RUSSIA AND IRAN´S OVER-HYPED ALLIANCE / GEOPOLITICAL FUTURES

Russia and Iran’s Over-Hyped Alliance

Their growing closeness won’t be a game-changer.

By: Ekaterina Zolotova

Russia and Iran have a long history of cooperation, but amid the conflicts in Ukraine and Gaza, their relationship has come under renewed scrutiny. 

Last month, the White House expressed concern that Iran is considering providing Russia with ballistic missiles for use in Ukraine. 

The Kremlin didn’t respond directly to the story, saying only that its relations with Iran are growing, including on the military-technical front. 

Days later, Iran’s deputy defense minister said Russian Su-35 multirole fighters, Yak-130 combat training aircraft and Mi-28 attack helicopters are beginning to enter service in the Iranian military.

There’s no question that, amid Western pressure, relations between the two countries have deepened in several areas. 

However, their relationship won’t change the balance for either country. 

Their growing closeness is a result of their increasing isolation and difficult internal realities, rather than what they can offer each other.

In Search of Allies

Russia and Iran have long had strong relations on political and regional matters, including the war in Syria. 

However, since the beginning of the conflict in Ukraine, cooperation has expanded into the economic realm as well. 

Trade, logistics and economic cooperation are now high on the agenda whenever Iranian and Russian officials meet. 

The speaker of Russia’s State Duma, Vyacheslav Volodin, visited Tehran last February and noted that trade between the two countries increased by almost 15 percent in 2022, totaling $4.6 billion. 

This shift is a result of the fact that their economic interests have increasingly converged since Russia invaded Ukraine. 

Moscow today sees Iran not only as an important player in the Middle East but also as a partner that could help it circumvent Western sanctions. 

Iran, for its part, has been under sanctions for many years and sees in Russia an opportunity for its exports to reach a fairly large market. 

It’s also hoping to become a key transport hub in the International North-South Corridor, which runs from Russia to India. 

Tehran also relies on Russia for oil and gas production technology. 

Their growing convergence was triggered by the economic and political changes in Russia brought on by the Western sanctions regime. 

According to Russia’s Federal Customs Service, trade with Asia now accounts for about 70 percent of the country's total trade turnover, twice as much as before the war, while Europe, which accounted for 50 percent of Russian trade before the Ukraine crisis and COVID pandemic, now makes up just 16 percent. 

This pivot to the east was necessary for Moscow to bring in revenue for its cash-strapped budget once its ability to trade with Western countries was severed. 

It also enabled Russian consumers and businesses to continue to access much-needed imports.

Iran, meanwhile, has also been looking to diversify its economic and diplomatic relations. 

In the summer, it became the ninth member of the Shanghai Cooperation Organization, a security grouping founded by Russia and China. 

It also made progress toward normalizing relations with Arab countries, including Saudi Arabia, with which it announced in September it would reestablish diplomatic ties. 

Iran maintains constant dialogue with Central Asian countries, and in July, the president of Iran took a rare trip to Africa, the first by an Iranian leader in a decade. 

There are signs of easing tensions even in Iran's relations with Azerbaijan, despite many unresolved issues.

It’s in this context that Moscow and Tehran’s growing closeness has developed. 

While it’s true that they’ve seen growth in trade and diplomatic exchanges, it comes as both governments have been on a mission to repair and strengthen relations with their remaining allies around the world. 

It’s too early to say whether their alliance will be a reliable and lasting one. 

After all, they were pushed together by their circumstances and lack of options. 

And despite the double-digit growth in bilateral trade last year, it amounted to only 1 percent of Russia’s total trade. 

For Iran, Russia isn’t a top trade partner, and though it is the biggest investor, spending $2.76 billion on investments in Iran, this isn’t a huge total for an economy of Russia’s size, basically equaling the average Russian investment in each of the post-Soviet countries.

Inhibitors

A number of factors have blocked further enhancement of their ties. 

The first relates to infrastructure. 

The two countries lack well-developed and reliable transport networks to deliver goods to market. 

Both countries have access to the Caspian Sea, but their ports there are underdeveloped and the sea’s receding water levels are making cargo transport increasingly difficult. 

Implementation of the north-south corridor is also complicated by the absence of a single operator to handle logistics and payments for transport and goods. 

The low cost of diesel in Iran means road transport is less expensive than rail, meaning investors won’t be quick to sink money into potentially unprofitability railway projects in Russia.

Consumer demand is also a factor. 

Iran is unable to produce the electronic goods that Russian consumers want to buy and now have limited access to. 

Iranian cars such as IKCO Dena, which are comparable in price to Russian cars, became available in Russia in 2023, but in the first 10 months of the year only 99 were sold. 

It may be that Iranian cars just don’t suit the needs of Russians consumers, but the lack of developed import-export programs to facilitate trade is also an issue. 

Iranian cars are currently sold in Russia under Moscow’s parallel imports scheme, so access to spare parts and accessories is unreliable. 

Other Iranian goods that made it to the Russian market – from shampoos to tomato paste – weren’t successful in part because they were in highly competitive spaces. 

Russian products have also had a difficult time entering the Iranian market. 

Some 90 percent of Russian exports to Iran are food and agricultural raw materials.

One area where cooperation has expanded is in the military-technical space. 

However, exchanges have been limited here too. 

Iran simply isn’t interested in much of what Russia’s defense industry has to offer. 

Tehran has said it has already achieved self-sufficiency in defensive weapons and has secured stockpiles of its own weapons systems. 

It therefore may not need to purchase Russia’s top offerings – though Tehran did try to buy the S-400 missile defense system in 2019 but was denied. 

Iran also has other partners with which it can cooperate on the defense front. 

It held military drills with Oman just last week and expects to strengthen defense ties with China within the framework of the Shanghai Cooperation Organization. 

For Iran and Russia, cooperation with countries such as China is critical, since both need foreign technology but are constrained by Western sanctions. 

Iran and China signed a strategic cooperation agreement in 2021 that includes stable exports to China of Iranian oil, as well as Chinese investments in Iranian ports and high-speed railways that connect with the energy and petrochemicals sectors. 

Similarly, Russia and China have sealed major contracts on energy and the exchange of technology.

In terms of defense support, Tehran’s main interest is air force-related goods and technology. 

It has expressed interest in buying Russian Su-35 fighter jets – something it can't get from Beijing. 

Though the U.S. has asserted that Russia is trying to secure more Iranian Shahed drones for use in Ukraine in exchange for advanced fighter jets, it hasn’t provided any evidence. 

Ukrainian intelligence has not reported deliveries of drones to Russia from Iran in recent months, and the main production of the weapons has been moved to Russia. 

The Iranian drones Russia had in its possession, which it purchased before the war, included only a limited part of Tehran’s arsenal, not the newest and most effective drones produced in Iran. 

Tehran itself has used much more advanced attack drone models in recent years. 

In addition, the main production of Iranian drones was transferred to Russia long ago.

Finally, lingering mistrust between Moscow and Tehran acts as a brake on their building a strong and lasting alliance. 

Cautious voices in Iran warn that a closer relationship with Russia encourages the U.S. to crack down harder on Iran’s nuclear program. 

The Kremlin worries about Iran’s internal stability, as well as the potential damage that closer ties could do to Russia’s relationships with other countries in the region such as Israel, Turkey and Azerbaijan. 

To name one recent example, Tehran was outraged earlier this year when Moscow appeared to side with the United Arab Emirates in its dispute with Iran over the status of three small islands in the Strait of Hormuz.

Cooperation between Russia and Iran is expanding but it is not limitless. 

Both sides are still prioritizing diverse relationships covering a range of areas over their bilateral ties. 

Efforts to counter Western sanctions are important for binding them together, but a strategic alliance is some ways off.