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Global Energy Advisory Friday 20th October, 2017

Global Energy Advisory Friday 20th October, 2017

As tensions surrounding Kurdistan rise,…

While U.S.-Iran Relations Warm, Russia Is The Real Winner

While U.S.-Iran Relations Warm, Russia Is The Real Winner

The lifting of crippling sanctions imposed on Iran over its nuclear program may be opening a new era of closer political and business relations between Tehran and Moscow, but it also shows that it and the United States, its longtime nemesis, are capable of working together constructively.

Officials from Europe and the United States on Saturday lifted the sanctions once the United Nation’s International Atomic Energy Agency announced that Iran had fully complied with demands that it sharply limit its nuclear program.

Almost simultaneously, Iran released four imprisoned Americans, including Jason Rezaian, a reporter for The Washington Post, who had been convicted of spying for the West. Washington responded by freeing seven Iranians imprisoned in the United States for violating the sanctions.

Perhaps even more surprising is the case of the 10 U.S. sailors who say their two small patrol boats inadvertently strayed into Iranian waters of the Persian Gulf and were captured by Iran on Jan. 12. Critics, particularly those running for the Republican nomination for president, called the incident a cruel humiliation of the United States. Still, officials in Tehran evidently believed the sailors had simply made a navigational error and released them the next day, although Iran got nothing in return.

Related: War Between Saudi Arabia And Iran Could Send Oil Prices To $250

It’s hard to imagine such cooperation between Iran and the United States before the nuclear agreement, reached in July after marathon negotiations in Vienna. Tehran wasn’t dealing only with the United States, of course, but also its fellow permanent members of the U.N. Security Council – Britain, China, France and Russia – as well as Germany.

As the lifting of sanctions neared, it appeared that Iran, about to be re-integrated into the world economy, was tilting toward closer relations with Russia, not with the United States. For example, until Saturday Iran showed no inclination to release the American prisoners it was holding, and Supreme Leader Ali Khameini has said Iran isn’t ready to make big deals with U.S. oil companies.

Meanwhile, Iran’s ties to Russia seemed to be warming. First, President Vladimir Putin was a special guest at the Nov. 23 Tehran summit of gas-exporting countries. Moscow has also been considering extending two loans to the Iranian government worth a total of $7 billion, and Russia will equip Iran with modern air-defense systems, according to country’s financial daily, Kommersant.

Related: Forget $20 - Oil Prices At $8 Per Barrel In Canada

Finally, Iran Shipbuilding & Offshore Industries Complex Co. (ISOICO) has reached a tentative deal with the Russian shipyard Krasnye Barrikady, or Red Barricades, to cooperate in the construction of oil rigs and share technology.

If all these deals with Russia come to pass, Tehran and Moscow likely will fast become economic and political allies, while the United States, and especially its large corporations, appear to be left out of Iran’s economic rebirth. Further, critics of the nuclear deal with Iran said that to engage Tehran rather than fight it would merely make Iran twice the threat it already is to an unstable Middle East.

Throughout the Vienna negotiations, the Obama administration argued exactly the opposite, that to engage Iran was the best way to soften, if not eliminate, its hostility to the West, just as President Richard Nixon’s overtures to China in 1972 turned Beijing from a communist adversary into what President George W. Bush once described as a “strategic competitor.”

Related: The World Just Lost One Of Its Biggest Oil Plays To Low Prices

In other words, no one should expect relations between Washington and Tehran to be cordial in the foreseeable future, just as the United States and China maintain strained relations. But if Obama is to be believed, any relations are better than no relations at all.

The question so soon after the lifting of sanctions is whether these relations can improve at least to the point where Washington and Tehran spend more time talking and less time threatening each other. It probably won’t be easy, as Obama made clear on Sunday, as soon as the White House confirmed that the Americans released from Iranian prisons had flown out of Iran.

The president announced that Washington was imposing new sanctions on 11 Iranian individuals and companies that he said had recently violated U.N. resolutions forbidding ballistic missile tests. And he reiterated his pledge that the United States would monitor Iran’s overall behavior closely to ensure that it doesn’t violate the terms of the nuclear deal or otherwise act aggressively.

Still, Obama expressed optimism about the new U.S. relationship with Iran. “We have a rare chance to pursue a new path, a different, better future that delivers progress for both our peoples and the wider world,” he said. “That’s the opportunity before the Iranian people. We need to take advantage of that.”

By Andy Tully Of Oilprice.com

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  • Alisuda Rahmani on January 18 2016 said:
    If USA is able,or at least try to improve realtions with Iran,it'll be even wiser to do the same with the P.R. of China, and The Russian Federation

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