The sovereign can no longer say, "You shall think as I do on pain of death;" but he says, "You are free to think differently from me, and to retain your life, your property, and all that you possess; but if such be your determination, you are henceforth an alien among your people."

(Alexis de Tocqueville, Democracy in America, 1835)

Friday, 21 May 2010

"Keep your friends close but your enemies closer"

Earlier this week I attended a talk by Brenda Shaffer, the author of the book Energy Politics, who gave an interesting interpretation of Russian policy towards Iran. Her explanation was almost entirely based on energy policy, or, more specifically, natural gas. Given that I was discussing this issue in my previous post, I thought it might be worth revisiting.

Shaffer pointed out that Iran sits on the world's second largest reserves of natural gas (Russia being the largest), yet it continues to be a net importer. This situation is explained by a lack of investment from western companies, which prevents Tehran from exploiting its reserves. Although this lack of investment is partly due to sanctions, it is also a result of the difficult business environment in Iran, which discourages any extensive FDI. If this obstacle was overcome, however, then Iran's most obvious export market would be Europe (once a viable transit infrastructure was constructed through the South Caucasus). This is where Russia comes in. As is widely known, Moscow and Gazprom have a significant hold over the European gas market, something they wish to maintain. In this respect, their biggest potential rival is Iran.

This means it's in Russia's interest to do two things:

1) Maintain a certain level of tension in the political relationship between Tehran and the West - making any significant investment in Iran unlikely.

2) Avoid an Iraq scenario in Iran - Russia certainly doesn't want any western occupation of the country (not that it's really conceivable) as it would open the door to western investment in Iranian gas fields.

I found this an interesting argument and one that certainly fits with Russian policy towards Iran. Reminds me of that famous saying "keep your friends close but your enemies closer."

But the Iran crisis is reaching the latter stages now and if you extrapolate Shaffer's argument to the end then there is one outcome that Russia doesn't want: an Iran that suddenly sees the error of its ways, comes clean about its nuclear programme and prior intentions, and then reengages with the international community. A likely outcome of this would be that western companies compete to gain lucrative Iranian contracts.

So how would Russia like to see it turn out? Very difficult to say but one things is for sure: Russian policy towards Iran is extremely complex and can't just be boiled down to economic factors alone.

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