On November 23, Russian Senators, Academicians, Researchers and Experts gathered to discuss the export of non-commodities to Africa at the interactive webinar, organized by Federation Council of Russia, Chamber of Commerce and Industry of Russia, and Business Russia Association.
According to the organizers, the meeting was to identify funding for exports, to concretize proposals for increasing exports to Africa and to facilitate amendments to the Russian legislation if required to promote exports to African market.
Senator Igor Morozov, a member of the Federation Council Committee on Economic Policy, also the Chairman of the Coordinating Committee on Economic Cooperation with Africa, held the videoconference meeting on “Improving State Support for Export in African Countries.”
During the videoconference, many questions including the issues of developing a system of state support for Russian enterprises exporting products to the African market, as well as the participation of Russian regions in the development of exports to African countries were thoroughly discussed.
The meeting was attended by Deputy Chairman of the Federation Council Committee on Economic Policy, Konstantin Dolgov; member of the Federation Council Committee on Constitutional Legislation and State Construction, Alexey Pushkov; representatives of the Ministry of Industry and Trade of the Russian Federation; the Ministry of Economic Development of the Russian Federation; the Ministry of Finance of the Russian Federation; the Russian Union of Industrialists and Entrepreneurs; scientific organizations and expert community.
Senator Igor Morozov noted that in conditions of sanctions pressure, new markets, new partners and allies are important for Russia. “This predetermines the return of Russia to Africa, makes this direction a priority both from the point of view of geopolitical influence, and in the trade and economic context.”
“It is important for us to expand and improve competitive government support instruments for business. It is obvious that over the thirty years when Russia left Africa, China, India, the USA, and the European Union have significantly increased their investment opportunities,” Morozov stressed.
He, however, suggested creating a new structure within the Russian Export Center – an investment fund, explained further that “Such a fund could evaluate and accumulate concessions as a tangible asset for the Russian raw materials and innovation business.”
Konstantin Dolgov touched upon the topic of using political ties with African countries to build up economic and investment cooperation. He also pointed out the need to connect Russian regions, to maximize their export potential.
Alexey Pushkov noted that with the right strategy, such a large state as Russia has a chance to take strong positions in interaction, in particular, economic, with other continents, including Africa. “The competition will certainly grow,” the Senator said, noting that the situation is constantly changing.
Representative from the Russian Export Center (REC), Veronika Nikishina, informed the gathering about Russian projects that are being implemented or planned in the African market, including the supply of passenger cars to Egypt, wheat supplies, as well as REC business missions, participation in exporters’ exhibitions.
REC offers a wide range of financial and non-financial support tools to benefit the Russian exporters explore the foreign markets and build capacity in the global trade. Generally, the African market is of particular interest to potential Russian exporters, and negotiations with government, trade agencies and business community to allow establishing effective ways of entry to the huge continental market. With an estimated population of 1.3 billion, Africa constitutes a huge market for all kinds of products and a wide range of services.
According to her, since July 2020, the REC began to practice online business missions, which in the absence of physical contacts, allows continuing communications, maintaining current exports and looking for new niches.
According to Professor Irina Abramova, Director of the Institute for African Studies under the Russian Academy of Sciences, financial instruments are the main issue of Russian interaction with the continent. She touched upon such topics as Russian investments in African countries, the prospects for establishing direct contacts on the supply of agricultural products with African countries.
Quite recently, the Ministry of Foreign Affairs created the Secretariat for Russia-Africa Partnership Forum. The Secretariat further established an Association for Economic Cooperation with African States. The Russian Chamber of Commerce and Industry has also restructured its Coordinating Committee for Economic Cooperation with African States that was established as far back in 2009.
According to historical documents, the Coordinating Committee for Economic Cooperation with African States was created on the initiative of the Chamber of Commerce and Industry of the Russian Federation and Vnesheconombank with the support of the Federation Council and the State Duma of the Federal Assembly of the Russian Federation. It has had support from the Ministry of Foreign Affairs, the Ministry of Economy and Trade, the Ministry of Natural Resources, as well as the Ministry of Higher Education and Science.
After the first Russia-Africa Summit in the Black Sea city Sochi on October 23-24 in 2019, Russia and Africa have resolved to move from mere intentions to concrete actions in raising the current bilateral trade and investment to appreciably higher levels in the coming years. Indeed, all the structures are fixed for the necessary take-off.
“There is a lot of interesting and demanding work ahead, and perhaps, there is a need to pay attention to the experience of China, which provides its enterprises with state guarantees and subsidies, thus ensuring the ability of companies to work on a systematic and long-term basis,” Foreign Minister Sergey Lavrov explicitly said.
According to Lavrov, the Russian Foreign Ministry would continue to provide all-round support for initiatives aimed at strengthening relations between Russia and Africa. “Our African friends have spoken up for closer interaction with Russia and would welcome our companies on their markets. But much depends on the reciprocity of Russian businesses and their readiness to show initiative and ingenuity, as well as to offer quality goods and services,” he stressed.
Amid a stagnating economy and after years of Western sanctions, Moscow is looking for both allies and an opportunity to boost growth in trade and investment. Currently, Russia’s trade with Africa is less than half that of France with the continent, and 10 times less than that of China. Asian countries are doing brisk business with Africa.
In terms of arms sales, Russia leads the pack in Africa, and Moscow still has a long way to catch-up with many other foreign players there. In 2018, Russia’s trade with African countries grew more than 17 percent and exceeded US$20 billion. At the Sochi summit, Russian President Vladimir Putin said he would like to bring the figure US$20 billion, over the next few years at least, to US$40 billion.
The Fate of Ukraine: Can the West Stop Russia?
The options of financial containment are exhausting as Russia bristled through the last obstacle to its domination in the Luhansk province of Donbas. With the anticlimactic fall of the city of Lysychansk, Russian troops have turned to Kramatorsk and Slovyansk – the forefront cities in the neighboring Donetsk region. A heavy shower of artillery rocks both the cities as Russian forces (alongside the separatist fractions) are tilting toward drawn-out ground warfare to triumph over Ukraine’s southeast – cementing a formation extending down to Crimea, the former southern-Ukrainian territory annexed by Russia in 2014. The strategic victory over Donbas would compensate for the initial failure in central Ukraine and allow Russia to regroup to eventually pressure Kyiv into surrender. Despite visible attrition in Russian forces, intense missile strikes have resumed in Kyiv and Kharkiv while Ukrainian defensive forces are preparing to launch a counteroffensive to reclaim Kherson. The Western coalition is privy to this subtle shift in momentum – albeit reacting a little too late!
The G7 summit was a mockery of the supposed resolve the West wished to portray. Banning gold imports from Russia and debating on an oil price cap was the highlight of the meeting (looking past the crude retorts by soon to be the ex-prime minister of the UK). Admittedly, the embargo on gold exports would hurt the Russian economy. Russia holds approximately $100-140 billion in gold reserves – about 20% of the total holdings of its central bank. Budgetary estimates reveal that gold is Russia’s second-most profitable export commodity – secondary only to energy exports. The ban would significantly dent trade as almost 90% of the gold export revenue comes from the G7 economies. And while Russia would still be able to streamline gold to alternative economies in Asia, the embargo would effectively “[deny] access to about $19 billion of revenues a year,” said US Secretary of State Antony Blinken in his interview with CNN. Thus, the US is seemingly determined to tumble the Russian economy to cripple the Kremlin’s ambitions in Ukraine. The mantra is the same – cutoff maximum revenues to the point that Russia struggles to finance its war of attrition. Unfortunately, such strategies are not enough.
Placing an oil price cap on Russian supplies is trickier than banning gold imports. For starters, gold is not essential for economic and social survival and, frankly, not the basis of upheaval in many developed economies struggling with skyrocketing inflation. While gold exports cannot flow easily to alternate markets, Russia has been sufficiently successful in replacing Europe as the prime market for its crude supplies.
Six months since the invasion and revenues earned by Russia from oil exports are already up by more than 50%, according to a market report by the International Energy Agency (IEA). Since the invasion, Europe has relatively reduced its reliance on Russian oil while the US has absolutely banned crude imports from Russia. Still, India has procured roughly one-fifth of total Russian exports since the invasion – up from less than 1% pre-war quota. According to an exclusive Reuters report, Indian customs documents reveal that companies are rapidly replacing the US dollar to evade sanctions and purchase Russian energy supplies. In June alone, India imported roughly 44% of its 1.7 million tonnes of Russian coal via non-dollar settlements – either in yuan or the Hong Kong dollar. In July, that number increased over a fifth to a record high of 2.06 million tonnes.
Alternatively, China has been the core defiant force against Western pressure – despite not outright supporting Putin – terming sanctions against Russia as “illegal” and “Immoral”. China has also been a crucial economic lever for Russia – both symbolically and practically. According to the General Administration of Customs China, bilateral trade with Russia increased by 29% YoY during the first seven months this year. The most notably traded commodity is the Russian crude. Beijing imported roughly 55% more Russian oil in May compared to the same period last year, prodding Russia to replace Saudi Arabia as its biggest oil supplier. In combination, China and India have counterbalanced the revenue shortfall by $24 billion in energy imports from Russia – more than $13 billion in revenue compared to 2021. The US should now question: how exactly can a price cap work in this scenario?
According to official sources, the G7 coalition is considering placing a cap at $40-60 per barrel of Russian oil. However, the mechanism of implementation is still hazy. As of now, the ambitious plan to cap Russian oil revenues is still very much an ambition, without any concrete structure or broader consensus. On one hand, the G7 is considering to cap the oil revenues of Russia. On the other hand, the EU is easing payment restrictions for oil supply from Russian monopolies like Gazprom Neft and Rosneft. Many experts have questioned the viability of such a theoretical (and contradictory) policy. “The price cap policy would not put Russia under the immediate fiscal stress many expect,” said Mark Mozur, a market analyst at S&P Global Commodity Insights.
Failure to bring India and China on board would automatically tune the futility of the plan before it even gets launched. European insurance services provided to Russian oil cargoes could be replaced by Asian counterparts, assuming that the European companies would comply instead of overriding the cap to avoid a retaliatory cut back on oil supply from Russia. The recent slash in gas supplies through Nord Stream 1 (NS1) pipeline hints that Russia could potentially choke oil supply to Europe if a price cap is enacted. “As far as I understand, we won’t be supplying oil to those countries which would impose such price limits. And our oil (and oil products) will be redirected to the countries which are ready to cooperate with us,” said Elvira Nabiullina – Governor Russian Central Bank. According to the Russian Ministry of Finance, fossil fuel revenues have already surpassed last year’s budget projections. Thus, Russia is not short on finance for the remainder of this year. Yet a winter without Russian oil or gas would be a nightmare for a Europe already grappling with hyperinflation. Citing recent estimates by JP Morgan, if Russia resorts to retaliatory output cuts, the global oil prices could soar to around $380 per barrel. Hence, despite cutting export volumes, profits from oil sales would still flourish the Russian coffers. Ultimately, the superficial policy of a price cap could only spell doom – not just for Europe but for the entire global economy teetering on the cusp of a recession.
Mr. Richard Connolly – Director of the Eastern Advisory Group – perfectly sums my position: “For as long as the political will is there in the Kremlin and for as long as export prices remain high, I don’t see any immediate financial constraints confronting the Kremlin.” Thus, the desperate cartel-like strategies by the G7 economies only highlight the West’s constrained toolkit. Russia has successfully projected force in eastern Ukraine while simultaneously pressing intensely for Kyiv. The West, on the other hand, has focused on fortifying its own security instead of resolving the conflict in Ukraine. Ukrainian President Volodymyr Zelensky has repeatedly exuded optimism – refusing to cede the captured territory to Russia and hoping to negotiate from a position of strength. However, that position would almost certainly falter by 2023 when Western aid starts to dry up. “No one expects another $54 billion [in aid to Ukraine],” said Peter Baker, the Chief White House correspondent for The New York Times.
The truth is, while the NATO expansion might detain Putin from launching another invasion in Europe; it would not impede Russia from further dismantling Ukraine. Perhaps the Western bloc should pause and consider a few harsh realities. Firstly, the prospective expansion of NATO was the very catalyst that sparked the invasion in the first place. And secondly, an embargo on Russian commodities would not substantially damage the Kremlin unless Asia (predominantly India and China) supports the western consensus. And that support would certainly not be gained by pressuring India or evoking tensions over Taiwan with China.
The skewed western logic evades common sense sometimes. The West is cautious not to supply advanced weaponry to Kyiv; avoid tilting the war against Russia to the point of risking a nuclear retaliation from Putin. However, advancing Ukraine to retrieve captured territory in the south is somehow a safer strategy. It is unbelievably naive! And I believe the US already realizes this paradoxical reality yet continues to push forward – to save face and prolong the defeat of its pseudo-democratic rhetoric. Understandably, a push for diplomacy with Russia – though the ethical path to prevent further bloodshed – would be a swift political death to President Biden, as he prepares his bid for re-election in 2024. Therefore, we should be ready for two outcomes: a segregated Ukraine or mass destruction in Europe.
Ultimately, these sanctions and strategies, the NATO induction of Finland and Sweden, and the supposed candidacy of Ukraine to the EU have done nothing to derail Russia. Putin shows no sign of distress while political and economic attrition is gradually gaining a foothold in the US-led coalition. And expecting Putin to hang his gloves just because the West is exhibiting its renewed post-cold war cohesion is as fantastical as expecting a Ukrainian victory against Russia without detrimental consequences. Wishful at best!
The Moscow–Tehran Axis: Alliance without Rigid Obligations
Russia and Iran are finding ever more points of convergence in their foreign policies and across the domain of economic cooperation. It is no coincidence that a record number of high-level visits between the two countries have taken place this year, the most recent being Vladimir Putin’s visit to Tehran to take part in the Syria summit of the leaders of Russia, Turkey and Iran.
Fostering relations with Iran, along with the continued functioning of the Astana Process, demonstrate Moscow’s increasing use of pragmatism in its foreign policy: any non-Western power is a welcomed partner, even if there are contradictions and inconsistencies in its relations with Russia.
Biden in the Background
The Astana summit and Putin’s visit to Tehran came immediately after U.S. President Joe Biden’s tour of the Middle East. Despite numerous commentators suggesting that the Russian leader’s visit to Iran was a “response” to the initiative of the American president, there is no real substance to this argument. What Biden’s trip does do is place the trilateral meeting in the Iranian capital into a wider context.
The Middle East is one of those regions where the presence of the United States and Russia matters, although the dynamics of their engagement are diametrically opposed to one another. While Washington is gradually pulling out of the region that holds less and less allure for the White House, Moscow is doing exact the opposite, being increasingly pulled into the processes unfolding in the Middle East.
The basic approaches of the two sides differ as well. The United States has become accustomed to finding allies in the region so that they can become conductors of its policy, while at the same time looking for key troublemakers that it can try to contain and isolate. Russia, on the other hand, does not have friends or enemies in the region. Over the past decade, Moscow has been trying to act as a universal mediator, maintaining relations with all the key forces in the Middle East.
Against the backdrop of the events in Ukraine, the United States has set about trying to turn Russia into an international pariah. Moscow sees the Middle East as a possible route to circumventing the sanctions, even if partially, so it is only logical that Washington would seek to isolate Russia in the region. This is proving somewhat difficult, however, even with its impressive list of allied states and the lukewarm reaction of Middle Eastern countries to Russia’s special military operation in Ukraine. For one thing, no one in the Middle East wants to be faced with a choice between Moscow and Washington. In the Middle East, Russia remains a player to be reckoned with, and its interests coincide with those of almost all the countries in the region—including Washington’s partners—on a whole range of issues.
Take Turkey, for example, a NATO member who has serious disagreements with Russia over Syria, Libya and the South Caucasus. Worse still, Ankara has openly criticized Moscow’s actions in Ukraine, lending active support to Kiev by supplying hi-tech weapons. At the same time, Turkey, much as Russia, does not hide its annoyance at the U.S.-established order in the regions adjacent to its territory, notably the Middle East and the Eastern Mediterranean. Let’s not forget Russia–Iran trade relations as trade turnover between the two amounted to some $33 billion in 2021 and the bilateral trade is expected to reach even greater heights by year-end 2022. Given this, Ankara will clearly want to continue dialogue with Moscow, both with regard to Syria and on other issues.
A somewhat similar situation has been the case for the Arab countries in the Persian Gulf. Not a single one of these has joined the Western sanctions against Russia, and the United Arab Emirates is turning into something of a hub for Russian capital. Saudi Crown Prince Mohammed bin Salman has made it clear that his country places its agreements with OPEC+, where Russia is a key player, above U.S. interests, and Joe Biden’s visit did nothing to change this.
Outside the Persian Gulf, President of Egypt Abdel Fattah El-Sisi has also refused to pursue a policy to isolate Moscow. Cairo has been one of the biggest importers of Russian weapons in recent years. And, like the United Arab Emirates, the country is also cooperating with Russia on Libya. Finally, there is another important U.S. partner, namely, Israel. Despite some friction with Moscow, Tel Aviv is still willing to cooperate with Russia to sustain its policy of containing the Iranian threat in Syria. In other words, all these players have more than enough reason to turn their backs on the binary approach that Washington imposes on them, where they are forced to choose between the United States and Russia.
The Astana Model
It would be quite a mistake to dub Joe Biden’s tour of the Middle East a complete failure. He got some wins here and there, such as the Saudi decision to open flights to and from Israel. Besides, it is unlikely that the U.S. was harboring any real hopes to reverse the regional alignment, including the attitudes towards Russia, all in a single trip. What is telling here is the situation as such. The events in Ukraine were indeed a turning point in relations between Moscow and the West—however, the Middle East did not undergo any major changes until February 24, 2022, and later.
Today, the situation in the region is much different to the Cold War-style polarization that analysts bring up so frequently. The Middle East of 2022 is a complex combination of multi-vector approaches of various countries. All this is not so much a reflection of Washington’s weakness as it is an illustration of the fact that Russia continues to be an important and legitimate player for Egypt, Turkey, Saudi Arabia, Israel and the United Arab Emirates, and this is unlikely to change any time soon.
It is this difficult political climate that gave rise to the Astana format, a platform where the parties with different approaches—and even waging a proxy war against each other—can come to the negotiating table as partners who resolve issues. True, this format may only have worked in relation to the Syrian dossier in years gone by, but the most recent summit took the paradoxical relations between the countries to a new level. Turkish drones carry out targeted attacks on the Russian Army, which in turn shoots them down. But this did not prevent Vladimir Putin and Recep Tayyip Erdogan from sitting at the same table and having a constructive conversation at the meeting in Tehran. Moreover, one of the main topics on the summit’s side-lines did not even have anything to do with the region, and that was finding a solution to the issue of exporting grain through the Black Sea.
This has nothing to do with banal hypocrisy on the part of sides with opposing interests. The participants in the Astana summit were not hiding behind smiles, sticking their middle finger up at each other from inside their pockets… no, they held a constructive dialogue. The grain issue was eventually resolved thanks to the negotiations between Turkey and Russia, and the summit in Tehran was largely responsible for getting the two together in the first place.
The Astana summit is swiftly turning into a model that reflects the basic principles of Russia’s foreign policy. What this model essentially boils down to is political realism in its purest form, where everyone is invited to cooperate, regardless of accumulated problems and disagreements, assuming the sides have overlapping interests.
And the invitation has effectively been extended to the West: despite the proxy conflict waged between Europe and Russia on the Ukrainian soil and despite the economic war in the form of sanctions, Moscow is nevertheless prepared to sell oil and gas to Europe. “Gazprom has always fulfilled and will continue to fulfil its obligations in full. If that’s what European countries want, of course, as they are the ones closing the pipes,” Vladimir Putin noted calmly at a press conference following the Tehran summit.
At the same time, the Astana format stands at odds with the traditional integration models of the West, which believes similar values to be a prerequisite for alliances. Certainly, the Americans do not always follow this approach. Still, even those relationships where common values typically play little if any role—such as that between the United States and Saudi Arabia—become bogged down by human rights issues (in this case, Biden’s condemnation of the murder of journalist Jamal Khashoggi). In the present situation, we see that the Astana model of radical realism allows Russia, in such a difficult situation, to pursue dialogue with all players in the Middle East, while the United States is facing problems talking to its traditional allies.
With the relations with the West collapsed owing to the Ukraine crisis, Russia’s policy towards Iran is increasingly perceived as a policy case that could be heading in a promising direction. Putin’s trip to Iran did not bring any significant breakthroughs, although news reports about the summit and events surrounding it were overwhelmingly positive. One newsworthy item, for example, was the launch of the rial/rouble pair on the Tehran Currency exchange on the day of the summit, while another was a memorandum signed between National Iranian Oil Company (NIOC) and Gazprom to involve investments of approximately $40 billion into Iran’s oil sector.
Some important news came out shortly after the Russian President’s visit, such as the decision to increase the number of flights between Russia and Iran up to 35 per week, or the announcement that an agreement on the supply of aircraft parts and maintenance work was being drawn up, or plans to earmark $1.5 billion for the development of railway projects in Iran.
It must be noted here that there is no guarantee that all these initiatives will be successful in the end. For one, timelines have not been set out for most of the projects, and not all of them will even reach the stage of implementation. And those that do—for example, the supply of aircraft parts—will concern a limited set of products. The Iranian aviation industry has been in a rut for a number of years now, thanks to the sanctions. They have learned to make certain things on their own, sure, but most parts are either imported through third countries or stripped from old planes that no longer fly.
Despite all this, some projects might turn out to be rather successful. The number of areas where cooperation between the two countries is possible is clearly expanding, and this is thanks to the sudden spike in interest on the Russian side in Iran. In addition to this, traditional pockets of cooperation are getting a new push. For example, the export of Russian agricultural products against the backdrop of the global food problem is fast becoming a key element of Iran’s food security. And the North–South Transport Corridor, which has been operating in test mode for the past few years, could very well become the main export route for Russian products.
A certain rapport can also be witnessed in the domain of foreign policy. Iran’s reaction to the events in Ukraine was more positive than that of the other Middle Eastern states. During his meeting with Vladimir Putin in Tehran, the Supreme Leader of Iran, Ali Khamenei, stressed that NATO would have started a war with Russia on the pretext of Crimea if it had not been stopped in Ukraine. Certain changes can also be seen in Syria, where Russia’s responses to the actions of Israel are becoming increasingly harsh. Finally, the hallmark of the trilateral summit in the Iranian capital was the attempt of Tehran and Moscow to convince Ankara to abandon its military operations in Syria.
Be that as it may, there is no way the alignment between Russia and Iran would turn into a full-fledged alliance. The main reason why this will never happen is because of Russia’s image in Iran, which is riddled with negative historical connotations. Distrust of Tehran and a poor understanding of its policies can be found among the Russian elite as well. Besides, the sides disagree quite strongly on a number of issues, including their respective policies in the Middle East and how to resolve the territorial disputes over the Caspian Sea.
Also keep in mind that Russia and Iran are competitors in the energy market. The agreement with Gazprom largely stems from Russian efforts to gain leverage over the Iranian oil and gas industry. Exactly how much leeway the Iranian side will give to Russian companies remains to be seen.
However, paradoxical as it may sound, the bunch of contradictions that has accumulated in Russia–Iran relations does not stand in the way of rapprochement between the two countries. Russia is realistic in its approach, and this makes it possible to focus on areas of common interest, even when there are far more problems in bilateral relations, for example in Moscow’s relations with Ankara. At the same time, both Moscow and Tehran are extremely interested in an alternative to the West-dominated economic order. Neither country can do this alone, but these two “political outcasts” countries are better suited to the task than anyone else.
Here, positive developments were reflected in the conclusion of a long-term strategic agreement between Russia and Iran similar to the documents that Tehran signed with China and Venezuela. Judging by what Russian officials said, the project will be finalized quite soon. Importantly, the agreement will take the form of a memorandum—a formal confirmation that the intentions do not impose any direct obligations on the two countries. The “Russia–Iran axis” will continue to move in more or less the same direction. Relations between the two countries may well expand and deepen with each passing year to never-before-seen levels, but the sides harbor no intention of taking any unwanted obligations, including becoming allies.
From our partner RIAC
Astana Trilateral Summit 2022: What did Russian President Achieve?
Since he launched the fateful invasion of Ukraine in February 2022, the Russian President had not traveled outside the former Soviet territories. His only visit outside Russia was to “friendly” Central Asian States in June, where he predictably received a warm reception. The first trip by Putin outside former Soviet territories proved to be to the Iranian capital Tehran for the Astana Trilateral Summit — a forum established for the settlement of the Syrian conflict and features key players in the Syrian conflict: Russia, Iran, and Turkey. Unsurprisingly, the Syrian conflict took a back seat and the aftermath of Russia’s invasion of Ukraine dominated the discussions at the trilateral summit.
After the boycott of Putin by the Western world, the Russian leader has been attempting strategic and economic reorientation toward Asia and has achieved considerable success in making up for the losses in revenues incurred owing to the Western economic sanctions by selling oil at heavily discounted prices to countries like China and India. The trip to Iran provided the beleaguered Russian leader an opportunity to dissipate the impression of Russian isolation — no matter if the support extended is from a state under the severest of Western sanctions – Iran. The outright endorsement of his Ukraine invasion and scathing condemnation of the Western world was precisely the music Putin wanted to hearken and the Iranian Supreme Leader had plenty to offer.
Nonetheless, being under Western sanctions has positioned both the countries abreast and Russia, by offering even cheaper energy rates, has captured the energy and steel markets previously held by under-sanctions Iran. The shift did cause some resentment in Iran and Putin sought to assuage the Iranian grievances by signing the $40 billion deal between the National Iranian Oil Company (NIOC) and Gazprom for the development of oil and gas fields in Iran. Nonetheless, the suspicions do persist as the Iranian Supreme Leader pushed Russians to follow up and fulfill the agreements signed between the two countries in the oil and gas sectors.
Putin’s Tehran visit has cemented Russia’s position as an important power broker in the Middle East having friendly relations with countries on both sides of the regional Middle Eastern divide. Besides its longstanding relationship with Iran, Russia’s intervention in the Syrian civil war forestalled the almost certain downfall of Bashar’s regime and the country is also a party in the Libyan civil war, wherein it patronizes the warlord Khalifa Haftar. Moreover, Russia now has a multifaceted relationship with the USA’s Arab allies — particularly Saudi Arabia, United Arab Emirates, and Qatar — primarily owing to the convergence of their energy interests in OPEC Plus. The Arab countries also avoided harshly denouncing the Russian invasion of Ukraine — as the West would have anticipated — so as to avoid antagonizing Moscow, and top Saudi and Emirati royals reportedly declined calls from President Biden during the initial days of the invasion.
Days before Putin visited Tehran, President Biden took a trip to the Middle East and in his address to a gathering of Arab leaders, tried to reassure Washington’s Arab allies that the superpower remains committed to the region and urged oil-rich Arab nations to increase their oil production to mitigate global oil price shock caused by the Russian invasion of Ukraine. Following Biden’s visit, the de facto Saudi ruler Muhammad Bin Salman and President Putin during a phone call agreed to keep coordinating within the framework of OPEC Plus. Accordingly, during the cartel’s meeting held on August 3rd the OPEC Plus members agreed to make a small increase in the oil production, which is unlikely to drastically impact the energy prices as President Biden counted upon.
Even more remarkably, in utter defiance of the US sanctions, Saudi Arabia is importing Russian oil at discounted price for domestic use while selling its oil at higher prices in the international market. In effect, in a major geopolitical turnaround for Moscow in the Middle East, Putin has been able to reaffirm its partnerships, and the days of Arab capitals uncritically following Washington’s lead are all but over.
Putin’s meeting with Turkish President Erdogan during Astana Summit also captured headlines — initially after the Russian President was left awkwardly standing for around 50 seconds waiting for his Turkish counterpart before their meeting and successively for the discussions between the two strongmen to strike a deal to freight the Ukrainian grain from its three Black Sea ports (the deal has now been reached). During the discussions on Syria, Erdogan reportedly talked about the Russian President as “My dear friend Putin” in an exhibition of the close relationship between the two strongmen. Though Turkey and Russia feature on the opposite sides of equations in the Syria, Libya, Azerbaijan-Armenia, and Ukraine conflicts, they have long-lasting trade and energy ties. Turkey, despite being a member of NATO, did not join the Western sanctions against Russia and is now buying more oil from Moscow. Correspondingly, Moscow looks to Turkey as a partner — nonetheless a difficult one — among a host of antagonists and as a crucial market for its energy products and wheat. Yet another meeting between the two leaders in the Russian city of Sochi further hollows Western gambits to isolate Russia for its invasion of Ukraine; meanwhile, Putin continues to assemble allies.
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