15.02.2016 Author: Salman Rafi Sheikh

Post-Sanctions Scenario: Iran’s drive to the West

453452222In its bid to end ‘global isolation’, Iranian leadership, known for its pragmatism, has been treading a very cautious path since the finalization of the US-Iran nuke deal. Iran’s traditional ‘Russian tilt’, some believe, is undergoing a significant change and that this ‘change’ is deeply rooted in the current leadership’s ‘economic pragmatism.’ This cautious and pragmatic policy approach took a clear shape with the beginning of the Iranian President’s recent tour of Europe—a tour that is quite clearly aimed at re-opening the European market’s gates for Iran. Even a cursory look at the 120 member strong delegation, which includes Iran’s famous entrepreneurs as well as the oil and gas minister, Iran’s President is leading clearly indicates the whole case: it is the desire to get economically integrated that is guiding Iran’s current policies vis-à-vis the West.

Hence, the question: to what extent can Iran accommodate the West and, at the same time, maintain its erstwhile good relations with Russia? This is the key question; for, without being able to effectively balance its relations with both global actors, Iran may find itself between the ‘devil and the deep sea.’ The diplomatic test for the Iranian leadership is, therefore, to strike a balance between the two and secure its own national interest too.

While the existence of some policy differences between Iran and the West, especially those with regard to the Syrian question and Yemen crisis, cannot be denied, the crucial importance of the recently held many meetings between the Iranian and European officials cannot be denied either. Frequency of meeting at the negotiating table indicates, more than anything else, the seriousness of the political and economic bargain going on between the parties.

Certainly, the roots of today’s ‘goodwill’ prevailing between Europe and Iran can be traced back to the P5+1 negotiations on Iran’s nuclear programme. However, neither does this ‘goodwill’ overcome the policy challenge Iran is facing and will keep facing with regard to its involvement in the crucial geo-strategic conflict in the Middle East, nor does this easing down of tension between Europe and Iran override Europe’s concerns over Iran’s strategic partnership with Russia in the larger global strategic calculus.

Therefore, while Iran seems to be aiming at striking a balance between ‘the East’ and ‘the West’, the West seems to be putting pressure on Iran to completely wean it away from the Russian and Chinese axis. This is evident from the way France’s position has dramatically changed vis-à-vis Iran. For instance, at critical points throughout the negotiations, France had taken hardline positions more extreme than even the United States. However right after the nuclear deal, France’s foreign minister Laurent Fabius travelled to Tehran; with the seeming aim of positioning France at the forefront of countries seeking to clinch business agreements with Iran.

While the West seems to be luring Iran to itself by offering the later an economic opening, Iran’s own calculations also appear to be dictating the policy steps it can take under the circumstances. With a very weak economic position and the oil prices already reaching historic lows, Iran does not seem to be in a position to ‘refuse’ an economic opportunity the West is currently offering it. The West, on the other hand, also stand to benefit from Iran once the latter’s oil starts reaching the former’s markets.

In this regard, a number of European countries have been sending positive signals since the finalization of nuke-deal. For instance, senior officials of major European countries, accompanied by big trade and economic delegations, started their visits to Iran soon after the conclusion of the nuclear deal. Germany was forerunner of improving ties with Iran, which first sent its vice chancellor followed by its minister of foreign affairs to Tehran. This was followed by visits to Iran by a number of economic and trade officials from various German states, who were also accompanied with big delegations. France and the UK also sent their foreign ministers at the top of political and economic delegations to Tehran. Italy, as the fourth biggest European power, also sent a major economic delegation along with two state ministers to Tehran. In addition, the European Union’s foreign policy chief and chairman of the European Parliament have paid visits to Iran during past months.

One of the most important issues of interest to Europe in this regard is the issue of energy. Europe is seriously trying to diversify its energy sources and transfer routes in order to make sure about security of energy supply by reducing its reliance on the Russian oil and gas. Therefore, ensuring a safe and more economical route for transfer of energy for its own weak economy, especially natural gas, from Iran to Europe is on its high-priority. Not a long time has passed since the beginning of the implementation of JCPOA, but European countries have already begun oil trade with Iran and the biggest oil refinery in Greece has signed the first oil contract with Iran subsequent to the removal of sanctions against Tehran.

Similarly, during the Iranian president’s visit to France and Italy, seven big contracts were signed—a clear indication of how ‘deep’ Iran is aiming at taking its relations with the West. Some of the contracts signed include: the €22bn deal with the Airbus, which is certainly one of the largest foreign contracts ever signed in the history of the Islamic Republic; a €5.7bn contract with the Italian metal industry firm, which will supply heavy machinery and equipment to Iran; €3.5bn deal with an Italian oil and gas contractor to revamp and upgrade the Pars Shiraz and Tabriz oil refineries; €400m deal with a French carmaker for a joint venture with the Iranian vehicle manufacturer Khodro to modernise a car factory near Tehran; an agreement with the oil giant “Total” which will buy as many as 200,000 barrels of crude oil per day (€6.6m at current prices).

This is, in itself, enough to suggest how Iran’s weak economy is actually steering its foreign policy options vis-à-vis Europe—a continent that was only a year ago Islamic Republic’s ‘greatest foe.’ However, the change that we are witnessing today is one classic example of how national interest shapes, if not fully determines, foreign policy options.

Although it cannot be said that Iran will strike a full strategic shift towards the West at the expense of its relations with Russia, the recent developments unambiguously demonstrate that Iran is certainly balancing itself between Russia and the West. The challenge for the Iranian leaderships, however, is this: not only does Iran have to balance its position between Russia and the West, but it also has to balance its precarious geo-strategic tussle in Syria and Lebanon with its newly established economic relations against and with the West respectively.

The case is clear enough: if Iran needs access to European markets to re-establish its economy, Iran needs Russia to stay strategically alive and relevant in the region. Pragmatist as it is, Iran’s leadership does not seem to be unmindful of the crucial importance of maintaining balance between its strategic and economic interests. Given Iran’s strategic position in the region, it cannot afford to lose Syria. However, were it to lose Syria, it would lose direct territorial access to Lebanon too. Such a loss would amount to a strategic defeat against Israel—a scenario that Iran’s leadership can least afford given the country’s strategic and religious culture.

Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook”.

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