(Washington – Brussels Morning) – Iran has become a deeply contentious issue between Washington and Brussels. US secondary sanctions have pushed European companies to pull out of Tehran.
But the issue is not only significant for Washington’s relations with Europe. Russia, Turkey and the United Arab Emirates also hold different positions to that of the United States.
Reviewing the current state of play of Iran, Brussels Morning talks to Alex Vatanka, the Director of the Iran Program and a Senior Fellow at Frontier Europe at the Middle East Institute in Washington D.C. He is also Senior Fellow in Middle East Studies at the US Air Force Special Operations School (USAFSOS)”
Ambassador Tedo Japaridze (TJ) How resilient is Iran at this point in time? What is the effect of Washington’s “maximum pressure” regime on the economy?
Alex Vatanka (AV) As with the rest of the world, the Iranian authorities are uncertain about the outcome of the November 2020 American elections. They are therefore attempting to play a double-game for the coming few weeks to make sure that the two main eventualities – Trump losing or winning – are both covered.
President Hassan Rouhani is leading the way in expressing Iran’s demands should Trump lose and Joe Biden wins the elections. Rouhani increasingly mentions Tehran’s demands for a return to the 2015 nuclear deal should Joe Biden win and decide to return the Americans to the nuclear agreement. Rouhani has also raised demands for an “apology” and “compensation” for imposing the sanctions on Iran.
In reality, such demands are a form of political theatre, so that Rouhani can show himself to be a “tough” negotiator towards the Americans. Hardliners in Tehran still accuse Rouhani of being obsessed with cutting a deal with the Americans and so they look for any opportunity to attack him.
Meanwhile, Foreign Minster Javad Zarif is preparing the ground for talks in a possible second-term Trump presidency. Zarif is likely engaged in various backchannel tracks with American officials and personalities close to Trump to outline what Tehran would require from a second-term Trump White House in order to start negotiations with him. It has to be remembered that a second-term Trump will be freer to negotiate with Tehran since he no longer need worry about re-election or the need to satisfy the demands of anti-Iran voices and interest groups in the US.
The state of the Iranian economy is naturally a major concern for Tehran. For the first time in 60 years, Tehran requested a loan from the IMF, which was denied. Iran’s request for a US$5 billion emergency loan was intended to fight the spread of coronavirus in Iran.
The request came after the IMF announced that it will make US$50 billion available to member states to deal with the financial impact of coronavirus. The US dominates IMF’s decision-making process and Washington was always unlikely to accept an IMF loan to Tehran. Tehran’s request for a loan is just one of many examples of the economic pains Iran is under.
(TJ) Russia is bracing to sell the S-400 missile system to Iran, as soon as the UN arms embargo expires. Is there a broader range of diplomatic agreement between Moscow and Tehran in the Middle East?
(AV) In late September, Russia, China, Iran and a number of other states held the “Kavkaz2020” military drills in southern Russia and in the Caspian and Black seas. It was not unprecedented. Iran has participated in such joint drills with Russia and China before but it is becoming a trend that Western states are becoming more anxious about.
In recent weeks, a number of individuals from Iran’s Revolutionary Guards have argued that it is in Iran’s interests to move closer to Russia in its foreign relations and diplomatic ties. Hossein Amir Abdollahian, a top Revolutionary Guards official on foreign affairs, in a recent meeting with the Russian ambassador to Tehran urged closer ties between the two countries.
These warm words follow on Moscow’s support for Iran’s recent satellite launch and the Kremlin’s opposition to American efforts to extend the UN arms embargo on Iran beyond its 18 October expiration date. Iran and Russia may have had a troubled partnership but their common enmity towards the US has kept them together. At the same time, there seems to be a new push by the Revolutionary Guards to argue more explicitly for closer ties with Moscow. This is music to Moscow’s ears since it has always resented the recurring desire of the Rouhani government to move Iran closer to the West.
Following the Iranian Defence Minister’s visit to Russia in September, Tehran increasingly has been promoting the idea of a “strategic” new relationship with Moscow. The official reason for the visit was the “Army 2020” defence show in Moscow. Defence Minister Amir Hatami was shown Russia’s most sophisticated military platforms, including the S-400 anti-air defence system. Moscow did not speak of the visit as part of a new “strategic” era. There was no big publicity or show around the visit.
But this is probably because the Russians don’t want to create any alarm about what Moscow is undertaking with Iran in the field of defence cooperation. Moscow has many partners in the Middle East, including Israel, and the Russians also want to move closer to states like Saudi Arabia and the UAE. That is why the Russians did not make a big show of the Hatami visit. But there is no doubt that Russia considers Iran as its top possible surrogate in the Middle East.
There is also talk about joint military production but little specific information has been provided. Joint production and the transfer of military technology are among the top concerns of the US as it looks at developments in Russian-Iranian relations. At the moment, reports from Russia suggest that Tehran is negotiating to buy a number of S-400 anti-air systems.
The UN arms ban on Iran ends on 18 October, and this is a factor behind the timing of such reports. The S-400 is basically a defensive system. The Americans and the Israelis will not be happy about Moscow selling it to Tehran but it does not pose a threat to Iran’s neighbours like the UAE per se. The question is whether the Russians would also sell offensive military platforms to Iran, which can seriously pose a risk to Iran’s regional rivals by changing the balance of military power.
(TJ) Turkey and the UAE have been traditionally financial conduits for Iran during the peak of “maximum pressure” but also before. How and why have Ankara and Abu Dhabi been more effective in circumventing maximum pressure, compared to the European Union?
(AV) Tehran cannot give up on Europe.
Javad Zarif made it clear that the Europeans were “desperate” to mediate between Iran and the US before Washington introduced a motion at the UN to put “snapback” sanctions on Iran. Zarif claims that Tehran repeatedly rejected the Europeans for one simple reason: the Iranians had concluded that Washington would fail at the UN, which it did as only the Dominican Republic voted in support of the US. In the context of Europe, what is important at the moment are two factors.
First, that the Iranians genuinely seem to believe that the US global standing is not the same as before and this will fuel Tehran’s intransigence. Second, the Iranians also seem to think the Europeans also share this assessment about declining American power. This in turn is an opportunity for Tehran to pull Europe further away from the Americans. Regardless of Tehran’s efforts to move closer toward Russia and China, the reality is that the Iranians are psychologically not ready to give up on Europe.
And while Iran is disappointed that Europe has not done more to push back against US efforts to sanction Iran, which has led to a dramatic decline in Iran-EU trade, the reality is that Iran’s trade is down across the board, including that with three of its top trading partners: China, Turkey and the UAE. In 2020, the impact of sanctions has been exacerbated by the impact of COVID-19, which forced Iran to close its borders with neighbours.
That said, the Iranian economy is too deeply integrated with the economies of Turkey and UAE to simply break up entirely in the short-term. And it’s a two-way street. The financial sector in Dubai has deep and long ties with the Iranian market, and Turkey too has various economic interests in Iran, from the billions of dollars that Iranians invest in Turkish properties to importing natural gas from Iran.
No doubt American sanctions have badly impacted these economic ties but Iran as a market is simply too big to be ignored in the short term. The future of Iran’s economic relations will nonetheless greatly depend on its foreign policy agenda and priorities.
