Russia, Iran tighten the energy noose - 2007

Russia, Iran tighten the energy noose


Foreign ministers are busy people - especially energetic, creative diplomats like Russia's Sergei Lavrov and Iran's Manouchehr Mottaki, representing capitals that by tradition place great store on international diplomacy. Therefore, the very fact that Lavrov and Mottaki have met no less than four times in as many months suggests a great deal about the high importance attached by the two capitals to their mutual understanding at the bilateral and regional level. Moscow and Tehran have worked hard in recent months to successfully put behind them their squabble over the construction schedule of the Bushehr nuclear power plant in Iran. The first consignment of nuclear fuel for Bushehr from Russia under the International Atomic Energy Agency safeguards finally arrived in Tehran on Monday. "We have agreed with our Iranian colleagues a timeframe for completing the plant and we will make an announcement at the end of December," said Sergei Shmatko, president of Atomstroiexport, which is building Bushehr. At a minimum, the gateway opens for Russia's deeper involvement in Iran's ambitious program for civil nuclear energy. But nuclear energy is not the be-all and end-all of Russo-Iranian cooperation. Iran is a crucially important interlocutor for Russia in the field of energy. The Bushehr settlement is a necessary prerequisite if the trust and mutual confidence essential for fuller Russo-Iranian cooperation is to become reality. Evidently, Moscow is hastily positioning itself for the big event on the energy scene in 2008 - Iran's entry as a gas-exporting country.

Russia consolidates in 2007

In fact, how Moscow proceeds with the reconfiguration of Russo-Iranian relations could well form the centerpiece of the geopolitics of energy security in Eurasia during 2008. The dynamics on this front will doubtless play out on a vast theater stretching well beyond the Eurasian space, all the way to China and Japan in the east and to the very heart of Europe in the west where the Rhine River flows. What places Russia in an early lead in the upcoming scramble is its fantastic win in the Eurasian energy sweepstakes in 2007. But 2007 as such began on an acrimonious note for Moscow when two minutes before the clock struck midnight on December 31, Russia signed a gas deal with Belarus whereby the latter would have to pay for Russian gas supplies at full market prices on a graduated scale stretched over the next five-year period. President Vladimir Putin's critics seized the moment with alacrity to portray him as a whimsical megalomaniac.

Moscow-based critic Pavel Felgenhauer rushed to condemn Putin's "highly aggressive, unscrupulous and revengeful" mindset as a dictator, and prophesied that the "pressure on Belarus will most likely misfire ... This may undermine the Kremlin's authority ... and provoke internal high-level acrimony [within the Kremlin]". Other Western critics warned European countries not to count on Russia's dependability as an energy supplier. Much of the vicious criticism might seem in retrospect to be either prejudiced and self-interested, or downright laughable, but that didn't prevent the acrimony from setting the tone for the geopolitics of energy during 2007. Prima facie, Russia was making a transition to market prices for its energy exports, which was quite the proper thing to do if it were to integrate with the world economy in a manner consistent with the broad orientations of its liberal economic policies.

Indeed, the Kremlin had no reason to continue with the Soviet-era subsidies to former Soviet republics like the Ukraine or Belarus. Efficiency demanded that Russia allowed market forces to prevail. Actually, that was also the capitalist world's advice to the Kremlin. What incensed Western critics was that combined with the state control of oil and gas (and indeed the pipelines), the Kremlin was also maneuvering its way to a commanding position on the energy map of Europe. From its own viewpoint, Russia could claim it was merely pursuing a coordinated strategy aimed at integrating itself with European economies. But the United States viewed the implications of the Russian strategy to be very severe for trans-Atlantic relations on the whole, as it cast a shadow on the entire range of goals, strategic objectives and security policies that Washington has been pushing within the framework of the Euro-Atlantic alliance in the post-Cold War years. Plainly put, Washington fears that Europe's strategic drift may become a reality unless Russia is stopped in its tracks.

Europe's dependence on Russian energy

After much US prodding for a coordinated European energy security policy, European Union (EU) members adopted at their spring summit in Brussels an action plan for energy security for 2007-2009, which emphasized the need to diversify Europe's energy sources and transport routes. But the ground reality continues to be that Europe's dependence on Russian energy supplies is growing. In 2006, Europe imported from Russia 290.8 million tonnes of oil and 130 billion cubic meters of gas. With Europe's energy consumption rapidly rising, its import dependency on Russia is also set to increase. Europe, which imported around 330 billion cubic meters of gas in 2005, will require an additional 200 billion cubic meters per year by 2015. And Russia has the world's largest natural gas reserves, estimated to be 1,688 trillion cubic feet, apart from the seventh largest proven oil reserves, exceeding 70 billion barrels (while vast regions of eastern Siberia and the Arctic remain unexplored).

On the other hand, Europe's self-sufficiency in energy is sharply declining. By 2030, the production of oil and gas is expected to decline by 73% and 59% respectively. The result is that by 2030, two-thirds of Europe's energy requirements will have to be met through imports. In Europe's energy mix, the dependence on oil imports by 2030 will be as high as 94% of its needs, and on natural gas as high as 84%. As supply becomes concentrated in Russian hands, the Kremlin will find itself in a position to dictate oil and gas prices. There is also the possibility that the supply and demand situation itself might become less elastic - Russia's own demand for gas, for instance, is growing by over 2% annually.

Clearly, the economics of energy supply to Europe are getting highly politicized. Ariel Cohen, a prominent Russia specialist at the US think-tank, Heritage Foundation, who is closely connected with the George W Bush administration, wrote recently, "It is in the US's strategic interests to mitigate Europe's dependence on Russian energy. The Kremlin will likely use Europe's dependence to promote its largely anti-American foreign policy agenda. This would significantly limit the maneuvering space available to America's European allies, forcing them to choose between an affordable and stable energy supply and siding with the US on some key issues." Cohen warned, "If current trends prevail, the Kremlin could translate its energy monopoly into untenable foreign and security policy influence in Europe to the detriment of European-American relations. In particular, Russia is seeking recognition of its predominant role in the post-Soviet space and Eastern Europe ... This will affect the geopolitical issues important to the US, such as NATO [North Atlantic Treaty Organization] expansion to Ukraine and Georgia, ballistic missile defense, Kosovo, and US and European influence in the post-Soviet space."

US-Russia rivalries escalate

Thus, through the past 12-month period, the Bush administration has been pressing for the development of new energy transit lines from the Caspian and Central Asia that bypass Russia. Washington has robustly worked for advancing its proposals for the construction of oil and gas pipelines linking Kazakhstan and Turkmenistan to Europe across the Caspian Sea; new pipelines that would connect the Baku-Tbilisi-Ceyhan oil pipeline with the Baku-Erzurum gas pipeline (making Turkey an energy hub for Europe); and the so-called Nabucco pipeline that proposes to link Azerbaijan and Central Asian countries with southern European markets. However, as the year draws to a close, it becomes clear that the Kremlin has either nipped in the bud or frustrated one way or another the various US attempts to bypass Russia's role as the key energy supplier for Europe. Indeed, Moscow's counter-strategy aims at augmenting even further Russia's profile and capacity to be Europe's dependable energy supplier and thereby forcing the European consumer countries to negotiate with Russia as a partner with shared or equal interests.

The month of May stood out as the watershed when the geopolitics of energy in Eurasia decisively turned in Russia's favor. At a tripartite summit meeting in the city of Turkemenbashi (Turkmenistan) on May 12, Putin and his Kazakh and Turkmen counterparts signed a declaration of intent for upgrading and expanding gas pipelines from Kazakhstan and Turkmenistan along the Caspian Sea coast directly to Russia. The president of Uzbekistan, Islam Karimov, also signed up separately on May 9 for a modernization of the Turkmenistan-Uzbekistan-Kazakhstan-Russia pipeline. Both pipelines are components of the Soviet-era Central Asia-Center pipeline system bound for Russia. The quadripartite project essentially aims at the transportation of Turkmenistan's gas output, which almost in its entirety would be bought up by Russia for a 25-year period.



In related news:

Iran and Russia meet to discuss defense cooperation

Iran and Russia discussed defense cooperation, the official IRNA reported Monday, as ties between the two countries have been increasingly flourishing. Little detail was provided about the meeting. Mohammad Ali Hosseini, the spokesman for Iran's Foreign Ministry, said a joint defense committee met and both sides reviewed continued cooperation. He did not elaborate. Last week, Iranian state media said Mikhail Dmitriyev, head of the Russian Federal Service for Military and Technical Cooperation, arrived in Tehran to discuss defense cooperation with Iranian Brigadier General Ahmad Vahidi, regarded as father of country's missile program. In November, Iran did not deny reports that it aimed to order Russian Sukhoi Su-30 aircraft to bolster its air defenses. In early 2007, Iran received advanced Russian air defense missile system under a US$700 million contract signed in 2005. Russia has provided Iran with military products such Kilo-Class submarines, MIG and Sukhoi military planes and bombers in the past decades. Relations between Iran and Russia have been growing closer in recent months, climaxed by a historical visit by Russian President Vladimir Putin to Tehran in October. Russia is also putting the finishing touches on a 1,000-megawatt nuclear power plant in Bushehr, located in southern Iran. Iran received the first shipment of nuclear fuel from Russia last week, paving the way for the startup of its reactor in 2008. The United States last year called for a halt to international arms exports to Iran and for an end to nuclear cooperation with Iran to pressure it to stop uranium enrichment. Iran has refused to halt its enrichment program despite receiving two sets of U.N. Security Council sanctions.


Iran plans to buy Russian copters, fighter engines

 Moscow and Tehran are in negotiations for the sale of fighter jet engines and helicopters to Iran, the Kommersant daily reported on Monday, citing Russian arms industry officials. Iran wants to buy RD-33 engines for a fleet of new Iranian fighter jets, as well as an upgraded version of the Ka-32 helicopter that Tehran wants to be assembled in Iran, Kommersant said. After a meeting between Russian and Iranian officials in Tehran last week, the head of Russia's agency for military cooperation said any arms sold to Iran would be only for "defensive" purposes, Kommersant reported. The military cooperation chief, Mikhail Dmitriev, said that defence ties between the two countries "reinforces stability in the region." Last year, Russia finished supplying Iran with 29 Tor-M1 air defence systems under a USD 700-million agreement.


Russia could build more NPPs in Iran - Iranian lawmaker

Russia will have a good chance of participation in the construction of new nuclear power plants in Iran if it completes the Bushehr nuclear power plant on time, a top Iranian official said on Monday. Tehran is expected to announce soon a tender for the construction of 19 new 1,000-mWt nuclear power plants in the Islamic Republic. "Russia may have a better chance of participation in the construction of new nuclear power plants in Iran if it fulfills its obligations on time," said Alaeddin Boroujerdi, chairman of Iran's parliamentary committee on national security and foreign policy. The completion of the Bushehr plant, currently being built by Russia's Atomstroyexport under a 1995 contract, came under threat in February 2007 when Russia complained of payment delays. Iran denied any funding problems and accused Russia of deliberately stalling the project in response to pressure from Western powers. Russia and Iran subsequently held several rounds of negotiations to settle disagreements relating to the Bushehr nuclear power plant and recently announced that the plant could be commissioned by March 2009. The $1 billion project has also been at the center of an international dispute, with Western countries who suspect Iran of developing nuclear weapons protesting against Russia's nuclear cooperation with the Islamic Republic. The project has been implemented under the supervision of the United Nations nuclear watchdog, the International Atomic Energy Agency. On December 16, Russia announced the start of nuclear fuel deliveries to Bushehr. Deliveries are set to continue into February 2008. Meanwhile, Alaeddin Boroujerdi said Iran had no intentions of abandoning its own uranium enrichment program and planned to build its first nuclear power plant without foreign participation by March 2017. The project stipulates the construction of a 360-mWt plant in southwestern Iran. "The [first domestic] nuclear power plant will certainly be built in Iran," the lawmaker said, adding that a nuclear fuel reprocessing facility in Isfahan and a nuclear enrichment center in Natanz could provide enough fuel for any future nuclear power plants.


Iran-Russia trade surged 100 percent: Mottaki

Iran and Russia have surged mutual trade volume more than 100 percent over the current year said the foreign minister Manouchehr Mottaki in a meeting with his Russian counterpart Sergei Lavrov. Mottaki who was in Moscow to hold the 7th joint economy commission of Iran and Russia said there are many fields prepared for expanding cooperation and the two sides have inked long-term cooperation agreement. Referring to the four visits of Mahmoud Ahmadinejad and Vladimir Putin during the last two years he called the visits decisive in opening new chapter of relations. "We believe the two countries' negotiations on regional and international issues in different levels can help resolving problems." Mottaki also emphasized that Moscow's supporting legal rights of NPT members for utilizing peaceful nuclear energy was of great importance. Meanwhile Sergei Lavrov in this meeting stressed that Iran's nuclear dossier must be solved under the NPT and the IAEA regulations and that Iran's right for employing peaceful nuclear technology must be preserved. "Russia favors Iran and the IAEA cooperation and this is what can result in solving all issues regarding this dossier," he added. Also regarding the two presidents' agreements made in Tehran he stated "the deals must be put into practice and that we must have close cooperation in this regard."


Russia has no intention of quitting Iran’s arms market

Russia has no intention of quitting the Iranian market of arms, the Chief Of the Federal Service for Military-Technological Cooperation, Mikhail Dmitriyev, told Itar-Tass in an interview after the 4th session of the Russian-Iranian inter-governmental commission. “We are interested in exporting military hardware to foreign clients, including Iran, just as any other arms manufacturing country,” Dmitriyev said. “We wish to access world markets and to build up our own potential.” “Iran is an integral part of the vast market of armaments, very crucial for Russia, and not only Russia. A struggle for Iran, both covert and overt, is underway, and we experience great competition. This is a very lucrative market and all countries are aware of that. We are in no mood quitting it, because getting back would be far harder.”


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Dear reader,

Arevordi will be taking a sabbatical to tend to personal matters. New blog commentaries will henceforth be posted on an irregular basis. The comments board however will continue to be moderated on a regular basis.

The last 20 years or so has also helped me see Russia as the last front against scourges of Westernization, Globalism, American expansionism, Zionism, Islamic extremism and pan-Turkism. I have also come to see Russia as the last hope humanity has for the preservation of classical western civilization, Apostolic Christianity and the traditional nation-state. This realization compelled me to create this blog in 2010. Immediately, this blog became one of the very few voices in the vastness of cyberia that dared to preach about the dangers of Globalism and the Anglo-American-Jewish alliance, and the only voice preaching the strategic importance of Armenia remaining within Russia's orbit. From about 2010 to 2015 I did monthly, at times weekly, commentaries about Russian-Armenian relations and Eurasian geopolitics in general. It was very difficult as I had no assistance in this endeavor. The time I put into this blog therefore came at the expense of work and family. But a powerful feeling inside me urged me to keep going; and I did.

When Armenia finally joined the EEU and integrated its armed forces into Russia's military structures a couple of years ago, I finally felt a deep sense of satisfaction and relaxation, as if a very heavy burden was lifted off my shoulders. I finally felt that my personal mission was accomplished. I therefore felt I could take a step back, as I really needed the rest. Simply put: I have lived to see the institutionalization of Russian-Armenian alliance. Also, I feel more confident now that Armenians are collectively recognizing the strategic importance of Armenia's ties with Russia. Moreover, I feel satisfied knowing that, at least on a subatomic level, I had a hand in the outcome. As a result, I feel a strong sense of mission accomplished. I therefore no longer have the urge to continue as in the past. In other words, the motivational force that had propelled me in previous years has been gradually dissipating because I feel that this blog has lived to see the realization of its stated goal. Going forward, I do not want to write merely for the sake of writing. Also, I do not want to say something if I have nothing important to say. I feel like I have said everything I needed to say. Henceforth, I will post seasonal commentaries about topics I find important. I will however continue moderating the blog's comments section on a regular basis; ultimately because I'm interested in what my readers have to say and also because it's through readers here that I am at times made aware of interesting developments.

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