies that numbers about 800,000 people. Iran is undoubtedly a serious factor in the regional politics. Possessing considerable reserves of hydrocarbon raw materials and capabilities of their transporting, the country has a significant influence on the world market of oil and gas.
The relations between Russia and Iran are of the pragmatic nature. Even in the Soviet epoch their ideological differences did not impede the mutual rapprochement of both countries’ economies: in the 1960s and 1970s the USSR assisted Iran in building over 200 industrial production facilities, including the large Isfahan integrated metallurgical mill. And today Iran is still an important economic partner of Russia. The range of their cooperation is very wide: nuclear and thermal power energy, oil-and-gas industry, metallurgy, agriculture, forestry and fishery, transport, communication, construction, ecology. In the last five years the annual goods turnover doubled reaching about $1 billion. Russian supplies account for over 90 % of product sales.
One of the major Russian-Iranian projects is the international North-South transport corridor. It has been officially in operation since May 2002, when an appropriate agreement between Russia, Iran and India was put into effect. However, transit transportation in this direction was taking place even before that. In 2002 over 7 million tons of freight were transported there or by 20 % more than in 2001. In 2003 the freight flow may exceed 8 to 9 million tons. And the design throughput capacity of the corridor ranges from 15 million tons to 20 million tons. It takes 30 days to transport a container from India to Finland by the North-South corridor, while it takes twice as long to bring it by sea via the Suez Canal.

Today’s Iran: The tower on the Freedom Square that is the symbol of Iran’s capital

The Russian government approved the project of the long-term (till 2012) program of developing trade, economic, industrial as well as scientific and technical cooperation with Iran. In particular, it provides for an active cooperation in the aircraft industry, including the joint production of TU-204 and TU-334 airplanes, selling and leasing of TU-154M, TU-204-100, Il-96-300, Il-114 airplanes, cooperation in making air-engines. Both sides will continue to develop the transit transport system, including construction of the optical fiber communication line for the North-South corridor, laying of a new railroad line. They also plan to jointly produce and launch communication satellites. An important role is assigned in the program to the interaction of both countries’ banking systems.
Many observers are paying special attention to the cooperation between Russia and Iran in the field of nuclear power engineering. Under the project of the long-term program, in addition to the reactor with the capacity of 1,000 MW in Bushehr, Russia intends to start building in 2004 four average-capacity atomic piles in Tabas and Ramin as well as two small-capacity reactors in Ahwas. All in all, with Russia’s help Iran is going to build 15 new nuclear power facilities within 10 years.

Tehran at night

In June 2003 the International Atomic Energy Agency (IAEA) considered the question of Iran’s nuclear program and did not find any violations. Tehran was presented with only one urgent recommendation: to sign the additional protocol to the Nuclear Nonproliferation Treaty. By the way, not only Western countries but Russia as well is insisting on this because Moscow is especially interested in transparency of nuclear projects that it is participating in. Nevertheless, along with expressing concern over Iran’s activity in the area of the nuclear power engineering the world public is accusing Russia of prompting nuclear ambitions of the Ayatollah. In this connection it seems necessary to make a number of points clear.
Of course, the Iranian nuclear program is not limited to building nuclear power blocks. According to American analysts, there are 7 large nuclear research centers operating in Iran and about 10 more centers are being established now. Besides, a major enterprise to enrich uranium is under construction in Natanz (with the use of Pakistan’s technologies) and a heavy water production plant is being built in Arak. But these facilities are in no way connected technologically with the reactor being built by Russia. The construction of the nuclear power plant in Bushehr has been controlled by IAEA, which has never laid claims either to Russia or Iran in this respect.

A new hotel complex

The nuclear power block should have been put into operation in 2004. There were plans to start supplying nuclear materials there in the summer of 2003. But no agreement on returning spent nuclear fuel has been signed yet. When Tehran and Moscow do sign it, there will be no political aspects left and the cooperation will be purely commercial.
The question of commercial benefits is the main one in the free market trade. Against this background any attempts to criticize Russia for the participation in the Iranian nuclear program look like using political pressure in trade competition. And so they are causing an appropriate reaction.
Russia’s activity in the Iranian direction angers Washington most of all. The U.S. considers it extremely important to get back to those positions in the Middle East that Americans had 25 years ago before Ayatollah Khomeini came to power in Iran. Washington also wants to strengthen its positions in the Caspian Sea, the promising oil production region. In recent years creating the sphere of its influence on Russia’s southern border has become one of the important goals of the U.S. foreign policy strategy to be buttressed by Caucasian and Central Asian countries. To this end it is necessary, on the one hand, to minimize the role of Iran and Russia in the region through removing them from participation in major international economic projects and, on the other hand, to prevent other states, above all, the West European ones, from coming there.

In the streets of the old city

Not to the least extent anti-Iranian laws passed by the U.S. Congress are promoting precisely these goals. For example, the so-called D’Amato law forbids companies to sign contracts on investing more than $20M in Iran’s fuel-and-energy complex. In fact, these laws affect American allies in Western Europe and restrain development of ties with Iran that are beneficial to them.
However, Europeans are actively developing the Iranian market. The annual goods turnover of the Iranian trade with Germany, for one, amounts to $3B, it reaches $2.6 billion in trade with Italy and $1.8 billion in trade with France. By the way, Russia is placed just 12th on this list. Of course, Russia and Western Europe are competing with each other in some sectors of the Iranian market but it does not have a negative impact on their political relations as is the case with the U.S.
In its turn, Iran is interested in the closest relations with Russia and, at the same time, hopes to develop beneficial business ties with countries of Western Europe. But it would not mind to "play" with the U.S. either, though without giving up on the anti-American rhetoric. Thus, there is a behind-the-scene intrigue in relations of the main partners with Iran.
As for Russia, there is only one thing left so as not lose its positions in this competitive struggle: to intensify its trade and economic expansion in the Iranian market through bringing to this country such products, technologies, services and projects, which Western states still cannot offer due to political or economic reasons. First of all, the list of such commodities contains equipment for the nuclear power and oil industries, space exploration projects, weaponry and military equipment.
Iran’s leadership worked out a 25-year program of re-equipping the country’s army with a priority given Russian-made equipment. In the first place, Tehran is interested in making a complex system of antiaircraft defense of facilities of the nuclear power and military industries, in starting a licensed production of arms, in modernizing the existing stock of fighting aircrafts, in establishing service, repair and training centers, in developing cooperation in space exploration programs.
As the history has already demonstrated, Iran is ready to buy arms in any place whether it is permitted or not. In the years of the war between Iran and Iraq Tehran by passing over the blockade and embargo, semi-legally and illegally, directly and through third countries was purchasing arms from over 25 countries, including the U.S. and Israel. Today, when there are no official international sanctions against it, Iran has much more opportunities to buy weaponry. In principle, the West is ready to become its supplier. It is quite natural that the U.S. would not mind to "squeeze" Russia in the Iranian market of arms and that also provides Washington with a pretext for criticizing the cooperation between Russia and Iran.
It goes without saying that Moscow cannot ignore the fact that Tehran quite often sticks to different views on the situation both in the world and the region. The question can be put the following way: to what extent can democratic Russia and Islamic Iran draw together taking into account that Iran is a country, which not only proclaims the unity of religion, ideology and policy but also exports ideas of "the Islamic revolution"? In this sense there should be a better understanding of the West’s worries caused by Iran’s military and political doctrine. Moscow’s task is not to allow fundamentalists to use the developing cooperation between Russia and Iran for such purposes.