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The intensity of Moscow’s current contact with Tehran is unprecedented in Russia’s post-Soviet history. Both the Russian and Iranian authorities are determined to create a solid foundation for bilateral dialogue, and their dedication to deepening ties is largely determined by their geopolitical interests. Yet despite the potential for improvement, there are serious obstacles that may hamper or even halt cooperation.

Turning a New Page

• The beginning of a new period in Russian-Iranian relations was marked by the return to the Kremlin of President Vladimir Putin in 2012.
   
• The Arab uprisings that began in 2011 left Moscow with a shrinking political and economic presence in the Middle East. This outcome demanded that Moscow be more active in maintaining contacts with Tehran.
   
• In 2014, tensions between Russia and the West stemming from the Ukraine crisis also drove the Kremlin to strengthen cooperation with Iran.
   
• The Iranian authorities see Moscow’s attempts to improve relations with the Islamic Republic as a long-awaited chance to form a close partnership with Russia.
   
• Iran has gradually become disillusioned with the possibility of a quick and complete lifting of the punitive economic measures imposed on it. This has compelled Iranian authorities to be more active in their dialogue with countries—like Russia—that are ready to cooperate even in the face of sanctions.
   
• Tehran may also consider ties with Russia to be a plan B in case negotiations over its nuclear program fail or do not lead to the results it desires.

What’s Next?

• A settlement of the nuclear issue would not have a significantly negative effect on the Russian-Iranian dialogue; the two sides would remain interested in cooperation on a wide array of issues.
   
• External factors will continue to create room for cooperation between Russia and Iran. But the formation of any comprehensive strategic alliance with Tehran is still not in Moscow’s interest because it could harm Russian dialogue with others, including Israel and Gulf Cooperation Council countries.
   
• Russian-Iranian economic cooperation has limits. To capitalize on opportunities available, Moscow and Tehran have to determine to what extent and in what areas real economic cooperation is possible.
   
• Russia and Iran must determine in which political spheres their collaboration makes sense and can be effective—in other words, where they can go beyond mere consultations. On certain issues, the Russian and Iranian positions are close, but it is not certain that the two will agree.
   
• Without clear answers to these economic and political questions, further progress on the dialogue between Moscow and Tehran is unlikely.

Introduction

Since the return of Vladimir Putin to the Russian president’s office in 2012, Russian-Iranian relations have experienced a significant change of course in contrast to the substantial cooling of the bilateral dialogue during the last two years of Dmitry Medvedev’s presidency. Unexpected twists in the relationship between Moscow and Tehran have been quite normal since the 1990s.¹ As a result, in 2012, the initial intensification of contact between Russia and Iran looked like just another fluctuation in their dialogue. However, by 2015, it seems that under certain conditions, the rapprochement between Moscow and Tehran may lead to a qualitative change in ties.

The current intensity of Moscow’s contact with Tehran is unprecedented in Russia’s post-Soviet history. And this time, political analysts in Russia believe that both the Russian and Iranian authorities are determined to create a solid foundation for bilateral dialogue that would ensure gradual progress on political and economic ties in the long run and prevent unnecessary negative fluctuations.² The resolution on both sides has been determined by existing political realities. Growing confrontation with the West has pushed Moscow to be more active in the Middle East and Asia to compensate for the negative political and economic implications of tensions with the United States and the European Union (EU), to avoid international isolation, and to curtail possible security threats to the Kremlin in non-European parts of Eurasia. These factors, in turn, have led the Russians to intensify contact with Tehran.

As for the Iranian authorities, they see Moscow’s attempts to improve relations with the Islamic Republic as a long-awaited chance to form a close partnership with Russia. The Iranian leadership’s initial illusions regarding a prompt settlement of issues related to the country’s nuclear program and a quick lifting of sanctions have been dispelled. Iranian officials may assume that immediate political reconciliation with the United States and, to a lesser degree, the EU is hardly possible. Under these conditions, Russian support of Tehran’s efforts in the nuclear negotiations is seen as a certain guarantee that these discussions may still lead to positive results for the Islamic Republic. Moscow’s interest in developing bilateral ties is also taken as a sign that, regardless of the outcome of the talks, there are always countries ready to cooperate with Iran. Apart from that, the existing similarity in Russian and Iranian views on regional issues is meaningful for Tehran in its quest for dominance in the turbulent Middle East. And enhanced contact between the two countries on regional issues may benefit the Iranian authorities.

Yet it is still too soon to discuss the formation of a new regional partnership or alliance between Russia and Iran. Despite the intentions on the two sides to establish closer relations, whether the resolution of the Russian and Iranian elites is enough to make possible a qualitative leap in the nature of the dialogue between Moscow and Tehran remains a big question.

The Drivers of Russian-Iranian Dialogue From 1991 to 2011

According to some political analysts, it is hard to find another country whose relations with Moscow have experienced such a huge number of drastic twists and turns in as short a period of time as has been the case with Iran.³ Between 1991 and 2011, periods of active political dialogue between Russia and Iran were often swiftly interrupted by long pauses, during which Moscow and Tehran would actively exchange accusations about failing to meet treaty commitments or failing to keep promises.

For Moscow, this volatility in the bilateral relationship could be explained by the fact that Russian diplomacy in Iran was predominantly shaped by the Kremlin’s desire to use its ties to Tehran as a means to influence the geopolitical playing field, rather than by the bilateral relationship per se. Three Russian interests in particular played (and in some cases, still play) the central roles in determining Moscow’s approach to the Islamic Republic:

• Maintaining a certain level of positive dialogue with the West (primarily the United States)
   
• Ensuring Moscow’s dominance in the space of the Commonwealth of Independent States (CIS) as a zone for Russian national aspirations
   
• Securing stability around the borders of the CIS and Russia (including deterring nuclear proliferation)

At the same time, the Iranian authorities’ behavior toward Russia was also periodically influenced by drivers that were not directly related to the countries’ bilateral relations. Between 1991 and 2012, the struggle between pro- and anti-Western elites in the Islamic Republic, Tehran’s claims to dominance in the Middle East, and changes in the degree of confrontation between Iran and the United States led the Islamic Republic to make certain adjustments to its approach to Russia.

These factors did not always influence the Russian-Iranian dialogue in a positive way. For instance, the attention that Moscow paid to its dialogue with Washington made the Russian authorities see Iran as just another type of leverage that the Kremlin could use in its political games with the United States. Moscow played this card during both periods of U.S.-Russian rapprochement and times of tension between the two countries, either by freezing its cooperation with Tehran or boosting it, respectively. The Gore-Chernomyrdin agreement of 1995 is the most notable example. According to this confidential document signed under heavy U.S. pressure during another period of reconciliation between Moscow and Washington, the Russian government agreed to stop fulfilling contracts to export military supplies to the Islamic Republic by 1999 and to conclude no new deals with Iran in this field. The U.S. authorities, for their part, were expected to begin cooperation with the Russian military-industrial complex and to stop the unauthorized provision of U.S. military equipment to the Middle East, as well as to countries bordering Russia. In addition to this treaty, in 1998 Moscow decided not to follow through with its contract to export a research reactor to Tehran. The reason for this decision was the same as in the case of the Gore-Chernomyrdin agreement: Russia hoped to bridge relations with Washington and expected Western financial and economic help in return.⁴

These steps came with a high price for Russia. By 2000, exports of Russian military equipment to Iran had been halted (the loss to Russia’s military-industrial complex was estimated by a Russian economist to be $3 billion).⁵ Moreover, the secret details of this treaty were unilaterally revealed by the Americans during the 2000 presidential race. This, in turn, seriously harmed Russian-Iranian relations: since then, the Iranian authorities have grown more confident in their belief that Moscow could not be fully trusted.⁶

For Moscow, the failure of the Gore-Chernomyrdin agreement was a serious lesson that convinced some Russian politicians that such deals should not be made with the United States in the future.⁷ However, this understanding did not lead to any substantial changes in the United States-Russia-Iran triangle, and the dialogue between Moscow and Tehran remained dependent on the Kremlin’s stance on its interaction with the United States.

The relationship between the swings in Russian-Iranian relations and the dynamics of the dialogue between Moscow and Washington can be illustrated by a more recent example. Another rapprochement between Moscow and Tehran took place in 2006–2009, and it was marked by achievements in energy sector cooperation. Dialogue began when U.S.-Russian ties were experiencing serious difficulties: Moscow was deeply concerned about the U.S. intentions to deploy new missile defense systems in Eastern Europe and frustrated by American support of Ukrainian and Georgian efforts to join the North Atlantic Treaty Organization (NATO). The end of this period of close relations between Moscow and Tehran coincided with the start of the reset in U.S.-Russian relations initiated by the administration of U.S. President Barack Obama. Experts have argued that the reset partly guaranteed Russian support for 2010 United Nations (UN) Security Council Resolution 1929, which paved the way for the adoption of severe economic sanctions against Iran by the United States, the European Union, and their partners; Moscow’s refusal to export S-300 surface-to-air missile systems to Iran in 2010; and the de facto imposition of unilateral sanctions against Iran by then president Medvedev.⁸

The situation surrounding the Iranian nuclear program also affected the development of Moscow’s dialogue with Tehran. The Russian authorities never concealed the fact that an Iran armed with a nuclear bomb was not in their interests. As a result, the disclosure of the secret Iranian nuclear program in the early 2000s alarmed Moscow. Consequently, the Kremlin put substantial restraints on its cooperation with the Islamic Republic in the military, space/rocket, and nuclear spheres. In 2006–2009, Moscow also supported a number of UN Security Council resolutions related to Iran’s nuclear program, as the Russian government had doubts about the intentions of the Iranian authorities.

Moscow’s concerns were deepened in 2009 when Tehran suddenly disclosed plans to construct a second enrichment facility. Then, in October–November 2009, Iran refused to exchange low-enriched nuclear fuel for high-enriched fuel. The deal, which Russia had actively backed, was intended to supply a Tehran-based research reactor under European control. Russia believed the swap would illustrate Iran’s peaceful intentions to the West and alleviate Moscow’s concerns about the possible use of low-enriched uranium in dirty bombs. At the time, Medvedev described Iran’s behavior (including Tehran’s rejection of the deal) as “inappropriate.” He acknowledged that Tehran was moving closer to having the ability to produce nuclear weapons and thought new international sanctions were inevitable. This state of affairs led to the adoption of two far-reaching UN Security Council resolutions, and in September 2010, Russia under Medvedev imposed additional sanctions on Iran, including a ban on selling the S-300 system to Tehran.⁹

The Kremlin’s intention to secure Russian dominance in the CIS has not always been good for the development of the dialogue between Moscow and Tehran. In certain cases, the Russian government considered maintaining good relations with CIS countries to be more important than positively developing its relations with Iran. That was the case during the division of the Caspian Sea among Azerbaijan, Kazakhstan, and Russia in 2002, when Moscow broke the previous agreement to handle this issue exclusively in a format that involved all five littoral states—Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan. This allowed the Russians to improve relations with Astana and Baku, but it temporarily damaged relations with Tehran, whose authorities had expected that all territorial issues would be settled in a joint manner.¹⁰

The development of the dialogue between Moscow and Tehran has also been affected by Russian attempts to maintain a certain level of good relations with other key players in the Middle East. For instance, the Iranian authorities have traditionally kept a close eye on the development of Russian-Israeli cooperation. Any achievements in their bilateral relations (such as Putin’s visits to Israel in 2005 and 2012, as well as the introduction of a visa-free regime for Russian and Israeli tourists in 2008) have led Tehran to question why Moscow has avoided such a degree of cooperation with Iran. However, to Russia’s credit, the Kremlin has tried to balance relations with Israel and the Islamic Republic, considering both countries to be equally important to Moscow’s regional interests. The Russian authorities have avoided any moves and statements in their contact with Israeli officials that could be considered in Tehran as anti-Iranian, and vice versa. Yet, according to interviews with experts and officials, such an approach has not earned positive feedback in either Iran or Israel.¹¹

Tehran also has not always been a reliable partner for Moscow during the last two decades. For instance, in December 2008, the Russian government received a serious shock when, in spite of initial agreements, Iran voted against St. Petersburg in favor of Doha to be the location of the executive office and the secretariat for the Gas Exporting Countries Forum. The Iranian voice appeared to be decisive in the vote by the members of the organization.

The outcome was both embarrassing and unexpected for the Russian government. On the eve of the ballot, the Russian delegation had reported to Moscow its complete confidence in the result of the vote. Its members thought that they had ensured support from a majority of participants for St. Petersburg; they had reached agreement on this matter with the Iranians. But then, as the officials interpreted it, Russia lost the vote to a tiny Arab state. In addition, the Russian authorities fully realized that with the Gas Exporting Countries Forum, they had created an organization that made it possible to influence the international gas market, but they had failed to gain control of it.¹²

The Iranian government has never given an official explanation for this anti-Russian gesture. Russian experts have argued that the Iranian government had attempted to trade Russia for closer ties with the Arabs and, especially, the Gulf Cooperation Council states (2008 was a short period of rapprochement between Iran and the Persian Gulf monarchies). Either way, the decision over the forum headquarters is one of the most well-known examples of the ease with which the Iranian government could change course in its dialogue with Moscow.¹³

Watchful Partnership

When characterizing Russian-Iranian ties from 1991 to 2011, a prominent Russian expert on Iran, Vladimir Sazhin, called this relationship a “watchful partnership.”¹⁴ He correctly argued that although positive dialogue between Iran and Russia was in Moscow’s interests, the Russian government carefully watched the development of relations in order to prevent them from exceeding a level that would endanger Moscow’s dialogue with other countries.

Indeed, between 1991 and 2011, both Russia and Iran persistently avoided crossing the redline that would have made any further dialogue between the countries impossible. The factor of geographic proximity played no small role. Iran’s geostrategic position allowed it to influence the development of the situation in the Caspian Sea region, the Caucasus, Central Asia, and the Middle East. This reality compelled Moscow to discuss a wide range of foreign policy issues with Tehran, such as the conflict in Nagorno Karabakh, the situations in Iraq and Afghanistan, the stability of Tajikistan, NATO activities in the South Caucasus (primarily, NATO cooperation with Georgia and Azerbaijan), the presence of nonregional powers in the Middle East and Central Asia, the construction of trans-Caspian pipelines, and the instability in the Caucasus. Given the shared visions of Russia and Iran on how to handle some of these problems, the support of the Islamic Republic was (and still is) believed to be important to the success of Moscow’s activities to restore and strengthen Russia’s regional position after the fall of the Soviet Union.

Russia’s political elite also remember that, as opposed to Turkey, the Islamic Republic did not use the fall of the Soviet Union to aggressively spread its influence in the Caucasus and Central Asia by propagating the ideas of the Islamic revolution or funding local nationalist and radical religious movements. Moreover, in the mid-1990s, Moscow and Tehran united their efforts to stop the civil war in Tajikistan.¹⁵

This behavior demonstrated that Tehran could be a helpful partner, although the steps taken by the Iranian authorities were not altruistic but pragmatic. After the fall of the Soviet Union, Russia was not seen as a political threat or an ideological rival. On the contrary, cooperation with Russia was expected to bring the Islamic Republic out of international isolation.¹⁶

During the second Chechen war, between 1999 and 2009, the dialogue with Tehran yielded important results for Moscow. In 1999, the Iranian authorities not only refused to support the separatists but also used their country’s position as the chair of the Organization of the Islamic Conference to adopt a pro-Russian resolution at a summit meeting. This considerably reduced tensions between Russia and some Arab countries on the issue.

Amid these circumstances, by 2012 the Russian authorities had worked out an unofficial diplomatic strategy that involved balancing between Iran and its political opponents—not only the United States, but also Israel and some of the Gulf Cooperation Council members. The Russian government understood that any alliance or strategic partnership with Iran would inevitably worsen their relations with the world’s leading countries.¹⁷

Yet, the watchful partnership changed in 2012.

What Happened After 2012?

Putin’s return to the Kremlin in 2012 marked the beginning of a new period in Russian-Iranian relations. His vision of Russia’s top priorities in the international arena was seriously affected by the failure of the reset in U.S.-Russian relations and the beginning of tensions with the West over Syria. In addition to that, Moscow was frustrated by the fact that its generally pro-Western position on the Libyan conflict in 2011 received no positive feedback either in Washington or Brussels. Disappointed in the previous attempts to bridge the divide with the West, the three-term president of Russia was determined—more than ever before—to develop relations with non-Western countries.

This naturally affected Moscow’s stance on Iran. Only two months after his election, Putin met his Iranian counterpart, then president Mahmoud Ahmadinejad. The meeting was held on June 7, 2012, on the sidelines of a Shanghai Cooperation Organization (SCO) summit. In the public part of the meeting, Putin clearly stated the Russian interest in further developing relations with Tehran. He also described the problems that, in his opinion, the two sides should discuss first. These issues included the Iranian nuclear program, Russian-Iranian nuclear cooperation, the development of economic ties (which, according to Putin, had not achieved their potential), and the legal status of the Caspian Sea. More important, Putin called Iran Russia’s “old traditional partner.”¹⁸ Before 2012, this statement had not often appeared in speeches by Russian officials that were addressed to Iranians.¹⁹ Moreover, this time, such statements seemed to be more than just words.

Satisfied with the results of his meeting with Ahmadinejad in Shanghai, Putin provided the initiative for an unplanned visit by Sergey Lavrov to Tehran that took place less than a week after the presidents met in June 2012.²⁰ The visit by the Russian minister of foreign affairs demonstrated that the political agenda was even broader than stated by Putin in Shanghai. According to Russian media sources, Lavrov noted that Moscow would be interested in closer cooperation with Tehran on the situations in Syria and Afghanistan.

Since Lavrov’s trip to Iran in 2012, the strength of Moscow’s dialogue with Tehran has gradually increased. The Kremlin has been advocating Iran’s involvement in the international discussions on the situations in Afghanistan, Iraq, and Syria. In September 2014, Lavrov even called the Islamic Republic “a natural ally” of Russia in the struggle against religious extremists in the Middle East. All of these gestures were supposed to demonstrate that, currently, Iran is something more than just a southern neighbor to Russia.²¹

The transfer of presidential power in Iran, from Ahmadinejad to Rouhani, did not significantly affect the trend of deepening relations. Putin and Rouhani met on the sidelines of the fourth summit of the Caspian Sea littoral states on September 29, 2014. They also held negotiations in Bishkek, on the sidelines of the SCO summit (on September 13, 2013); on the sidelines of a summit for the Conference on Interaction and Confidence Building Measures in Asia (on May 23, 2014); and in Dushanbe, again at an SCO summit (on September 12, 2014). The visit to Bishkek was Rouhani’s first foreign trip as president, and it was taken as a sign of his government’s interest in strategic ties with Russia and China.

The agenda of the current Russian-Iranian dialogue also involves economic issues. A political expert close to the Russian government, who spoke to Gulf States News, believes that “Russia and Iran have a unique opportunity to create an economic basis for their co-operation, and the main task is not to lose this chance. . . . Both sides have concrete suggestions and, now, they are discussing the details of these proposals and adjusting their positions.”²²

In 2014, Russian Energy Minister Alexander Novak, who is also the head of the Russian-Iranian Joint Trade and Economic Commission, established good personal relations with the Iranian oil minister, Bijan Namdar Zanganeh, and the head of the Atomic Energy Organization of Iran, Ali Akbar Salehi. His efforts resulted in the adoption of an all-encompassing agreement on the principles of trade and economic relations between the two countries, which was signed by Novak and Zanganeh in Moscow on August 5, 2014. Putin welcomed the document’s adoption and said it was necessary to bolster the new legal framework with concrete substance.²³

The agreement laid important groundwork for the eleventh meeting of the joint commission, which was held in September 2014. According to some sources, the two sides agreed to increase the volume of bilateral trade tenfold (from $1.5 billion at that time) by 2017, and the overall volume of hypothetical investment contracts signed could potentially add up to $70 billion.²⁴

Reasons for the New Rapprochement

As in the past, Moscow’s increasing interest in Iran has been determined by a number of external factors.

The first steps made by the Kremlin toward Tehran were mostly provoked by the events of the Arab Spring. When, in mid-2012, the Russian authorities decided to intensify contact with the Islamic Republic, they were seriously concerned with their shrinking political and economic presence in the region. Moscow considered Tehran one of its last footholds remaining in the Middle East and tried to secure its position there.

As one of its early efforts, Moscow unofficially supported the activities of Russian businesses in Iran. The Kremlin looked the other way when Russian businesses found loopholes in the U.S. and EU sanctions regime aimed at their Iranian partners. This, in turn, created positive feedback in Tehran. Shortly before the end of Ahmadinejad’s second term, the two sides had started to talk about the possibility of resuming exports of the S-300 Russian missile system (or equivalent systems) to Iran.

The outcomes of the Arab Spring in the region demanded that Moscow be even more active in maintaining contact with Tehran after Rouhani’s victory in the 2013 presidential elections. By then, concerned about growing tensions in Iranian society and the possibility of a revolutionary spring in the country, the ruling regime of the Islamic Republic decided to loosen control over political life in Iran by letting people elect a president from a certain set of candidates (as opposed to the vote of 2009, when Ahmadinejad’s victory in the first round was likely helped by election fraud). It was not a surprise that a population tired of extreme positions chose Rouhani, the most moderate figure who promised long-awaited domestic liberalization and normalization of relations with the West.

Rouhani’s speech in the UN General Assembly on September 24, 2013, made it clear that improving Tehran’s relations with the West was his top priority, which alarmed Moscow. By that time, the Russian authorities had already received signals from Tehran that the window of opportunity for deepening relations could be closed if the Kremlin did not intensify its efforts to improve ties with the Islamic Republic. In mid-August 2013, Moscow failed to arrange Putin’s trip to Iran because the Iranian side had not agreed on the format for the visit proposed by the Kremlin. The Russian vision of Putin’s trip did not correspond with Tehran’s initial expectations: for instance, the Iranians sought to arrange a full-fledged presidential visit, whereas the Russians wanted to include Putin’s trip to Iran as just one element of the president’s tour of the Caspian states.²⁵

When Iran refused to accept the format of Putin’s visit to the Islamic Republic proposed by Moscow, the Russian authorities were shocked. The Kremlin had grown accustomed to dictating to the semi-isolated Islamic Republic the conditions of a Russian president’s meetings with his Iranian counterpart. Rouhani’s decision not to meet with Putin under the Russian conditions clearly demonstrated that unlike his predecessor, who was ready to use every opportunity to develop warmer relations with Moscow, he expected greater respect from the Russians. That is because Rouhani, more than Ahmadinejad, was able to choose dialogue partners in the international arena. Subsequently, Russia was compelled to reassess its approach and become even more engaged in the dialogue with Tehran than it was during the last year of Ahmadinejad’s presidency.

In 2014, tensions between Russia on the one side and the United States and the EU on the other over the Ukraine crisis became another reason for the Kremlin to strengthen cooperation with Iran. The unprecedented—since the end of the Cold War, at least—scale of confrontation with the West convinced Moscow that intensifying contact with Middle Eastern countries was highly important. Russian authorities believed that good relations with Middle Eastern states would ensure that the Kremlin could avoid international isolation and compensate for the sanctions imposed by the United States, the EU, and their partners. Moscow also developed plans to coordinate efforts with Tehran in the energy market to ensure that the Europeans would not use Iran’s resources to decrease their dependence on Russian gas. In addition, Tehran has become an important regional leader for Moscow, capable of influencing public opinion in the Muslim world. A key aim of Russia’s engagement with Iran in this regard is to counterbalance the anti-Russian campaign in the Arab media, which is supported by Qatar and Saudi Arabia.

From an economic point of view, the Islamic Republic has become increasingly important as an agricultural exporter. Iranian produce (predominantly fruits and vegetables) may help, at least in part, replace some European products that Russia is banned from importing under the sanctions.²⁶

Tensions with the West have also compelled Russian companies to look for trade and investment opportunities in Asia, including in countries such as Iran. There are several areas in which Russian businesses seek to cooperate with Iran: oil and gas, petrochemicals, nuclear energy, electricity, and railroad infrastructure. In November 2014, Russia and Iran signed a package of agree