Russia sees Iran as backdoor wielding sanctions for oil sales – Politico

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BERLIN: Western diplomats say Russia plans to use Iran as a backdoor to evade international sanctions on Ukraine if Tehran’s nuclear deal with world powers goes through again.

Moscow sent teams of trade and finance officials, as well as executives from Gazprom and other companies, to Tehran in July to lay the groundwork for closer cooperation between the two countries after Russian President Vladimir Putin’s meeting with the Iranian leadership.

In recent weeks, Iran also sent two official delegations focused on energy and finance to Moscow. Senior officials in attendance included Ali Saleh Abadi, the head of the Iranian central bank, Ali Fekri, the deputy economy minister, and the head of the Iranian legislature’s economy committee, Mohammad Reza Pour Ibrahimi. According to diplomats, the Iranians held several days of meetings with their counterparts and private sector officials.

Iran’s main attraction is that it provides a backup route to sell sanctioned Russian crude – the main source of the Kremlin’s hard currency.

Russian oil exports face near-total sanctions from EU countries from December, but if an international nuclear deal with Iran does happen, it would provide a fully timed Plan B for Putin. Under what traders call a “swap” arrangement, Iran can import Russian crude off its northern Caspian coast and then sell an equivalent amount of crude to Russia in Iranian tankers originating from the Persian Gulf. Iran will refine Russian oil to meet its domestic demand, while thanks to the nuclear deal, Iranian oil exported from the south will be exempt from sanctions.

In addition, Iran may eventually use its fleet of tankers, once freed from sanctions, to take Russian oil to ports outside the Caspian.

This get-of-jail-free card depends on whether the nuclear deal, under which Iran would limit its nuclear activities in exchange for sanctions relief, is renewed. Many diplomats involved in the talks say a deal is near, although neither the US nor Iran has accepted the EU’s latest proposal. Among the most vocal proponents of the resolution is Mikhail Ulyanov, Russia’s ambassador to international organizations based in Vienna, including the International Atomic Energy Agency of the United Nations.

This week, Ulyanov praised Iran’s “fairly reasonable drafting suggestion” for the EU proposal.

“Let’s hope that it doesn’t take long for Washington to consider these proposals,” tweeted Ulyanov, who in recent months has attracted condemnation for his frequent without hinges Social media posts about Ukraine.

In a sign of importance now being given to Tehran, Putin’s visit to Iran in July was his first to a country outside the former Soviet Union since the outbreak of the war. As a gesture of goodwill, Tehran and Moscow announced a Memorandum of Understanding on the occasion $40 billion-value joint projects, specifically aimed at Development of gas reserves in the Persian Gulf and produce high-value liquefied natural gas.

Ali Akbar Velayati, foreign policy adviser to Supreme Leader Ayatollah Ali Khamenei, has left no doubt that swaps are high on the priority list. “We receive oil from Russia and Kazakhstan via the Caspian Sea for domestic consumption, and then we deliver the same amount of oil to their customers in the south,” Fars news agency quoted Putin as saying shortly after his visit. ” Iran.

“Iran is a good partner in this effort,” said one of the Western diplomats. “Russia has the difficult and Iran has the potential.”

Ali Akbar Velayati, Chief Foreign Policy Adviser to the Supreme Leader of Iran | George Orphelion / AFP via Getty Images

The swap strategy has had varying success in the past. The swap had to be suspended more than a decade ago after Iran complained that it was losing money on the system and that Russia was providing substandard crude. This time, Iran will have to find a way to address any complications associated with Russia’s sale of crude oil at a steep discount to global markets due to sanctions.

In addition to the allure of energy cooperation, several diplomats have noted that Moscow is also widely looking to find loopholes around sanctions on imports of goods into Central Asia, Iran and Turkey. Sanctions are dramatically squeezing Russia’s ability to rebuild its broken military hardware as Moscow struggles to find critical imports, ranging from microchips to vehicle components, so it needs new supply lines.

Russia is well aware that Iran has a long lineage of exploring such alternatives. Even as years of sanctions have plagued Iran’s economy, Tehran has proven adept at finding ways to deflect control, mainly by turning to China and other Asian partners. Russia is eager to tap that expertise and is betting Iran will face some consequences for cooperating with Moscow as Western capitals will suffer from not jeopardizing a renewed nuclear deal. .

This may be one reason the US has been slow to comment, with little acceptance of the EU’s latest settlement offer. Washington has been warning China against giving arms to Russia to wage war against Ukraine. Yet Iran is already preparing to give Armed Drones for Russia. If Washington agrees to renegotiate the nuclear deal, it would risk opening the door to an unrestricted flow of weapons from Iran to Russia.

uncomfortable bed partner

Iran and Russia have traditionally been extremely wary of each other, cooperating where their interests coincide, but only to a point.

Although Russia played a decisive role in helping Iran build a nuclear power plant in the southern city of Bushehr, recent ties over nuclear power have been testy. Russian Ambassador to Iran Levan Dzhagerian Sharp interview to Iran’s Sharg newspaperIn which he accused Iranian officials of failing to pay off multimillion-euro debt related to the nuclear program.

Syria is another area of ​​tense negotiations. Both countries have helped advance the regime of Bashar al-Assad, but Russia has also allowed Israel to pursue Iranian-backed forces in the country, which it sees as a threat.

Russia’s reluctance to fully embrace Tehran is also rooted in its desire to improve relations with Gulf states such as Saudi Arabia, Iran’s other hostile foes in the region.

However, with the invasion of Ukraine, that strategic argument went out the window. Isolated as before by the West, Russia is desperate to find ways to make up for its lost trade to Europe, by far its most important trading partner.

Even as Russia is increasingly turning to China and India, two longtime partners, to fill that void, the Kremlin is also wary of the pair’s dominance, both of which are quite large. Iran, like Turkey, which Russia has also wooed in recent months, is easier for Moscow to manage.

Another reason Iran is attractive to Putin: it needs Russia.

In addition to the allure of energy cooperation, many diplomats have noted that Moscow is also looking broadly in Central Asia, Iran and Turkey to find loopholes around restrictions on the import of goods. Pool Photo by Sergei Chirikov/AFP via Getty Images

For example, earlier this month, Russia’s space agency launched an Iranian spy satellite into orbit.

In their discussions with the Iranians, Russian officials have also indicated that they intend to upgrade rail and road infrastructure in the Caspian port city of Astrakhan to facilitate trade between the two countries. An Iranian company has a controlling stake in Solyanka, the main port on Russian territory.

On a visit to the Moscow auto industry trade fair this week, Iran’s deputy industry minister, Manochehar Manteki, said his country was looking to cooperate with Russia in “rail, air and sea transport,” state-run IRNA News is agency. informed of,

This week, Russia, Iran and Azerbaijan signed a “Memorandum on Ease of Transit Transportation” to ease trade across the region, according to Russia’s TASS. informed of,

Another area of ​​cooperation is finance. During Putin’s meeting with Iran’s Supreme Leader Khamenei in July, the two men discussed ways to break the dollar’s grip on global trade. Banks in both countries are banned from SWIFT, a US-dominated system used to facilitate international trade, and their economies face extreme difficulty in conducting cross-border transactions.

While ending the dollar’s dominance has so far been a largely accelerated effort, Western diplomats said, Iran is eager to help Russia find ways to accelerate “de-dollarisation”.

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