Post-nuke deal scenario: A test of Iran’s foreign policy?

Even a cursory look at Iran’s newspapers suffices to delineate the developing scenario for Iranian foreign policy in the post-nuclear deal context. Where the revocation of economic sanctions would certainly open up Western markets for Iranian energy exports, the question of how to maintain a balance between East and West is clearly troubling Iranian policy makers.

On the one hand, there are some in Iran who want to rebuild the country’s economy by fully accessing western markets under the deal. Others, on the other hand, driven by the nostalgia of ancient history, seem overwhelmed by the idea of the re-emergence of Asia. They seek a reprise of the ancient golden times, and the prominence of major Asian powers such as China, India and Iran. This would be a sort of re-enactment of the Chinese, Indian and Persian empires.

Whatever the case, whether Iran looks to “the East or the West,” it’s not hard to grasp that Iran cannot politically afford to leave itself completely at the mercy of the West — which is almost addicted to the habit of imposing sanctions. The West, especially the EU, hit as it is by an economic crisis of its own, is of little importance for Iran. This is especially true since Iran has ready access to Asian markets, and when these markets, especially China and India, are so eager to have Iran as part of their strategic calculus.  Notwithstanding the lucrativeness of choosing East over West, Iran’s re-emergence is going to have some very significant outcomes, which in turn, will leave deep imprints on its foreign policy.

The addition of 1 million barrels of Iranian oil on the market, once sanctions are lifted, will further undercut the price of oil — bad news for Moscow, which is already paying a heavy price due to extremely low crude prices. Hence, the important question: With Iran-US relations getting better and with the EU markets ready to receive Iranian exports, can the addition of Iranian oil per se affect Iran-Russia relations in any way?

As far as Iran is concerned, the key objective for Iran’s political leadership at the moment is to restore its formal levels of oil production and oil export. As a matter of fact, this objective was clearly highlighted by Iran’s oil minister, Bijan Namdar Zanganeh, in an address on Iranian TV on Aug. 26 where he unambiguously declared Iran’s intention to restore her former oil export levels regardless of its effect on OPEC prices. He suggested were Iran’s exports to double and cause prices to halve, it would be no problem as the country’s accustomed to sanctions and export restraints.

On the other hand, Russia, too, understands Iran’s need to ship oil. As far as the issue of continuously falling crude prices is concerned, it depends fundamentally on how long the House of Saud and its Mideast cronies continue to flood the oil market in their bid to challenge and eventually bankrupt the US shale oil companies, while doing maximum damage to Iran and Russia. It must be remembered here that it was the Saudis themselves who initially decided last year not to cut the production of oil despite the declining demand for oil in the world.

On Dec. 21, 2014, powerful OPEC members, Saudi Arabia and Kuwait, said that they would not cut production even if non-OPEC members reduced their output, while Iraq and the United Arab Emirates shrugged off calls for an emergency meeting of the 12-nation cartel — a clear indication of political intransigence working behind the scenes! At that time, the intention was to open up a new front in the ongoing war in the Middle East. Their inability to defeat Iran and its allies on a military level must have spurred them to launch economic warfare with “oil” as the main weapon.

However, with the advent of Iran-US nuclear deal, Saudi tricks appear to have failed, returning Riyadh and its allies back to the square one. As such, with the upcoming addition of Iranian oil, the declining oil price would equally hurt the Saudis and its Gulf allies, especially the latter who don’t have as large a foreign exchange reserve as the Saudis have. Therefore, the scenario developing is not so worrisome for Iran and Russia as it is for its chief rivals in the Mideast.

Iran-Russia relations are, quite contrary to US expectations, developing further along strategic lines. For the US, the ideal scenario was to lure Iran into its bloc and use it as a transit route to provide massive heavy artillery to launch a far more effective military assault on the eastern Ukraine self-proclaimed republic. In the US calculation, this could be a devastating blow to Russia’s economic stability. But this is not happening.

On Aug. 19, Russia’s Deputy Foreign Minister Mikhail Bogdanov told Russian media that Iran will receive the S-300 long range surface-to-air missile systems by year’s end. The extent and depth of this growing defense cooperation is reflected in the fact the missile system will be upgraded to include all improvements made by Russia since the original deal was frozen earlier in 2010. Tehran is also reported to be in talks with Moscow to buy new Russian fighter jets. The possibility of buying jets from France was ruled out by Iran’s defense minister, Brigadier General Hossein Dehqan. Talks for buying commercial aircraft, and restoring credit and trade connections between the two countries is also in progress.

The West, especially the EU, is an attractive market for Iran. Despite this, Iran’s current geopolitical outlook can hardly be described as “looking completely to the West.” It would be a highly unrealistic way for Iran to look to the West while the West itself is looking East. For Iran, “Looking to the East” is supported by a strategic logic, and for this reason, it’s considered an attractive and balancing strategy with respect to Iran’s relations with the West. Based on this view, Iran cannot conduct its foreign relations without due consideration for its geographical position — such as being part of the Eurasia super continent and taking into account its proximity to the Indian Ocean.

For Iran, to re-define its position in global geopolitics, it is of supreme importance to give due regard to the dictates of this geographical position, especially with regard to the Indian Ocean and Persian Gulf’s crucial role in oil shipments to Asia.

Being itself located in the East, Iran should also look East. This is paramount because an emerging Asia, topped by China and India, is accompanied by the increasing dependence of these countries on the oil that’s exported via the Persian Gulf. India and China’s Indian Ocean rivalry in securing access to energy fields in the Persian Gulf and ensuring the free-flow of energy from this Asian region, has redefined Iran’s geopolitical situation in new and unprecedented ways. Hence, the need for Iran to stay focused on the East as these two Asian giants and other Asian states such as Pakistan look to a resumption of Iran’s oil and gas exports.

Apart from this, Iran is eager to join China’s great One Belt, One Road rail and sea lanes infrastructure project. Even before the nuclear agreement, Iran had already decided to be a founding member of China’s Asian Infrastructure Investment Bank (AIIB) — the rising rival to the Washington-controlled World Bank. On Sept. 2, Iran reportedly agreed, at Pakistan’s invitation, to consider becoming part of the China-Pakistan Economic Corridor (CPEC). This was a clear indication of Iran’s interest in expanding its border markets with regional countries. China also realizes that Iran’s geographical location and its topography make her a strategic partner in developing a network of overland infrastructure corridors crisscrossing Eurasia and Southwest Asia that cannot be blocked by the US Navy.

Iranian Deputy Economy Minister Massoud Karbasian said during a recent Teheran press interview in Tehran that when the Iranian branch of the New Economic Silk Road is completed, Iran will become a transit route for more than 12 million tons of goods a year. Chinese President Xi Jinping has estimated that within a decade of One Belt, One Road’s launch, the corridor will generate more than $2.5 trillion of trade among Silk Road member countries. For Iran, fully cooperating with the Silk Road project holds far more promise than becoming a geopolitical pawn of Washington in economic or other ways against China and Russia.

This is not to suggest that Iran will abandon “the West” all together. The West remains a lucrative market for Iran. However, with such vast opportunities opening up in Asia, and with Iran placed in perfect geographic proximity to avail itself of these economic and strategic opportunities, there seems to be no confusion with regard to the trajectory Iranian foreign policy should take. Given the precarious nature of Iran-West relations, Iran may find it useful to walk a cautious path in the short-run; in the long-run, however, Iran will have its face to “the East.”

Salman Rafi Sheikh is a freelance journalist and research analyst of international relations and Pakistan affairs. His area of interest is South and West Asian politics, the foreign policies of major powers, and Pakistani politics.

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