Conflicts Forum’s Weekly Comment 8 – 15 November 2013

Conflicts Forum

The one thing that has stood out from the first round of US – P5+1 negotiations is the clarity that it has shed on true positions of various actors:  It is plain that the Saudis are, (like Heraclitus in the underworld), lashing out and trying to kill the ‘demons’ of the Middle East (anything that is ‘other’), but unlike Heraclitus, they seem to lack a Hermes (guide) to tell them that they cannot actually ‘kill’ Medusa, or the multi-headed dog Cerberus, because these are just images -- images which in the latter instance, derived from deep within Heraclitus himself.   So far, an al-Saud ‘Hermes’ guide does not seem to have arisen within the family (at least one that is evident from outside of the family circle).  Rather its members now seem paralyzed by a vicious family fight over the future of the Crown.

Unless a deus ex machina intervenes soon (which may well happen), the Saudis seem intent to escalate their threats to slay all the ‘demons’ of Syria, Lebanon, Iraq, Yemen and Iran. This Heraclatean mission in the Middle Eastern underworld undoubtedly will affect the timing for holding a Geneva II, but it may also compound the problems in the Iran negotiations.  Saudi hawkishness is encouraging both France and Israel to try to block negotiations. (France for mainly commercial reasons: i.e. it hopes to replace the US as Saudi Arabia’s favored tradesman, and Israel because its PM never wanted a negotiation that was more than a discussion of Iran’s ‘surrender terms’).

Recent statements from official US spokesmen, op-ed pieces in the US mainstream media underlining the shift in US interests plus its dismissiveness of the notion that the US should act only as ‘Saudi Arabia and Israel’s lawyer’ all suggest ‘push-back’ by the Administration against the French-Saudi-Israeli axis. But more importantly, the leaks suggesting that the framework interim agreement proposed at Geneva was no spur of the moment accord, but owed its genesis to US-Iranian talks over recent months in Oman, adds to a clear intent by the US to persist with its Iran initiative.

But the other key element to the interlocking events in the Middle East, is Russia.  Russia working with America, produced the Chemical Weapons Agreement on Syria.  Russia is engaging in a fragile Egypt for the first time in 30 years - at a time when American influence there is eclipsed.  Russia is deeply involved in the campaign to defeat Sunni extremism, and Russia may justly claim to have influenced the shaping of the draft Interim Agreement proposed at Geneva from its own longstanding direct contacts with Tehran on this issue. But is Russia a potential partner to an Iran emerging from its isolation, or does Russia see Iran as a competitor, which directly threatens Russia’s energy interests?

“The view is expressed”, Fyodor Lukyanov, a prominent commentator notes, “that Iran's return from isolation would be a loss for Russia, because the current ‘special’ relationship is based largely on Tehran's being burdened by the sanctions and having nowhere else to turn but to Russia. This applies primarily to relations involving the construction of nuclear power plants and military and technical cooperation. But as soon as Iran has other opportunities, it will immediately reorient itself toward more influential Western countries. There is always the risk that the country that was eager to be “friendly” in times of trouble will turn away as soon as the grip of isolation loosens. This was seen to some extent in Libya under Gadhafi and in Serbia after Milosevic”.

Conflicts Forum is grateful to a colleague for offering the following ‘view from the region’ at our invitation:  “The recent upheaval in Syria has indeed served to exacerbate, and make much more visible, the existing fracture of the region into two opposing blocks – a schism that has widened over the last decade.  There are, of course, many factors which have led us to this point; but one significant contributor has been the project to build a pipeline for transporting natural gas from Qatar through Saudi Arabia, Jordan and Syria to the Mediterranean shores, and onward to the European market.  The Assad government was the prime stumbling-block standing in the path of this politically strategic pipeline.  But Assad has not been alone in his obstructing it – it has served to push Russia and Iran to find a common energy interest – support for Assad’s stand - that also complemented their strategic political interests.  A similar situation exists between Iran and Russia over the export of gas from Turkmenistan, where both states are blocking any direct supply to Europe that by-passes the gas transitting either through Russian or Iranian pipelines, or is divided between them both.

A strategic priority for Russia clearly is to protect its aim of becoming the primary energy supplier to the EU and to prevent competition.  Clearly Iran too has its own interest in preventing Qatar from becoming the main exporter of gas from the Gulf – particularly at a time when Iran is under sanctions, and unable to export its own gas.  Iran’s interest however is not centred so much on Europe, but on its potential to supply its neighbours (including Syria and Lebanon), which Iran views as a growing market. More importantly, both countries would wish to prevent any strengthening of the strategic energy importance of Qatar and Saudi Arabia for European countries.  Russia and Iran thus both have a common interest in preventing the Qatari pipeline from seeing the light of day, but they also share a common interest in seeing an economically stable Syria and Lebanon for the future, which a gas pipeline would help secure.

However, beyond this common point, the reconciliation of the interests of Russia and Iran is more nuanced. Russia is carefully watching Iran’s own pipeline project which will bring gas from the Gulf to Syria in a joint effort with Iraq.  Iran has declared that their main interest with this pipeline is to supply gas to these two countries and possibly to Lebanon. However, it is estimated that Iraq, Syria and Lebanon combined will need around sixteen billion barrels (of oil equivalent) a year, while the planned capacity of the pipeline is forty billion barrels a year. Russian concern might be that this surplus could be re-directed towards alternative pipeline projects from the Eastern Mediterranean to Europe which are under active consideration at the moment. But Iranians are adamant that their interest lies not in supplying Europe, but rather lie eastwards to supplying India and China (the interest in Pakistan is waning as a result of perceived Pakistani awkwardness).  Beyond this, their interest is to supply gas to their neighbours, Iranian officials argue.

A prolonging of the Syrian crisis – it might be argued – would put the Iranian project on hold, but would not directly affect Russian energy interests, since Gasprom would not be inhibited from further expansion of its Northern Stream gas network to Europe, or impact the construction of the Southern Stream. However, neither Syria nor Iran would see this as reason for Russia to delay a Syrian settlement – since for the Russian government, the defeat of Sunni extremism would trump any concerns that they might have over energy competition.

The new government and leadership in Iran clearly want to change the current situation where Iran is a net importer of gas, and to exploit to the maximum the significant potential it has for gas export. In that context, Iran is pursuing negotiations with the P5+1, and in parallel is indicating its intention to open its energy industry to foreign investors. Iran needs to attract foreign investment in the energy sector to the extent of one hundred billion US dollars. To that end, they also indicated their readiness to change the current contracts and tenders procedures to make them more attractive to foreign investors. Naturally, Iran would like to create a healthy competition between major international oil companies, including Russian, Chinese and even perhaps the US.  Russia also wants Iran to open its gas industry for Russian companies.

International trade and supply of gas would change significantly if Iran does become a major exporter. Russia is carefully monitoring all the movements of Iran in this regard, especially the extent of possible openness towards the West in general, in order to protect its interests if this occurs. They will watch for any attempt to bring Iran’s gas to Europe (through Turkey, Azerbaijan or the East Mediterranean), while bypassing Russia and excluding Gasprom from these projects. It should be expected that Russia will take concrete measures to thwart these moves as they did in the past. For example,Gasprom has ensured that the Iranian-Armenian pipeline, which has been operational since 2009, had its capacity downsized to 50%, and is therefore insufficient for export to Europe.

A strategic priority for Russia is to remain the major supplier of natural gas to Europe and to continue to use this position as a political lever in their European policy. To that end, Russia is currently exerting heavy pressures to remove the last remaining obstacles for the construction of the South Stream - as in Serbia.  But should the South Stream become operational,  Russia is likely to be open to Iranian gas joining its flow.

There are a number of reasons therefore for Russia and Iran to cooperate in the energy field and advance their common interests - such as control of the world transportation, supply and price of natural gas. They have high stakes in the future of this industry and in the price of gas on the international market. In the case that they do not strengthen their cooperation, they will inevitably become competitors, to the detriment of both.

A strategic partnership would entail an agreement on dividing the market, with Russia focusing on Europe, and Iran on China, India, Japan and on the neighboring countries; joint projects to connect their network of pipelines; and promoting regional cooperation concerning the energy deposits in the Caspian basin, including an agreement on controlling the export of gas from Turkmenistan. Currently, there are attempts to promote such cooperation on three different levels: through a bilateral agreement on oil and gas cooperation; through the Gas Exporting Countries Forum (GESF), which is comprised of thirteen largest gas producers; and through the Shanghai Cooperation Organization, which has as its members the biggest oil and gas producers and consumers in Asia.

Most importantly, overall bilateral relations and alliance between Russia and Iran is on the ascending trend. Russia is and will remain the main supplier of arms and nuclear technology to Iran, and represents a vital counter-balance to the West, especially taking into account the strengthening of regional influence of Russia and its demonstrated commitment to supporting and protecting their allies. They also have a high level of commonality between their respective strategic interests, first and foremost, the protection of their natural resources; preventing the spreading of radical Salafist ideology and Al Qaida militancy; and ensuring their respective security interests in the Caspian Basin, Central Asia, Middle East and Gulf. The confluence of the highest national strategic interests between the two leaves them with no choice but to cooperate also in the gas and energy field."

This view is endorsed by Fyodor Lukyanov who argues that “now is the time [for Russia] to promote the ‘opening’ of Iran: The Syrian conflict, in all its diverse manifestations, has changed the diplomatic landscape in the Middle East. Russia's firm position, whatever it was based on (global considerations prevailing over regional ones), has led to an unexpected result. The interests of Russia and Iran were closely aligned, much more so than earlier, when the two countries were essentially trying to exploit each other's difficulties to serve their own interests. The emergence of the situational — and also, at the present moment, logical — alliance between Moscow, Tehran, Baghdad, Damascus and Hezbollah has made Russia a more influential regional player than would have been expected two years ago. This course … lays the foundation for action in the region”.

 

 

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