February 03, 2014

US trying to prevent oil deal between Russia and Iran

Featuring Colin H. Kahl

Source: Russia & India Report

Journalists Kirill Belyaninov, Elena Chernenko, Kommersant

As we approach the conclusion of the agreement on Iran's nuclear program, the struggle for access to its domestic market escalates. It has become known that the United States, at different levels, is trying to ensure that Moscow refuses from concluding an oil agreement, which is being discussed with Tehran. Russian government sources admit that this is a question of “hard pressure”, while at the same time, the United States refrains from criticizing India, which is negotiating a similar deal with Iran.

Russian experts urge Moscow not to engage in “self-castration” just to please Washington. The US is strongly trying to dissuade Russia from a sharp intensification of economic cooperation with Iran, using all bilateral meetings and contacts, several Russian government sources told Kommersant.

According to one of the interlocutors, this is not just persuasion, but “hard pressure” combined with the threat to impose economic sanctions against Russian companies and financial institutions that will participate in such a transaction.

Moscow and Tehran are discussing the possibility of delivering Iranian oil to Russia (up to 500,000 barrels per day) and Russian goods and equipment to Iran.  While Reuters was the first to report on the impending transaction, Kommersant received confirmation of this information from the Russian government.

The White House and the US State Department made tough statements, declaring that the agreement would be contrary to the existing sanctions against Iran and to the interim arrangement on the Iranian nuclear program.

Russian government sources disagree – Moscow considers the US sanctions against Tehran to be illegal, and the agreements on the Iranian nuclear program to have nothing to do with Russian-Iranian economic cooperation.

“This is not a matter of violation of sanctions or of the Geneva agreements – that is absurd,” says one of the interlocutors. Moreover, he draws our attention to the fact that Washington is not reacting to reports of a similar deal between Iran and India. “Is this not a double standard?” asks the interlocutor.

Hindustan Times recently reported that Tehran and New Delhi resumed negotiations that had been interrupted several years ago for the implementation of a multi-billion gas pipeline project to deliver Iranian gas to India. It also reported about the participation of Indian companies in the development of the Farzad B Iranian gas field. Previously, they spoke about laying a surface pipeline from Iran to India through Pakistan (and the United States strongly opposed this). Now, judging by the statements of Iranian and Indian authorities, the parties are leaning towards an agreement on laying a pipeline on the bottom of the Sea of Oman.

So far, there has been no official reaction from Washington in relation to this issue. American experts assure that the silence from the White House “does not mean anything”. “Any country that violates US laws gets sanctions imposed against it,” Colin Kahl, director of the Middle East Program at the New American Security Center in Washington DC, told Kommersant.  Kahl, who is also former Deputy Assistant to the Secretary of Defence, added that in November, Iran agreed to intermediate concessions in the nuclear field for two reasons – because of the tough sanctions and the unity of the “Six” intermediaries. “If Russia concludes this deal, the economic pressure on Iran will be eased, and would demonstrate that there are ‘differences’ among the ‘group of six’,” said the interlocutor, adding that in such a case, Tehran will be less interested in the fulfillment of the agreements on its nuclear program. “The will be a disaster,” Kahl said. “In such a case, the White House will unlikely be able to dissuade Congress from the actively discussed idea of imposing additional sanctions against Iran. And this will bury any chances of achieving agreements on the Iranian nuclear issue in the coming months.”

The President of the PIR Center Vladimir Orlov gives two reasons for the nervous reaction of the US to reports about rapprochement between Moscow and Tehran. The White House feels that the situation in the Congress is really shaky – any appearance of Russia in Iran, be it economic, military or technical, now, before a final agreement on the Iranian nuclear program is reached, will cause a storm in Congress, while India does not annoy the US lawmakers. There is also the utilitarian and economic point. The Americans do not want the Russian Federation to consolidate its position in Iran. According to the interlocutor, this is not what the US government promised to its big corporations, lobbying for a rapprochement with Tehran. “Russia is glad to help the White House overcome difficulties in the Congress, but not by self-castration,” said the president of the PIR Center. “The fact that Russia is considering oil transactions with Iran, not only should be encouraged, but it is rather a belated step.”

Since November, when the process of unblocking the Iranian nuclear issue started, Tehran has already been visited by business delegations from the UK, China, Italy, Austria, Sweden and other countries. In early February, they are waiting for representatives of major French companies. American business is also seeking to reach Iran. A Russian diplomatic source told Kommersant that, according to some information, the United States and Iran have recently created a trade and economic chamber.

  • Colin H. Kahl

    Middle East Security

    Dr. Colin H. Kahl is an associate professor in the Security Studies Program at Georgetown University’s Edmund A. Walsh School of Foreign Service and the former National Securi...