Potential cooperation in certain areas, such as military technology, may look promising. But Iran cannot be expected to really help Russia’s economy withstand the impact of sanctions.
Relations between Russia and Iran have flourished since the start of the war in Ukraine. Russia, hit by tough new Western sanctions over its invasion of Ukraine, has begun looking for alternative partners among traditionally anti-Western countries, including circumventing trade restrictions, with Iran being the most promising country. looks like one of
The aspect of the relationship between the two countries that has received the most attention recently is Russia’s use of Iranian drones to terrorize Ukrainian cities. Both the Russian and Iranian governments deny that the kamikaze drones used by the Russian military in Ukraine are Iranian, but all evidence suggests they are. Ukrainian military intelligence said at the end of October that Iran was also about to start supplying Russia with missiles. However, this is far from the scope of their joint project.
This year saw a record number of meetings between senior Russian officials and their Iranian counterparts, including a visit to Tehran by Russian President Vladimir Putin. At these meetings, there was much discussion about how to circumvent Western sanctions with the help of Iran. It was intended to be shown to a domestic audience.
Concrete agreements were also reached at the meeting. Gazprom, for example, has pledged to invest his $40 billion in Iran’s oil and gas sector, but Iranian spare parts for both cars and aircraft, as well as the vehicles themselves, will be exported to Russia. The number of flights between the two countries is also soaring, according to Tehran, with trade, which he said was $4 billion in 2021, could reach $6 billion “in the near future.”
But this does not mean that Iran can compensate for the losses suffered by the Russian economy as a result of Western sanctions. Even if these forecasts for trade turnover growth were accurate, it would still account for less than 1% of Russia’s total foreign trade. There is a big gap between countries
Even the new pact has provoked more skepticism than optimism. Iran’s civil aviation industry has been in jeopardy for many years (due in part to Western sanctions) and is certainly not going to be rescued by the sale of individual parts to Russia. am sending. This year, the government decided to stop manufacturing a range of models due to excessive fuel consumption, poor safety and environmental standards, and high costs compared to similar models made elsewhere. I made up for the deficit by importing foreign cars.
There are areas where Iran can fill a niche in the Russian market, such as pharmaceuticals, construction materials and cosmetics. However, the development possibilities are not endless.
Implementing large-scale Russian state projects in Iran and making them cost-effective is also not smooth sailing. Tehran is short on foreign exchange and has been battling budget deficits for years. This has caused problems for Moscow in the past. Iran has yet to repay its debt to Russia for building the Bushel nuclear power plant. As of 2021, it still owes over $500 million.
New initiatives such as the construction of the Sirik power plant and the electrification of Iran’s railways will be financed with the help of a $5 billion Russian loan. If Russia’s mission is to use these projects to increase its political influence in Iran, its approach could possibly be justified. But it will not save the Russian economy in a time of sanctions.
Any project can be further complicated by the escalating wave of protests seen in Iran over the past 18 months. Outbursts of unrest have become larger and longer lasting, and their criticism of the country’s political system has become uncompromising.
The authorities’ draconian approach to closing public places and restricting internet access will only make things worse. If the government loses control of the situation, either nationally or in individual regions, Iran could plunge into a deep Venezuela-style crisis, with rising crime, taxation problems, and difficulties maintaining critical infrastructure. may be connected. This level of volatility creates significant investment risk and hinders implementation of the agreement.
Another major obstacle to cooperation is that Russia, for historical reasons, is still widely seen in Iran as a colonial power seeking to control local resources. In February and March, there were even small-scale protests against Moscow’s actions in Tehran.
Therefore, it will not be easy for the Iranian authorities to publicize the rapprochement with Russia as an achievement. A major deal with Moscow itself could spark further protests.Just last year, there were large-scale demonstrations in Tehran following the signing of a long-term strategic cooperation agreement with China.
Iran can teach Russia a lot about life under sanctions. This is the area where you are most likely to share your experience. But the Iranian example shows that while the negative effects of sanctions can be mitigated, they cannot be completely denied. Iran’s absolute GDP today is roughly back to 2010-2011 levels, when a major sanctions package was introduced against Tehran, but per capita is back to 2004-2005 levels. The experience in Iran is anything but exciting.
With the rapprochement between Moscow and Tehran showing no signs of ending any time soon, potential cooperation in certain areas such as military technology may look promising. But Iran cannot be expected to help in any significant way to help the Russian economy withstand the impact of sanctions.