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Will Iran turn into Russia’s competitor when sanctions end?

June 23, 2015, 17:04 UTC+3 Alexandrova Lyudmila
© AP Photo/Ronald Zak

MOSCOW, June 23. /TASS/. Now that the outlook for concluding an agreement over Iran’s nuclear dossier looks more than real, many analysts have been asking whether the lifting of sanctions from Iran will affect the overall economic and political situation in the world. On the one hand, experts say, Russia will obtain fresh opportunities for advancing bilateral cooperation in a variety of fields, but on the other, it is fraught with the emergence of a major competitor on the world market of fossil fuels.

The negotiations between the sextet of world powers and Tehran over the Iranian nuclear program are entering into the final phase. It is expected they will be over on June 30. A future settlement of the Iranian issue and the lifting of sanctions from Tehran would put an end to its international isolation and make Iran, possessing the world’s fourth biggest reserves of oil and second biggest or even biggest reserves of natural gas, a full-fledged participant in the world economy.

"The Iranian problem is to be resolved soon. There can be no doubts this will happen, because all parties are interested in it," senior research fellow Vladimir Sazhin, of the Middle and Near East Studies under the Russian Academy of Sciences, has told TASS. Both US President Barack Obama and Iranian President Hassan Rouhani, he said, have staked their own political future on that issue.

Should Rouhani suffer a setback on the "nuclear front," his opponents - the radical Islamists interested in the country’s militarization may stage a comeback. On April 26, 2016 Iran will be electing a new parliament, where the opponents of Rouhani and his administration are now in the majority. If the talks over the nuclear dossier end successfully, his supporters will be able to gain a majority in the national legislature.

"This will change the situation in the country towards greater liberalization and, of course, will have an effect on international politics, but this will be happening gradually. Iran will never turn its back on Bashar Assad. It will retain a firm foothold in Iraq and Afghanistan and remain an opponent to Saudi Arabia, but its hardline stance will give way to a more placid attitude to this problem."

In the long term Sazhin expects Iran’s political rapprochement with the West, in the first place, with Europe. The country has a vast demand for investment and high technologies, and Europe is capable of providing all this. Also, there will develop a trend towards a better relationship with the United States, but this will happen not overnight, but step by step, Sazhin predicts.

"In a word, Iran will turn towards the West a little bit more, although it will go ahead with developing its relations with Russia," he said.

He pointed to several fields where such cooperation looked most promising: nuclear power engineering, electric power engineering, railways, space exploration and, lastly, agriculture. If the UN Security Council’s Resolution 1929 of 2010 that outlawed the supplies of heavy armaments to Iran is canceled, military-technical cooperation may start thriving.

Naturally, on the world market of fossil fuels Iran will be Russia’s potential rival, Sazhin said. "Even when the sanctions are lifted, Iran will be unable to provide a large amount of oil on the world market. True, there may follow some injection into the oil market, but it is unlikely to cause any significant effect on the world prices, let alone ruin it. For building up the oil export there will have to be huge investment and new technologies. One should not expect instant oil production growth for several years to come."

The same is true of gas. Its reserves are enormous, but almost all the amount produced is consumed domestically. Iran will be unable to export natural gas to Europe for the next 7-10 years. For that it will need more pipelines, more LNG plants and a fleet of tankers.

"In the long term Iran will be exporting gas to Europe, and not only to Europe, with 100-percent certainty.

Iran does not care at all about Russia’s interests. It needs money and at some future date it will be able to offer considerable competition to Russia, and not in Europe alone: on the oil market, in two or three years from now, and on the gas market, in five to seven years, Sazhin forecasts.

"Iran is determined to develop oil fields in the first place, because this industry spells the highest return," the portal Svobodnaya Pressa (Free Press) quotes the director of the National Energy Institute, Sergey Pravosudov, as saying. "Of course, Iran will be playing on the Europeans’ wish to oust Russia from the EU gas market. It will continue to draw investment into the development of its oil fields, while retaining the controlling stakes in all of them."

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