The lifting of sanctions against Iran raises a number of challenges for the Kremlin, including concerns that Iran could be preparing to assert its power in the South Caucasus, the Caspian Sea or Central Asia.

Iran's President Hassan Rouhani waves to media with an ink-stained finger, after registering his candidacy for the Feb. 26 elections of the assembly at Interior Ministry in Tehran, Iran. Photo: AP

The Iran nuclear deal in which Russia acted as one of the negotiators and a major lobbyist of Tehran’s interests reached its concluding stage last week. The international commission confirmed the country’s compliance with the terms of the deal that had been signed in July last year, which resulted in the lifting of sanctions against Iran.

Major world powers welcomed the deal and among them was Russia. The Ministry of Foreign Affairs released a statement in which it welcomed the sanctions relief, calling it an important step towards the normalization of the situation around Iran.

Interestingly, Russia’s Vnesheconombank (VEB), a state financial corporation that promotes foreign economic cooperation, also released a statement in relation to the decision to lift international sanctions. VEB called the deal a boon to Russian exports to Iran and boasted of several such deals that are on their way. There is, however, a lot of skepticism surrounding these statements and it is questionable whether Russia will benefit from Iran rejoining the world economy. 

Lengthy nuclear talks and the Syrian war have brought Russia and Iran closer together. Their mutual support for Syrian President Bashar al-Assad has been universally interpreted as an alliance between the two. Outside of the issue of Syria, the nuclear talks and, to some extent, Yemen, Moscow and Tehran do not show that much unity. On some issues they agree to disagree, on others, there are ongoing disputes.

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A strong and assertive Iran whose power in Eurasia has been continuously declining since international sanctions were imposed in 2006 will now try to regain its lost leadership. Moscow, in particular, should be concerned as to what Iran’s policy is going to be in the South Caucasus, the Caspian Sea, and Central Asia, which constitute Russia’s entire southern border.

The South Caucasus

Russia uniquely considers the South Caucasus - Armenia, Azerbaijan and Georgia – within its sphere of interest. The fact that, for the first time since the collapse of the Soviet Union, Russia chose to go to war with Tbilisi in 2008 convincingly proves this argument.

Russia has also been continuously playing Armenia and Azerbaijan against each other by supplying weapons at large discounts to both parties. The two countries have been at loggerheads with each other over Nagorno-Karabakh, an ethnic Armenian enclave within Azerbaijan controlled by Yerevan. The conflict dominates the political rhetoric of the two countries and mutual distrust has permeated their societies. This territorial dispute is the most explosive land conflict in the post-Soviet Union space that by all accounts may result in a major war. 

The way Russia handles the South Caucasus, and the Armenia-Azerbaijan conflict in particular, is exactly where Iran disagrees with Moscow. The Nagorno-Karabakh potential hotspot sits right at Iran’s northern border. Iran, Armenia and Azerbaijan share largely the same history, as they were all part of Persia at some point in the past. In fact, Northern Iran (called Iranian Azerbaijan) today is home to millions of ethnic Azeris as well as up to 200,000 of ethnic Armenians. 

The fear in Iran is that if a full-scale war over Nagorno-Karabakh erupts between Yerevan and Baku, it could easily spill over into Iran. This is the reason why Russia’s questionable domination over the South Caucasus is not in Iran’s best interests.

What is unimaginable in Armenia and Azerbaijan today exists in Iran, where these minority ethnicities have coexisted peacefully for hundreds of years. The Armenian Orthodox community there enjoys official recognition while Shia Muslim Azerbaijanis have their own mosques and both communities participate actively in the country’s politics.

The conflict over Nagorno-Karabakh intensified sharply in 2014-2015 and the risk of a full-out war between Armenia and Azerbaijan is at an all time high. It is clear that Iran has more in common with the two countries than Russia and could be more interested in their peaceful coexistence than Moscow. Unexpectedly for the Russian leadership, Tehran could intensify its contacts with Yerevan and Baku in a bid to retake Moscow’s position of a key mediator between them, which would inevitably lead to the alienation of the two from Russia.

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The Caspian Sea 

Since the collapse of the Soviet Union, Russia and Iran have made numerous attempts to delimit the Caspian Sea, both in their favor. The reason for the ongoing attempts is of course natural resources. Oil fields are so vast in the Caspian that the countries cannot decide on how to get the better portion of the pie. This has lead to steady militarization of the sea.

Today Russia’s Caspian flotilla is the strongest one in this region, followed by Iran, which recently increased its military presence in the sea. While most vessels in the Caspian are small missile-armed or patrol craft, the status quo changed in October when Russia launched cruise missiles at targets in Syria from the Caspian Sea.

The 26 missiles crossed the territory of Iran, meaning that the operation was approved by Tehran. The extent of the Russian operation caught Western governments off-guard but it also likely alerted the Iranian leadership as well since there was no pressing need to use such unorthodox methods in its Syria campaign.

The idea of having a military fleet in the enclosed body of water is absurd in itself unless Russia and Iran concede that in the future their navies may clash over the access to natural resources. While Russia’s Caspian flotilla remains largely unchallenged, this may end soon.

As the five littoral countries are still to reach an agreement on the sea’s legal status, Iran hopes to increase its territorial claims in the Caspian from 13 nautical miles off its coast to 20 percent of the entire sea. To that end, Tehran launched the destroyer Jamaran-2 in the sea in 2013, is building a Fateh-class submarine to serve there as well and is likely to continue expanding its military presence in the sea to raise its bargaining power in light of negotiations on the sea’s legal status.

Central Asia

Iran’s cultural and political links to Central Asia have always been very strong but in the past ten years the country largely disappeared from the region due to its inability to back its political influence with finances. This has allowed China to emerge as a leading power in this region, something, of which both Iran and Russia are wary.

Now that Iran has rejoined the world economy, it will soon be ready to reclaim its position in Central Asia. A flurry of meetings that took place between Uzbek, Turkmen and Iranian officials in the past year proves just how much both sides are anticipating this new era of cooperation. 

Iran offers the shortest non-Russian route for shipping Central Asian oil and gas to Europe, which Turkmenistan is likely to make use of. Iran’s transportation system may also allow connecting the landlocked region with the countries of the Gulf and Northern Africa, essentially cutting Russia out of the transportation equation in Central Asia.While Russia does not trust Tehran entirely on its intentions in Central Asia, Moscow is unlikely to challenge its attempts to regain some of the influence in the region simply because it could balance China’s standing there. Central Asia is not the goal in itself for Iran, but rather part of a wider strategy that involves restoring its influence in Afghanistan.

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While Russia does not trust Tehran entirely on its intentions in Central Asia, Moscow is unlikely to challenge its attempts to regain some of the influence in the region simply because it could balance China’s standing there. Central Asia is not the goal in itself for Iran, but rather part of a wider strategy that involves restoring its influence in Afghanistan.

Iran is struggling to limit the flow of narcotics from Afghanistan and to suppress the activities of Sunni extremist groups there. Largely, Tehran relies on Tajik groups that live along the Iranian border in west Afghanistan. Since the Afghan-Central Asia border is porous, the fight against extremists there is not possible without rallying support of Turkmenistan, Tajikistan and Uzbekistan.

Russia has tried to curb the influx of terrorists to Central Asia through the Collective Security Treaty Organization (CSTO), which also helped Moscow support its own significance with local political elites. Iran’s strategy bears certain risks for Russia, because it could effectively minimize the influence of Moscow and the Russia-led CSTO.

The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.