OPINION: Changing Trajectory in Russia-Iran Relations?

While the untimely demise of Iranian President Ebrahim Raisi may have sent ripples in the political circles of the Middle East and beyond, it is highly unlikely to alter Iranian politics in the years to come, especially after Tehran’s growing relationship with Moscow post-Oct. 7.

According to the Iranian political system, the President is second only to the most powerful appointment (the supreme leader). Unlike monolithic dictatorships, decisions pertaining to national security and foreign policy in Iran are undertaken by various institutions with numerous political leaders exercising influence. Given the trajectory of Russia-Iran engagement post-Oct. 7, it will be a challenge even for the most influential political leaders in the Iranian Ministry of Foreign Affairs to change course.

According to some experts, the late minister of foreign affairs Amir Abdollahian (who also died in the crash) was vocal in strengthening Tehran’s ties with Moscow.

That said, similar sentiments were echoed by a Tehran-based scholar, who credited the late President Raisi for putting special emphasis on strengthening the relationship with Russia, during the early days of the presidency, which was reflected by his visit to Moscow in early 2022.

Although experts have not credited his Moscow visit with any substantial agreements, it did elevate Tehran’s economic engagement between the two countries. The late President Raisi’s visit culminated in a $40 billion agreement with Russian state-owned enterprise Gazprom (for investing in Iranian oil and gas sector), in addition to a Russian railroad enterprise constructing the Rasht-Astara railroad (as part of the flagship North-South Transport Corridor) connecting Moscow with the Gulf.

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But the highlight of Tehran’s relations with Moscow is not economic engagement but strengthened military cooperation between the two countries. Tehran began shipping arms to Moscow after the latter’s invasion of Ukraine, with Iranian military instructors providing tactical training to Russian soldiers, emphasizing the art of urban warfare. In return, Tehran received three squadrons of training aircraft. During Raisi’s visit to Moscow, he had asked for two squadrons of Su-35 fighter aircraft, which, according to one source, Moscow agreed to ship by the end of this year or by the first half of 2025.

Although the engagement between Tehran and Moscow may appear to have been enhanced during President Raisi’s reign (as scholars credit the late president for strengthening cooperation between the two states), that is not the case.

The Russian invasion of Ukraine, and its systematic isolation in the global order is the factor driving the Russia-Iran partnership. This means that their relationship is a meager reflection of basic realities in the global order and will remain unaffected even after a new Iranian president is sworn in.

The game of economics

In the first year of the Russo-Ukrainian War (2022), there was a 20 percent increase in the trade partnership (between Iran and Russia), hitting a new record of $4.9 billion. I expected a similar upward trajectory, or at best a steady continuation (when political leaders from both countries, during an interview, mentioned a unified payment system to me). Instead, bilateral trade in 2023 fell by a record 17 percent, dropping to $5 billion. On investigating the cause of such fluctuations, the I identified Russian exports to Iran comprising mostly grain (almost 80 percent of all exports). The decline in exports in 2023 can be attributed to Tehran buying less Russian grain compared to 2022.

During a discussion I had with a Tehran-based trader, the Russian goods have yet to enter Iranian markets. Beside logistical challenges, the trader blamed lack of payment settlements and excessive transportation costs as major hurdles. Which means the payment settlement systems appear functional only on paper, in reality the markets remain devoid of any payment system, forcing traders to opt for commission processes. When asked about the expensive transportation system, one trader lamented the absence of any grievance redressal mechanism or platform on Tehran or Moscow’s part, forcing him to foreclose business transactions in Russian markets.

That said, the situation appears to be a bit more stable in terms of Iranian exports to Russia. Taking the data for 2023 alone, Iranian exports increased to 15.8 percent making over $1.29 billion. On analyzing Iranian goods, the agriculture proportions appear to have declined, reflecting an increasing demand of industrial-based applications (such as cement as well as other hardware appliances and engine parts) in Russian markets. Nevertheless, the Iranian goods appear to make a comfortable entry in Russian markets, it remains unclear whether the economic partnership could maintain a numerically positive balance of trade in 2024-25.

As a trend, any new engagement between Tehran and Moscow usually sees its share of media hype. Yet it remains functional primarily on paper. One such example is of the multi-billion-dollar agreement with Gazprom (investing in Iranian oil and gas industry), which in reality remains devoid of any substantial progress. On the same note, the construction work at the Rasht-Astara railroad is yet to come to fruition.

An increase in defense cooperation?

Tehran continues to supply Moscow with drones, heavy ordnance, ammunition, and anti-armor weapons. Moscow has also set up local industries and makeshift factories to build Iranian drones locally. Although it is difficult to identify Iranian military exports to Moscow, one analyst puts it at between one million to few billion dollars in 2023-24. 

A new dawn in Russia-Iran engagement?

Taking note of Tehran’s anti-Western rhetoric into account, it is unlikely that the new Iranian president will alter Tehran’s stance towards the West, which means Moscow’s engagement with Tehran will potentially grow. This will not necessarily result in quick completion of joint projects, due to bureaucracy and delays. The fate of the joint projects will remain unchanged even if the new president follows Raisi’s steps, with or without a future trip to Moscow for his first official visit. 

The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.