With the historic return of Iran to world markets following the international nuclear accord’s implementation, Russia stands to be a big winner from budding economic fortunes. News headlines spoke of a new era in international relations, with decades of largely Western-imposed sanctions on the Iranian economy finally being lifted. The Persian empire is back with a bang it seems – and Russia is poised to reap the fruits of a benign strategic relationship.
No sooner had the US and European allies announced the lifting of their sanctions off Iran then Washington moved to slap fresh bilateral sanctions on Tehran over alleged breaches of ballistic missiles testing. These new American sanctions are puny compared with the international restrictions that have been ditched under the nuclear accord. Nevertheless, the damage to trust caused by the new bilateral measures will make sure that Washington has closed itself off whatever prospects it might have been planning to gain in the new Iranian market.
With an 80 million highly educated population and prodigious natural resources, no wonder Western countries are itching to avail of Iran’s grand re-opening post-sanctions. But it is Russia, through its principled foreign relations with Iran, that will gain handsome advantage. Others, by contrast, will only weep for their past malfeasance towards Iran, even in a new era of openness.
It was Russian President Vladimir Putin who initiated the diplomatic process between the P5+1 nations (US, Britain, France, China, Russia plus Germany) and Iran, which produced nearly two years of negotiations and culminated in the final nuclear accord signed on July 14, 2015, in Vienna. That deal finally gained official implementation at the weekend after the UN nuclear watchdog, the IAEA, confirmed that Iran had fulfilled its side of the bargain in curbing key aspects of its nuclear industry.
US President Barack Obama claimed that implementation of the nuclear accord proved the power of American diplomacy. We might allow Obama to indulge in vain self-congratulations given his eye on a post-presidential legacy. But the fact is that it was Putin that provided the vital bridge to the diplomatic process, ably assisted by his foreign minister Sergey Lavrov. It was Lavrov who at critical moments of near-breakdown during the two-year negotiations kept the process on track. US top diplomat John Kerry more than once publicly acknowledged Lavrov for his steadying diplomatic hand, when others like French foreign minister Laurent Fabius were at times jeopardizing progress with mischievous interventions.
The end of international sanctions will translate in up to $100 billion of Iranian assets being released by Western countries, primarily by the US. That money plus the opening of world markets for Iranian exports will catapult Iran’s undoubted economic trajectory. As the world’s biggest holder of natural gas reserves, along with Russia, and as one of the top oil producers, one can rightly expect Iran to further develop into an economic powerhouse in the Middle East, if not the world.
On a recent visit to Tehran, this author was deeply impressed by the country’s high level of development – and that was before the trade and financial sanctions have been lifted. Despite decades of Western embargo imposed on Iran, the country has managed to achieve impressive progress in many spheres. Social infrastructure, engineering, urban planning, architecture, industrial development, health and education standards – all were on par with any European state. And that was under an onerous sanctions regime! With the return to normal international business and transactions one can only imagine that Iran awaits even greater economic and social progress.
It is noteworthy that when Tehran shipped out its stockpile of enriched uranium last month, as per the nuclear accord, it was Russia that the Iranians dispatched their uranium wealth to for storage. That speaks of a solid trust between the two countries. It will not be forgotten by the Iranians that Russia has shown itself to be a reliable partner in the P5+1 negotiations, a relationship that has only become ever closer under Russia’s President Putin.
It is also significant that Russia is Iran’s partner of choice when it comes to developing its civilian nuclear energy sector. Russia is contracted to build more nuclear plants in Iran over the coming years, in addition to the long-established reactors at Bushehr. Given the strategic sensitivity of this sector, that partnership demonstrates an abiding trust between the leaderships of the two countries.
When it comes to Iran revamping its oil and gas industries, Russia’s technical know-how in these sectors and its proven trustworthiness as a principled foreign ally will put Russia in a prime position as an economic partner.
With crippling economic sanctions rescinded, Iran’s economic future looks bright, even though oil prices have tumbled on the world market. Its international stature and its already impressive industrial achievements can only grow greater still. That is perhaps what regional rivals of Iran in Saudi Arabia and Israel fear most. All their talk about Iran becoming free to «sponsor terrorism» – echoed by hawkish American politicians – is really a cloak to hide their real fear. Which is that Iran’s economic and political prowess – and legitimate geopolitical influence – will threaten to diminish their power and regional standing.
In contrast to the Western-backed Saudi regime and the other Persian Gulf Arab monarchies, Iran’s development is a relatively balanced process that has advanced the greater participation and benefit of the nation. One indirect benefit from the decades of sanctions is that Iran has a high level of indigenous development and diversification. The Saudi and other Gulf Arab states have a much higher dependence on oil and gas and the import of cheap foreign labor. In a word, Iran has a more sustainable economic model underpinned by a political leadership that is committed to national development as opposed to elite cronyism as seen in Saudi Arabia.
The «new era of diplomacy» that Washington and European states have regaled with regard to Iran will certainly allow Iran to make huge strides in economic development.
Going forward, Iran, it can be safely assumed, will be pragmatic in its business relations. The recent announcement by Tehran that it is to purchase 114 passenger planes from the European aviation consortium Airbus is a sign that Iran is open for business. But Persian culture is also famed for its long historical memory.
The mordant sanctions that Washington and its European allies inflicted on Iran over decades and for highly dubious reasons may be overlooked by the Iranians in the interest of moving forward. But the misdeeds will not be forgotten, and especially those by Washington where the Cold War seems to still be pursued albeit with a veneer of diplomacy, as attested by the latest round of bilateral sanctions.
In Iran’s brighter future, Russia stands to reap from mutual ties, while others will weep for past misdeeds and squandered opportunities.