Iranian Deal Leaves Russia in Deeper Isolation

Moscow tried its best to present the hard-negotiated deal in Lausanne, Switzerland, on curtailing and controlling the Iranian nuclear program as a success of its firm diplomatic position for a political solution to this formidable problem. In fact, however, Russia played, at best, a secondary role in achieving this breakthrough. Russian Foreign Minister Sergei Lavrov was not even present during the last agonizing day of talks, which culminated in the European Union High Representative for Foreign Affairs and Security Policy Federica Mogherini and Iranian Foreign Minister Javad Zarif announcing the parameters of the deal (Kommersant, April 3). Russia’s main contribution to the solution—the proposal to store the bulk of Iran’s enriched uranium—was actually turned down by Tehran (RIA Novosti, April 2). The United States has reasons to worry about the translation of the framework agreement into a final document. China is enthusiastic about the prospect of Iran opening for business. But Russia is, to all intents and purposes, the main loser in this compromise.

Indeed, Moscow’s ambivalent attempts to cultivate a “special relationship” with Iran while abiding by the sanctions regime have become irrelevant as Turkey, India and China explore new economic opportunities, while the remaining nuclear issues have to be sorted out bilaterally between Tehran and Washington, without any intermediaries (Gazeta.ru, April 1). In the last couple of weeks, Russia has sought to make itself a useful partner for Iran by taking a stance against the intervention in Yemen launched by Saudi Arabia and even taking this conflict to the consideration of the United Nations Security Council (Nezavisimaya Gazeta, April 3). This maneuvering, however, is hardly going to boost Russia’s profile in the Middle East, as the motley coalition of Arab states secures a modicum of support from the US for defeating the Shia rebels allegedly backed by Iran (Rbc.ru, April 3). It was only with great difficulty that Moscow managed to evacuate hundreds of Russian citizens and embassy personnel from harm’s way in Yemen (Kommersant, April 2).

The conflict in Yemen has made only a minor impact on the trajectory of the oil price, but the Lausanne deal is certain to pull it down, and Russia cannot ignore the potential downward pressure if a full-blown agreement is indeed reached by the end of June (Polit.ru, April 3). Iran needs a lot of investment to modernize its oil industry, while the estimate of a sustained decline of prices by about a third from the current plateau of $50–60 per barrel looks conservative (Rbc.ru, April 3). For the Russian economy, it would mean not only a deepening of the recession in 2015 below the World Bank forecast of 3.8 percent of GDP, but also the evaporation of any hope for growth in 2016 (Gazeta.ru, April 1). President Vladimir Putin keeps the government on the course of waiting the crisis out, but accumulating under-investment undermines the vision of Russia’s inevitable recovery. Meanwhile, the profound changes on the world energy market—accelerated further by the expected flow of hydrocarbons from Iran—leave Russia, with all its difficult-to-extract resources, in limbo of indefinite depression (Slon.ru, April 2).

Russia’s economic degradation is further seriously aggravated by the sanctions regime, and the Kremlin seeks to present the compromise reached in Lausanne as a major breach in the Western policy of sanctions. Instead, the long and still bumpy road to the agreement has become a proof positive of the effectiveness of sustained multilateral economic pressure, and the Russian leadership should have recognized how many concessions Tehran had to make in order to achieve this proposed lifting of sanctions. Moscow now argues that the UN-authorized arms embargo should be lifted as soon as possible so that a new contract on delivering to Iran the S-300 surface-to-air missile complexes could be negotiated (Moskovsky Komsomolets, April 3). Tehran, however, was rather annoyed with Russia’s behavior regarding the fulfillment of the previous contract and insisted on its annulment. It is also unclear whether it would opt for engaging Rosatom in the reconfiguration of the Arak heavy-water reactor as stipulated by the Lausanne deal (RIA-Novosti, April 3). Iran needs, first of all, the softening of US- and the EU-enforced measures that have crippled its financial system—and this is exactly what Russia is set to experience in the months ahead (Gazeta.ru, April 3).

It is not just the depressed oil prices that weaken the Russian economy, it is also the transformation of Putin’s trademark “manual management” into a tighter control of his loyal (or perhaps not that loyal) siloviki (security services personnel) over the financial flows and profitable enterprises (RBC.ru, April 1). Their appetites have not at all been diminished by the recession, and limitations on this predation—such as, for instance, international audits on corporate accounts or the presence of Western partners on the boards—are swiftly being eliminated in Russia (Forbes.ru, April 1). As such malignant mismanagement causes economic performance to deteriorate, the need to explain it away by exaggerating Western interference becomes ever greater. Against the background of the ceasefire in eastern Ukraine, the prevalent negative attitude toward the United States has decreased only slightly, while more than a half of Russians see a real threat of war with the North Atlantic Treaty Organization (NATO) (Levada.ru, April 2; Kommersant, April 3).

While Iran appears to be recognizing the need to reform its domestic politics and change its attitude toward the West, Russia is turning into a massively corrupt police state and is apparently thriving in the atmosphere of confrontation. The contrast between these two regimes has become strikingly sharp as nuclear negotiations approached the final stretch toward a binding agreement. Moscow still tries to present itself as a responsible stake-holder in the international system. But with every turn of the screw in the government’s repressions against members of the domestic opposition—stigmatized as “traitors” and “foreign agents”—Russia’s external behavior tends to turn erratic. Putin tries to maintain the appearance of confident statesmanship, but his subordinates remain eager to repeatedly violate international law because this law is after them. The survival of Putin’s Russia depends upon the inability of international institutions to deter its militarism and to punish aggression; and Moscow is set to discover which step along its path of “hybrid war” escalation will be the one too far.