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Iran: Recapping the year 2018

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With the year 2018 according to the Christian calendar now out and 2019 now setting in, people traditionally sum up the results of the past year. Even though the Iranian new year of 1398 is still three months away, we will stick to the Russian tradition and look back on 2018, which is already history now.

For the Islamic Republic of Iran, the past “Christian” year was one of the most trying in its recent history with a series of negative factors affecting the country’s foreign and domestic policy, the economy and national security. The worst of them all was Washington’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, resulting in a resumption of hard-hitting US sanctions and the exit of more than 100 big foreign companies, which had previously been doing business with Iran.

Socio-economic situation

The start of 2018 in Iran was marked by a series of mass-scale nationwide protests demanding better living conditions for the people and putting an end to the government’s policy of spending huge financial resources aimed at attaining military and political goals abroad.

The authorities managed to bring the situation under control, but the protests, though on a lesser scale, continued flaring up throughout the past year.

The situation was further exacerbated by President Donald Trump’s announcement in May of the US withdrawal from the Iran nuclear accord, and the subsequent introduction of anti-Iranian sanctions in August and November. Iran’s national currency, the rial, plunged to record lows hitting a dismal 190,000 rials to the US dollar in early September. Although it later stabilized somewhat at 100,000-110,000 to the greenback, the downfall led to an economic crisis: according to IMF estimates, inflation spiked to 30 percent, with Iran’s own Central Bank putting the figure at 40 percent. The country’s GDP slipped by more than 3 percent, many enterprises shut down, and unemployment reached 12 percent (18 percent among young people).

It should be noted that the hardest hit by the US sanctions was the Iranian economy, still reeling from the tough international sanctions imposed on the country between 2012 and 2015.

While blaming the economic problems on the country’s overdependence on oil exports, the Iranian President Hassan Rouhani also acknowledged the negative impact of the US sanctions on the living standards of ordinary Iranians. He still believes, however, that “the United States will fail, and the Iranian government, with the support of the parliament, the people and the country’s spiritual leader, will cope with difficulties.”

When unveiling the 2019 draft budget in parliament on December 25, President Rouhani promised that in the upcoming Iranian new year in March, civil servants and pensioners would see their incomes grow by 20 percent, and that state subsidies for the purchase of basic goods for the country’s poor would reach $14 billion.

Meanwhile, Russia, India and China are lending a helping hand to Iran, with Indian Ports Global Ltd (IPGL) taking over, in keeping with a bilateral agreement, the management of Iran’s Shahid Beheshti port for up to 18 months with the possibility of a 10-year renewal. The contract will facilitate the transit of goods between India and Afghanistan, bypassing the territory of Pakistan, and will significantly contribute to the region’s economic growth. Following the French oil company Total’s withdrawal from Iran, China’s CNPC Company has been moving in to fill the void.

Other countries are also offering their services in an effort to offset the negative impact of Washington’s sanctions on Tehran.

Domestic political situation

The outgoing year saw an increase in the activity of opposition forces, representing the radical, anti-Western segment of the Iranian establishment, including ex-President Mahmoud Ahmadinejad and the loser of the 2017 presidential election, hard-line Islamist Ibrahim Raisi.

Throughout the past year, the opposition was working hard, if not to remove Hassan Rouhani’s liberal reformers from power, than at least to target their individual representatives. In summer, they managed to force the resignation of the Minister of Economy and Finance Masood Karbasian and the Minister of Labor, Social Security and Cooperatives Ali Rabiyi. Earlier, the head of the Central Bank, Valiolla Safe, was equally dismissed, replaced by Abdnnacer Hemmati.

In 2018, divisions in the country’s ruling elite became increasingly visible, but it would still be premature to talk about any serious crisis, much hoped for by the US President Donald Trump. In fact, Trump has played right into the hands of Iran’s radicals and conservatives because instead of undermining Iran’s Islamic regime, the sanctions have hit President Rouhani and his team, who are looking for a dialogue with the West. With the Rouhani government losing its political clout in 2018, its radical and hard-line opponents have been strengthening their positions and their role in the country’s domestic and foreign policy.

While there were no signs last year of Hassan Rouhani being forced out as long as he enjoys the support, at least verbal, of the country’s spiritual leader, Ayatollah Khamenei, the president could still bend under the pressure from the opposition and change his domestic and foreign policy, and not necessarily in the direction of reforms and liberalization.

Foreign policy

In 2018, Iran continued its efforts to impact the situation in the Middle East, primarily in Syria, Yemen, Iraq, Lebanon and Afghanistan. President Trump’s decision to withdraw the US from the 2015 nuclear deal with Iran set forth a new, “offensive,” phase in Tehran’s foreign policy. On the one hand, this reflected the growing role of hardliners among those responsible for taking military and political decisions in Tehran. On the other, the US policy towards Iran has resulted in the moderates in Iran, including in the presidential administration and the government, toughening the country’s foreign policy.

In 2018, Iran ramped up the number of short- and medium-range missile tests, conducting seven test launches of medium-range missiles, five short-range missile launches, as well as a cruise missile launch. This was a significant jump from just four medium-range and a single short-range missile test carried out in 2017.

Russian-Iranian relations

The Russian-Iranian political dialogue in 2018 reflected the two countries’ shared view on some regional and global policy issues, above all the establishment of a multi-polar world order, strengthening the United Nations’ role in international affairs, countering new challenges and threats, on Syrian and Iraqi settlement as well as the situation in Afghanistan.

Moscow viewed cooperation with Tehran as an important condition for ensuring Russia’s national interests and strengthening stability in the South Caucasus, Central Asia and the Middle East.

In 2018, Russia maintained constant high-level contacts with Iran. Presidents Vladimir Putin and Hassan Rouhani have met 14 times since Rouhani’s election in 2013, and have on many occasions resolved important issues by telephone.

The Russian and Iranian foreign ministers met regularly in Moscow and Tehran, during UN General Assembly sessions, on the sidelines of other international events, and also communicated by phone.

In its relations with Tehran, Moscow proceeds from the assumption that cooperation with Iran is important for ensuring its national interests, strengthening stability in the region and elsewhere in the world. That is why throughout the past year Russia actively defended the Iran nuclear deal, which the US withdrawal threatens to unravel. There is a shared view in both Moscow and Tehran that the breakup of the Iran nuclear deal is fraught with the destabilization of the region and the whole world.

In 2018, Moscow and Tehran repeatedly reiterated their firm commitment to preserving the territorial integrity of Syria, and to a peaceful settlement of the Syrian crisis. They also voiced their concern about the continuing deterioration of the situation in Afghanistan and the growing threat of terrorist attacks by local extremist forces.

In August, as a result of efforts by Russian and Iranian diplomats, Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan signed an agreement of a truly historic significance – the Convention on the Legal Status of the Caspian Sea. The accord, the first of this kind in centuries, created real conditions that define and guarantee the signatories’ joint political, military, economic, and ecological activities in the Caspian.

Russian-Iranian relations were an important feature of the past year, the most notable being the decision to complete the creation of the 7,200 km North-South transport corridor to ensure faster and cheaper shipment of goods from China and India to Europe. Moscow and Tehran agreed to simplify customs procedures, remove existing barriers complicating the free flow of goods and services, and improve communications in the banking sector.

Not all problems existing in relations between Russia and Iran were resolved in 2018, of course. Russia and Iran are only “moving towards a strategic relationship.” Many problems still persist in trade and economic relations with a trade turnover of just $2 billion between two major powers looking nothing but negligible.

The two countries are working to change this, though. According to a memorandum on the “oil for goods” program signed in 2014, Russia planned to buy 5 million tons of Iranian oil each year (about 100,000 barrels a day), and supply it to other countries. In return, Russia would provide $45 billion worth of goods to the Islamic Republic. Tehran, for its part, committed to spend half of the revenue from oil sales to Russia as payment for Russian goods and services, such as aircraft, airfield and railway equipment, trucks and buses, pipes and construction services in Iran.

In keeping with the program, in November 2017, Russia started importing limited amounts of Iranian oil. (Tehran, which was then emerging from sanctions, had no interest in selling more). With a new round of sanctions back in place, Iran may now have a greater deal of interest in implementing the terms of the 2014 plan.

In March 2018, the Russian and Iranian Agriculture Ministries reached a preliminary agreement for the supply of Russian wheat to the Iranian market.

Military-technical cooperation is another promising area of mutually-beneficial partnership between the two countries. A Russian military delegation visited Tehran in late-December to discuss pertinent contracts in this area.

Russia and Iran are implementing a number of large-scale energy projects, including the construction of the Sirik thermal power station and the electrification of the Garmsar-Inche Burun railway.

In 2018, Russia and Iran continued their cooperation also in the cultural, humanitarian, scientific and educational fields. A national competition in the Persian language and literature was held in Russia, and the program of student and teacher exchanges between Russian and Iranian universities continued unabated.

The “Orthodoxy-Islam” joint Russian-Iranian commission on dialogue is working equally well.

That being said, Moscow and Tehran still differ on certain global and regional issues. However, these differences can be sorted out on the basis of mutual confidence building, and this is probably the main goal Russia and Iran will be working to achieve in the new year of 2019.

First published in our partner International Affairs

Senior research assistant at RAS Institute of Oriental Studies, candidate of historical sciences

Middle East

Beijing’s strategic 25-year partnership with Tehran

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image source: tehrantimes.com

Beijing is in the final stages of approving the 25-year $400 billion economic and security deal with Tehran dubbed Sino-Iranian Comprehensive Strategic Partnership. The media reports that the agreement incorporates massive Chinese investment in Iran’s infrastructure envisions closer defense and intelligence sharing and guaranteed Iranian oil for China.

The partnership was in process since 2016 when China’s Xi Jinping proposed it during his visit to Tehran. However, the proposal managed to remain low on the media radars and resurfaced when President Hassan Rouhani’s cabinet approved it in June. Chinese and Iranian officials confirmed that it is a document which is labeled “final version” and dated June 2020.

According to the Indian business newspaper, the Financial Express, China is to invest $120 billion for upgrading Iran’s transport infrastructure, beginning with the 2,300-km road that will link Tehran with Urumqi in China’s Xinjiang province. This road will be dovetailed with the Urumqi-Gwadar link developed under the China Pakistan Economic Corridor under the “New Silk Road.” The road link will provide connectivity with Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan and thereafter via Turkey into Europe.

The timing of such a deal amid the immoral and crippling “maximum pressure” economic sanctions could not have been better for the Islamic Republic. For the downward slope in China-U.S. relations, the deal will further deteriorate the bilateral ties between the two largest economies of the world, and another round of trade war between the two countries is expected. 

The rising geopolitical tensions between the U.S. and China are likely to hurt both sides and the global economy. In uncertain times people hedge on gold to protect personal savings. In the last week of July, gold price broke a record, reaching an all-time high of $1,921 an ounce.

China’s new digital currency e-RMB could play an important role to bolster the Sino-Iranian pact as it would bypass American financial systems, and eventually reduce the power of the dollar. The move towards digital money has gained momentum globally amid the Covid-19 pandemic.

The U.S. dollar is the most powerful and influential currency in the current financial market. In 2019, the U.S. greenback made up nearly 90 percent of all international transactions and 60 percent of all foreign exchange reserves. The supremacy of the U.S. dollar gives U.S. economic sanctions their strength, making it nearly impossible for sanctioned nations such as Iran and North Korea to conduct international business.

Chabahar Free Trade Zone

Reported to be over three trillion dollars, China has the world’s largest foreign exchange reserves. Some analysts argue that China is using the FOREX reserves to stretch its muscles and redraw the Asian map. It has used these reserves to invest in infrastructure projects in Africa and Asia mainly.  Sri Lanka’s Hambantota port was leased to China for 99 years after months of negotiations between China and South Asian island country the Lankan government handed over the port and 15,000 acres of land around it.

The transfer gave China control of territory just a few hundred kilometers off India’s shores and a strategic foothold along a critical commercial and military waterway.

Pakistan owes China at least $10 billion in debt for the construction of Gwadar Port, which is leased to the Chinese government through 2059. Transit trade to Afghanistan via Gwadar port began on July 19 with a consignment of bulk cargo from the United Arab Emirates (UAE). With its 600-km coastline, Gwadar is a key deep seaport currently operated by China to gain direct access to the Indian Ocean in line with its $64-billion Pakistan-China Economic Corridor (CPEC) megaproject.

The future of the port of Chabahar, which was in part India’s response to Gwadar port, hangs in the balance as the massive Iran-China deal incorporates infrastructure projects including airports, railways, and free trade zones. 

The prospect that India could lose out on the rail line project connecting the port of Chabahar to the Afghan border city of Zahedan due to apparent delays to invest has raised questions about the foreign priorities of New Delhi.

The Indian Ocean port of Chabahar consists of two separate ports named Shahid Kalantari and Shahid Beheshti, each containing five berths. Iran awarded the development of this port to India, which committed $500 million to build two new berths in this port.

In 2016, India, Iran, and Afghanistan signed an agreement to establish transit and transport corridor using the Chabahar port linking the region to Central Asia and further west. The port will complement China in its Belt and Road Initiative for trade and travel links from China to Asia, Africa, and Europe.

In January 2017, seven agreements valued at over $3 billion were signed by Iranian, Indian, Omani, Chinese, and South Korean investors during a conference to promote investment opportunities and sustainable development in Mokran coastal area in the Chabahar Free Trade Zone (CFTZ).

India sent its first consignment of wheat to Afghanistan through the port in 2017. In June, Afghanistan sent three transit consignments to India via the Chabahar port. Afghanistan’s first transit of goods to China was shipped through the port in mid-July.

Indian private industry firms, with the presence of Rashtriya Chemicals and Fertilizers and Gujrat State Chemical and Fertilizers, looked at the establishment of urea and ammonia plant in CFTZ, then Indian Ambassador, Saurabh Kumar told the Tehran Times in 2017, adding that the Indian private sector would be the main investor in CFTZ.

National Aluminum Company of Indian (NALCO) and Iran Mines and Mining Industries Development and Renovation Organization (IMIDRO) signed an agreement for an aluminum smelter plant in CFTZ.

Kumar added that the two countries were negotiating on important agreements on Preferential Trade Agreement (PTA), double taxation avoidance, and bilateral investment agreement (BIT). Representatives from Iran and India held a new round of negotiations on PTA in mid-February.

Head of Iran’s Trade Promotion Organization (TPO) Hamid Zadboum and the present Indian Ambassador to Tehran Gaddam Dharmendra met early July to discuss the expansion of trade ties.

The second round of preferential trade agreement was to meet this week, It reported EurAsian Times, adding that the Iranian foreign ministry spokesperson has clarified their “balanced foreign policy” and that it is not favoring Beijing at the cost of Delhi.

Although India has traditionally maintained good ties with Iran, despite the waiver which Chabahar port got from the U.S. sanctions regime, India has been criticized for delays in investing in Iran’s only seaport. Moreover, India has fully complied with the unilateral U.S. sanctions and has suspended its energy imports from Iran.  Figures released by the Chinese officials show that although Iranian crude deliveries to China were never suspended but reached a 20-year low in March 2020. 

Analysts see U.S. President Donald Trump’s recent visit to India and his friendship with Indian Prime Minister Narendra Modi as a way for the U.S. to contain China’s influence in the region. As well, the waiver that Chahbahar port got from the sanctions was another sign of Washington’s efforts to contain Beijing.

India recently clashed with China in the Himalayas, and the bilateral relations are not at an all-time high, and the Chabahar port can be another venue for conflicting interests. Having good relations with India and China, Iran would prefer a situation whereby both countries could simultaneously benefit from the multi-modal development of the transport infrastructure at the Chabahar port.

Through such bilateral cooperation, the Chabahar port project could bring China and India closer. Recall the “Peace Pipeline” for transportation of natural gas from Iran to Pakistan to India? Unfortunately, the lack of political will prevented this project from implementation.

What happens to the development of the Chabahar port if the Majlis approves the Iran-China strategic 25-year strategic agreement remains a matter of speculation at the moment. The implication of this 25-year strategic deal with China doesn’t necessarily mean deterioration of Tehran-New Delhi bilateral relations. On the contrary, it could shape up a new beginning for Beijing-New Delhi ties.

From our partner Tehran Times

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Iran-Russia: Bilateral strategic partnership or a disappointing agreement

Aref Bijan

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Following the topic of the 25-year Iran-China Cooperation Document, there was a discussion on a comprehensive long-term strategic agreement between Tehran and Moscow; this was not good news for the White House and its maximum pressure strategy. In a telephone conversation with Vladimir Putin, Iranian Foreign Minister Mohammad Javad Zarif had agreed to review the 20-year cooperation agreement, which expires in about eight months (March 2021). The question is why such a contract has been concluded at the present time. Some critics believe that before concluding such an agreement with China and negotiating a 20-year contract extension with Russia, Iran was cooperating with these two countries in a balanced way, and it was logical that if a contract was needed, it should have been concluded for 2 or 3 years. However, the regional and international situation in Iran has become very difficult in the current situation. Factors such as the Syrian crisis, the pressure of economic and arms sanctions, and the issue of a nuclear deal have led Iran to take the risk of concluding long-term bilateral cooperation with Russia and China.

Before raising the issue, it is necessary to first make a brief reference to the content of the 20-year agreement between Iran and Russia in 2001. The treaty is entitled “The Law of the Treaty on the Basis of Mutual Relations and Principles of Cooperation between Iran and Russia”, which was signed on March 12, 2001 in Moscow in the presence of the Presidents of the two countries (Khatami and Putin). The term of this agreement, which was also approved by the parliaments of the two countries, is originally 10 years, but after the end of the term, it has been extended twice for 5 years each. Article 21 of the treaty states: “This treaty shall be concluded for a period of ten years, and if neither party notifies the other party in writing of its intention to terminate the treaty in writing at least one year before its expiry, it is automatically extended for the next five years. This treaty contains an introduction and twenty-one articles. Article 6 of the treaty refers to cooperation between the two countries in the field of energy, including nuclear energy, and states: Nuclear energy will help build nuclear power plants, industry, science, technology, agriculture and public health.

Other sections also mention cooperation between the two countries in various fields of economy, energy transportation, politics and security. The treaty was seen as a diplomatic turning point at the summit, which was almost the first meeting at the level in 40 years. The agreement was opposed at the time and provoked a reaction from the Americans.”Some may like the agreement and some may not,” said General Leonid Ivashov, a senior Russian Defense Ministry official at the time. “Our countries will work for our interests.” The deal at the time was also a signal to the US administration of George W. Bush that Iran and Russia intend to further limit US influence in the region. “We are particularly concerned about the sale of advanced conventional weapons or sensitive technologies, such as nuclear technology,” said Richard Butcher, a State Department spokesman at the time.

Naturally, extending this treaty or changing it into a comprehensive long-term strategic agreement will again provoke a negative reaction from the United States. Because such a reaction was made for the 25-year document of cooperation between Iran and China. Basically, the United States seeks political and economic isolation of Iran. Therefore, any cooperation of Iran with any country is in violation of this policy in Washington. The White House has sought to weaken Iran’s economy over the past few years by pursuing a policy of “maximum pressure.” For this reason, any loophole to get out of this situation undermines US policy of pressure.

Therefore, one of the main reasons for concluding this agreement could be that US pressure has led Iran to embrace China and Russia. Since the imposition of US sanctions on Iran’s oil exports, Tehran has faced a severe economic crisis and has been forced to seek the support of other countries to escape the crisis. Washington also recently sought to extend and even increase sanctions at the UN Security Council as the UN arms embargo expires in October. As a result, Tehran has approached Beijing and Moscow and tried to respond to Washington’s pressure with some tactics. Iran has often said that it has other options if the United States does not show readiness. With the pressure that has been put on Iran due to sanctions and the corona epidemic, but Iran is ready to take risks (talks with the American side). Given the long-term dealings with Russia and China at the same time, Iran seems willing to change its foreign policy while seeking a coalition against Washington’s political and economic pressure. However, in 2019, Iran participated in an unprecedented naval exercise with Russia and China, and with the new developments, it seems that Iran has finally decided to go “east.” Contrary to the draft agreement reached with China, the content of the updated 20-year agreement with Russia is still unclear.

Meanwhile, KazemJalali, Iran’s ambassador to Russia called on China and Russia to form an anti-sanctions club with Iran to withstand pressure from Washington. Sharing the concept, he said it was time to build a coalition of countries affected by sanctions and that there would be many powerful countries with developed economies among its members: Russia, China and Iran.However, some argue that in the end, such a unilateral foreign policy may be restricted for Iran, which only five years ago managed to establish relations with the East and the West through a nuclear deal. The easiest way to avoid sanctions is to start negotiations to update the nuclear deal, but Iran seems to be moving in the opposite direction.

The most important issues that Iran and Russia seem to be pursuing include the following:

1. Preventing the spread of arms sanctions

Russia is one of the countries that opposes the US request for an extension of the UN arms embargo on Iran, which is scheduled to end in October this year.US government officials have tried to persuade other countries to impose arms embargoes on Iran, but so far have failed. Iran’s ambassador to Russia told a Russian newspaper that Iran was interested in buying new weapons from Russia “to increase its defense capabilities.” Buying and selling Russian and Chinese weapons to Iran after its legal deadline can be economically viable for Russia and China. It remains to be seen what weapons, Russia and China will offer to Iran if sanctions are not renewed. It should be noted, however, that the two sides are considering selling arms to Iran.

2. Nuclear deal with Iran

Perhaps the most important issue to be addressed in the extension of the Iran-Russia agreement is the nuclear deal. With the withdrawal of the United States from this agreement, the conditions for the resumption of negotiations to reach a collective agreement have become a little more difficult. Meanwhile, Russia and China, and to some extent the European side, have shown a desire to maintain the nuclear deal. The Russians seem to be seeking to preserve the nuclear deal because they know the best possible way is to control Iran in this case and not to seize power, and to use the Iran card to play in the United States on regional issues crisis (Ukraine Syria) and global (sanctions and balance of power) could be a nuclear deal. The Iranian government believes that Russia’s and China’ s opposition to a resolution against Iran in the International Atomic Energy Agency (IAEA) and their strong opposition to US efforts to extend the UN Security Council arms embargo indicate “strong ties between Iran, Russia and “China and their resistance to US unilateralism.” Russian officials said the nuclear deal was the most important achievement of multilateral diplomacy and stressed that there was still a chance to preserve the international nuclear deal. Therefore, the 20-year agreement between Iran and Russia, according to the Iranian government, can lead to long-term Russian support for Iran, and the most important is the use of Russia’s veto against the United States. However, it should be noted that the use of such vetoes for Russia will not be without advantages.

3. The Syrian crisis

The Syrian crisis is another concern of the diplomatic leaders of Iran and Russia, which is both a focus of cooperation and disagreement between the two countries. On the one hand, the victories achieved in Syria with the help of Iran and Russia have kept Bashar al-Assad in power so far, on the other hand, but the future of Syria will undergo changes that may create some differences in Iran and Russia. It seems that one of the important issues in extending the 20-year contract is the future of Syria and Iran’s role in it. Because Iran is worried about not having a serious presence in the political future of Syria. Evidence shows that Russia, the United States and Israel have reached an agreement in Syria, and this indicates that in the 20-year agreement, Iran seeks to emphasize its role alongside Russia in Syria’s future. Concerns that a Russia-US-Israel-Saudi alliance will be formed not in the short term, but in the long term, leaving Iran alone in the region. Therefore, before achieving such a goal, Iran started working and with a long-term strategic agreement has sought to maintain Russia’s support in this matter.

It should be noted that although Moscow insists that it went to Syria only to fight terrorism; it is trying to change the regime and the security systems and install more loyalists in the Syrian army. (One of the most important Syrian figures promoted by the Russian media is General Soheil al-Hassan, who leads the Tiger forces in the Syrian army. In many ways, this person is considered the ideal person for Russia’s interests in the future after Assad). It is possible that Assad could stay in power by changing the Syrian economy and security services, but Russia knows that keeping Assad in the presidency is of no use to him; Because Europe does not support reconstruction projects in Syria with Assad. Russia and Iran disagree on Syria’s political future, and Putin backs Assad as long as Russia’s interests are met and in line with its foreign policy and in the future, he is looking for a replacement for Assad who may be different from what Iran thinks.

Conclusion

In the end, the scales seem to be heavy for Russia and China. (Perhaps it is difficult to point out the win-win situation in both contracts with Iran). Because Iran has decided to make such an important decision in the context of the economic and political crisis that, its internal and regional consequences are unknown. Whether all the provisions of these agreements become operational depends on the international agreement with Iran. The most important thing is mutual trust between the two parties to the contract. Iran’s experience in nuclear cooperation with Russia in the previous agreement is not a good sign for concluding a long-term agreement and whether the economic and political context inside Iran is ready for such a thing or not. Russia seems to have the upper hand in this agreement and Iran for the following reasons: 1- Syrian crisis; 2- Confronting American Unilateralism; 3- Nuclear agreement 4- Buy military weapons; 5- Resolving the current economic crisis; 5. Concerned about the future formation of a Russian alliance with Israel-US-Saudi Arabia, seek to ensure the long-term support of Russia and China. On the other hand, both Russia and China are concerned about a shift in Iran’s foreign policy toward the West. Therefore, with this long-term contract, they can somehow control Iran.

Given the special relationship between Russia and Israel, this agreement will not affect Israel, because Israel is Putin’s red line and it is unlikely that the issue of Israel will be raised in the forthcoming agreement. Apart from the presence of Russians in Israel and Jews in Russia, the personal relationship between Putin and Netanyahu is very close, and Putin will not allow Russian citizens to be threatened in Israel. Israeli airstrikes against Iran’s positions in Syria, as well as Russia’s request for Iran to withdraw from the Golan Heights, illustrate this point. Regarding the change of world order, it should be said that both Russia and China seek to change the balance of power and the multipolar world. But the most important point is that the plans and views of Russia and China, as well as Iran, on this issue and the change of balance at the international level are different, and each pursues its own interests. There does not seem to be a strategic alliance between Iran, Russia and China in the long-term. Iran must first be able to form a regional coalition at the regional level and then pursue this goal at the level of the international system. Russia is more likely to join the US-centric Saudi-Israeli regional network.

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Between Missiles and Flour: The Inside-Outside Game of Hezbollah in Lebanon

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The Hezbollah is armed. Gunfire of Hezbollah and Amal supporters became audible on Beirut’s streets on early Sunday morning on June 7, 2020 after protesters called for the realization of the UN Resolution 1559 from 2004 which requires the disarmament of all militias. Several people were wounded. Actually, the nation-wide protests which started in October 2019 due to the dramatically grave economic situation in Lebanon carried the unprecedented feature of cross-sectarian support. However, the demonstrations on June 6, 2020 were thought to be dominated by parties opposing to Hezbollah because some protesters mentioned directly the Shiite militia when they called for its disarmament.  This created a division among the demonstrators because the original aim of the protests was to overcome the sectarian system by chanting “All that mean all”, when it comes to their demand that politicians resign. By doing so, they avoided targetting certain sectarian groupings. Hezbollah and the Christian parties allied with them are getting more and more under pressure due to the economic disaster the small multireligious country is experiencing currently. The economic crisis depicts one of the biggest threats to Lebanon’s stability since the end of the civil war in 1990 and jeopardize its stability. The Lebanese pound lost more than the half of its value in exchange to the US Dollar, the unemployment rate climbed up to approximately 35% and about 45% of the population has to live now below the poverty line. The state’s budget deficit raised to more than 150% of the GDP. While the Lebanese currency remains to be in the free fall, the demonstrations against corruption and sectarianism has continued after the violent clashes of June 7, 2020.

The Inside-Game Of Supply And Demand

The pressure in Hezbollah’s game inside Lebanon is rising. Their long-term coalitions which made it possible for the Shiite militia to dominate the Lebanese political system after 2008 and especially after the elections in 2018, start to crumble. The internal pressure grows because of supply shortages of electricity and food. A blame game about responsibilities has started for example in the electricity field. Sometimes the parties even fall back on somewhat bizarre offers in order to meet the expectation within the patronage system of clientelism. Other times, oppositional parties from the Christian bloc, which were part of the current Lebanese political proportional representation as well, held Hezbollah responsible for the miserable economic situation and questioned their actions in Syria. By taking advantage of inner-sectarian struggles in the Druze community, reigniting unity against Israel among Christian or simply by paying better salaries to converted fighters, Hezbollah sought to extend their influence outside the Shia community in the past. After the 2018 elections the Shiite militia was able to gain a dominant role together with its allied parties. Although Hezbollah showed at least some resources during the Corona Crisis, the US sanctions against Iran continue to influence the budget of the Iran-supported militia. Therefore, Hezbollah’s social services like extra food or other additional subsidies for fighters had to be cut, also amid the corona pandemic. Some analysts say that Hezbollah tries to bypass the manifold crisis in Lebanon with their own parallel systems like the quasi-bank-system “Al-Qard”, an electric generator supply, and by opening towards new products like Marijuana. Moreover, Hannin Ghaddar claims that the Shiite groups seeks to get rid of Nabih Berri, the head of the partially competing and simultaneously partnering Shia party  Amal.  Protests took place in Shia dominated cities and parts of Beirut as well.

Lebanon is very dependent on food imports because, despite of the fertile Beqaa valley, the country is not able to meet the demand of its citizens and the Syrian refugees living in tents. Lebanon continued to host the largest number of refugees relative to its national population, where 1 in 6 people was a refugee (figures from 2018. Just refugees under the mandate of UNHCR, the ones under the mandate of UNRWA are not included). However, importing food with a weak domestic currency entails several obstacles, some prices have already doubled and some importers consider stopping the trading of certain imported products if no profit can be extracted from it. Hezbollah tried to step in this gap by expanding its smuggling activities between Syria and Lebanon and by substituting some imports with cheaper and tax-free imports from Iran. But the militia provides petrol and flour to their Syrian allies who are facing serious economic problems because of the sanction resulting from the US Caesar Syria Civilian Protection Act. New protests broke out even in as-Suwaysa, a city controlled by Assad because of exploding prices for food. Hezbollah’s Nasrallah lashed out at the USA because of the sanctions. Petrol and flour have been subsidized by the Lebanese state. Despite of that, the smuggling activities now are conducted quite more openly than before with truck convoys using the main roads and in daylight. At the verge of the economic precipice the Lebanese state’s economy is approaching the losses caused by the smuggling are immense. Just recently, talks with the IMF about a potential bailout for Lebanon have started. Hezbollah formally supported the start of talks as a member of the central government, but at the same time warned against conditions which would violate the Lebanese sovereignty.

The Outside-Game Of “Resistance”

Lebanon’s sovereignty is the reason for Hezbollah to remain the only militia after the civil war which have not been disarmed. The so-called „Resistance“ against Israel has built the ideological ground for the Shiite terroristic group since its establishment in the 1980s during Israel’s occupation of Lebanon. Hence, the main source of the legitimacy of Hezbollah’s preeminent role has to be located in the field of foreign politics. Over the years the preeminent role of Hezbollah’s arms within Lebanon created a military dualism and constant power scrambling between the Lebanese Armed Forces (LAF) and the militia.

The outside-struggles of Hezbollah are continuous. The so-called “resistance” against Israel experienced a peak last year. Several Israeli airstrikes in Syria and in Beirut and skirmishes at the Israeli-Lebanese border, when Hezbollah blew up an armed vehicle of the Israeli Defence Forces (IDF), erupted after the IDF unveiled material about a missile production place in the Beqaa valley. The Iranian efforts to equip Hezbollah with precision-guided missiles would pose a major threat to Israel’s air defence system because even if the system would shoot down 99 % of the missiles, the remaining ones would hit a target with a very high probability. This led to a serious situation close to war-like confrontations. Both sides had already climbed up the ladder of verbal escalations. Nasrallah denied the existence of such a programme and accused Israel of being aggressive, whereas Israeli officials warned Nasrallah not to put the whole Lebanon at stake by launching an attack against Israel. Since some of the targets and delivering routes from Iran to Hezbollah went through Syria, Russia had to enter the stage to calm down the heat. Though the situation has cooled down compared to the last summer, still several incidences at the border or airstrikes take place. However, both sides try to avoid casualties and thus a large-scale war. The hostility between Hezbollah and Israel is something more than a border conflict. Nasrallah’s perception of the USA and Israel as mutual agents towards each other shows that “resistance” fight is the founding base for the militia. Two regional coalitions clash with each other in Syria. Will the Israeli intelligence be able to distinct flour from weapons in convoys?

“War on Iran is war on all the axis of resistance. War on the Islamic Republic means the entire region will be set on fire.” – Hezbollah’s Secretary General Hassan Nasrallah made this deterrent vow. Israel und the USA seek to reduce Iran’s influence in Syria. Turkey wants to secure its own influence area against Assad, and it even might have comparable strategic aims against Hezbollah’s influence like Israel has. The USA, Israel and Turkey are against the Assad regime. However, Russia and Hezbollah support the Assad regime together with Iran. It should not be forgotten that the war in Syria went on despite the corona crisis. Yet, maybe Iran and Hezbollah shifted their strategies in the face of the corona pandemic and its financial consequences for Iran and Lebanon. Assad’s regime made a great step towards regaining its territories in Syria. Nonetheless, Assad’s Syria is still on war with Israel, and the US recognition of Israel’s sovereignty on the Golan Heights have not changed anything about this status and neither did Assad or Israel with negotiations, nor had Assad the resources to engage in escalation with Israel during the war in Syria. Now the two partners in the “axis of resistance” have to figure out the next steps with the Assad regime, while Syria’s economic situation is rapidly deteriorating. Israeli and American sources claimed that Iranian forces have retreated from Syria.

Hassan Nasrallah indeed declared the threat of a “great war” against Israel during the speech on the 20th anniversary of Israel’s withdrawal from Lebanon, however, he also gave the priority to the still fighting armed groups in Syria. The formal approval of talks with the IMF can be interpreted so as Hezbollah and Iran are missing the financial potential to bring up an alternative for Lebanon’s state finances. In the same announcement on TV Nasrallah addressed domestic problems inside Lebanon like for instance fighting corruption. Nevertheless, it is important to recap Hezbollah’s internal activities in Lebanon based on parallel structures partially competing with the Lebanese state which include smuggling or corruptive clientelism. These networks are challenged by the corona crisis and the devasting economic situation. Would it be surprising if Hezbollah return to its foundational ideology of “resistance” by acting out the resistance outside Lebanon instead of trying to solve structural problems inside the country Hezbollah are part of themselves? The militia’s aim is to preserve the current status quo which secures their legitimacy. It is for this reason that the group has become hostile against the protests.

Conclusion

Inside Lebanon several regional and external actors assert their influence on Lebanese politics. Among them are the two regional rivals: Iran and Saudi-Arabia. Therefore, an almost constant struggle for power balances between sectarian groups marks the Lebanese history – amongst them the two prominent ones: Iranian-supported Hezbollah and Hariri’s alliance backed by Saudi-Arabia. This is nothing new. Hezbollah is playing an inside-outside-game with Lebanon. The Shiite party and terroristic group is gambling on two fields: inside Lebanon within the government and outside Lebanon with fights against Israel and others in the face of the looming risk of war due to a single error. Polls of 2019 show, how the Lebanese people perceive the situation: on the one hand, the vast majority of them consider Israel the greatest threat; on the other hand, the three most important challenges in the eyes of the Lebanese are the economy, corruption and public services, and not foreign interference. The news of 2020 are a stand-off with Israel, an unsure situation in Syria, a devasting economic situation amid the pandemic and huge cross-sectarian protests on the streets of Lebanon. These developments challenge Hezbollah’s internal and external influence currently conducted by means of deterrence, providing services and clientelism. If these means fail, one major strategic asset will remain for Hezbollah against their competitors inside and outside of Lebanon. They are armed.

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