Media Guide: The Growing Russian-Iranian Alliance
/By AIC Research Associate Tristan Gutbezahl
The last year and a half has augured a revolutionary shift in Russian-Iranian relations. Moscow’s illegal invasion of Ukraine in February 2022 isolated it from the West, resulting in an increased reliance on relations with other sanctioned countries like Iran. Though Russia and Iran had previously collaborated in Syria, the war in Ukraine has transformed the previously informal partnership into a serious strategic alliance. Official Russian foreign policy documents have explicitly called for “full-scale and trustful cooperation” with its erstwhile historical rival. Indeed, since the invasion, Iran has emerged as Russia’s indispensable partner, providing crucial military support while exploring new avenues of economic and political cooperation in the face of stifling Western sanctions. Though the burgeoning Russo-Iranian alliance poses an undeniable challenge to US interests in Eurasia and beyond, significant fault lines still inhibit the two countries from developing a comprehensive alliance, let alone a full-blown defense bloc like NATO.
This media guide will investigate Iranian military, political, and economic cooperation with Russia while examining the enduring competition and grievances that inhibit the alliance’s potential.
Russian-Iranian Military Cooperation in Ukraine
The burgeoning Russia-Iran alliance in the context of the Russo-Ukrainian War has garnered a significant share of media attention since the invasion began in February 2022, for good reason. Iran’s direct involvement in the war has expanded its reach from the Middle East to Eastern Europe, making it a direct competitor to NATO. In addition, atrocities against civilians, some aided and abetted by Iranian military personnel, has underscored the human cost of Russia’s advancing alliance with Iran.
The biggest impact Iran has made on the battlefields of Ukraine has been its delivery and operation of offensive military drones. Before the war, Iran possessed the largest drone and missile force in the Middle East, supplying its wares to proxies and allies throughout the region. Though Western sanctions have prevented Iran from creating models on par with its American rivals, its understated technology sector has managed to make relatively impressive drones with homegrown innovation. As Russian munitions began to wane after the invasion, the Kremlin turned to Tehran to supply it with advanced drones, most notably the Mojaher-6 and Shahed-series models. In exchange, Iran is aiming to secure billions in advanced Russian military hardware for its own defenses, particularly attack helicopters, air defense systems, and Su-35 mutli-role fighter jets.
Though Iranian-made drones regularly attack Ukrainian military targets, international media has primarily focused on their use against civilians from Kyiv to Kherson. Substantial evidence indicates that members of the Iranian Revolutionary Guard Corps (IRGC) have traveled to Crimea to assist Russian forces with technical issues and offer additional support. The sophistication of these drone transfers has only increased as the war drags on, with credible intelligence indicating that Iran is shipping the drones via the Caspian Sea into Russian ports to avoid seizures. As long as the importance of combat drones on the Ukrainian battlefield remains unabated, Russia will continue to rely on Iran to supply these crucial weapons. Iran is perfectly suited for this role given their lengthy history navigating crippling Western sanctions, which has forced the country to foster domestic innovation without foreign investment or technology, something Russia had yet to fully experience until 2022. Intelligence obtained by the US indicates that Iran is planning the construction of a drone factory in the Alabuga special economic zone east of Moscow as early as next year.
Though Russia and Iran’s strategic partnership has undoubtedly strengthened, the Wagner Group Rebellion in June 2023, led by recently deceased CEO and accused war criminal Yevgeny Prigozhin, threatened to upend what the two powers had built. At the onset of the attempted putsch, Iran decisively threw its support behind Russian President Vladimir Putin. Though Putin emerged seemingly victorious from the coup, potential dissent over the Russian army’s continued inability to capture more of Ukraine has reinforced Iran’s role as his most essential backer in winning the war. To this end, Iran’s leverage over Putin appears to have grown. This manifests perhaps most significantly in Syria, where the two countries have long cooperated to support the ailing regime of Bashar al-Assad. Here, Russia has become more dependent on the IRGC and Iranian proxies to exert pressure on US ground forces operating in the country. The Wagner Group’s dramatic reorganization in the aftermath of the June coup will likely only strengthen Iran’s leverage in Syria, despite the increasing number of conventional Russian troops in the country.
Renewed Economic Integration
Though the two country’s growing defense relationship continues to dominate headlines, Russia and Iran’s burgeoning economic integration may ultimately prove more significant in the long run. Their mutual desire to circumvent US sanctions has led to creative and potentially disruptive economic projects, namely de-dollarization, alternatives to the SWIFT banking system, and new transnational infrastructure projects.
The International North-South Transportation corridor (INSTC) lies at the center of renewed Russian-Iranian economic cooperation. A proposed transnational infrastructure corridor spanning 7,200 km, the INSTC would link Russia and Iran via three major transportation arteries: maritime trade via the Caspian Sea, along the western coast of the Caspian through Azerbaijan, and the eastern coast through Central Asia. If completed, it would satisfy Moscow’s long-held desire to gain access to the Persian Gulf (the pursuit of which has historically been at the expense of Iran), while Tehran would be able to trade with Russia’s populous urban centers along the Volga River. The INSTC has the potential to not only revitalize both countries’ beleaguered economies but to transform the Eurasian trade network, given its possible compatibility with China’s One Belt-One Road transnational infrastructure project.
Though proposed in the early 2000s, the multimodal transportation network had been on indefinite hold until Russia's invasion of Ukraine in 2022. Indeed, Russia had been vying to kickstart the project prior to the invasion, having called for a “3+3” dialogue with regional powers (Russia, Iran, and Turkey) and smaller states key to the INSTC (Georgia, Armenia, and Azerbaijan). While promising, continuing tensions between Iran and Azerbaijan have led to the delayed construction of the Rasht-Astana railway, the key transportation route in the INSTC.
Though the future of the INSTC remains murky, continued economic integration between Russia and Iran remains a near certainty in the immediate future. Last year, gross trade between the two countries (primarily in foodstuffs and agricultural materials) amounted to $4.96 billion, constituting a 20% increase from the year before. Continued sanctions against Iran coupled with Russia’s growing economic dependence on the country is lifting Tehran’s hopes of securing a trade deal with the Eurasian Economic Union (EEU), Russia’s premier trade organization in the former Soviet Union.
Aside from new infrastructure, Russia and Iran are attempting to circumvent the near ubiquitous use of the dollar in their bilateral trade. The summer after the invasion of Ukraine, when Russia was laden with unprecedented US sanctions, the Iran Currency Exchange (ICE) began listing the ruble-rial pairing, allowing Tehran and Moscow to settle debts using each other’s currency. This allows both countries to skirt sanctions that prevent listed countries from using the US dollar. In addition, both countries have gone to considerable lengths to side step the use of the SWIFT international banking messaging system, which is largely denominated in US dollars. Russia and Iran agreed to officially link their banking systems in January 2023, nearly a year after Moscow was expelled from SWIFT (which Iran has been barred from using since the reimposition of sanctions in 2018).
Though the fall of the dollar as the world’s reserve currency is constantly overstated, Russo-Iranian cooperation on the development of alternate currency exchanges may augur one of its first serious challenges. While the two countries’ combined economic capabilities are far from constituting a global powerhouse, their mutual benefactor China may be the balancer they need to tip the scales in their favor. Notably, the economic bloc BRICS (of which China and Russia are members) regularly discusses alternatives to the dollar, which they view as a vastly disproportionate economic advantage the US wields over the world. Iran’s formal admittance to BRICS in August of this year will likely distance the country’s already tenuous relations with the West and deepen their economic collaboration with Moscow and Beijing. Moreover, the combined weight of BRICS’ non-Western economies, coupled with the bloc’s more aggressive members' indignation toward US hegemony, may lead to a serious reckoning with the dollar as the world’s reserve currency.
Current Roadblocks to Russian-Iranian Partnership
While Russia and Iran’s collaboration in economic and defense matters are impressive to a certain extent, unhealed rifts between the Eurasian powers continue to limit the extent of their partnership. Pro-Western Iranians are largely suspicious of Russia's intentions due to historical aggression toward Iran. Likewise, moderates remain especially wary, citing fears that collaboration with Moscow will further preclude Iran’s ability to engage with the outside world. The war in Ukraine has only intensified these feelings: a study conducted by the University of Maryland found that only 3/10 Iranians believe that Russia is acting defensively in Ukraine. Interestingly, the study also found that the closer the average Iranian followed the war in Ukraine, the less agreeable they were to Iran acquiring nuclear weapons.
Outside of public opinion, competition in the energy sector remains a bitter rivalry between Russia and Iran. As major suppliers of oil and natural gas to Eurasia, the two countries are natural rivals in the highly lucrative market. Moscow has long sought to exclude Iran from the European energy market, which it effectively exercised a monopoly over until 2022. Moreover, many Iranian leaders are convinced that Russia has actively thwarted the construction of refinement facilities in Turkmenistan to prevent the shipment of Iranian oil to Europe.
Indeed, despite their extensive economic collaboration after the invasion of Ukraine, Russia cosigned a statement with the Gulf Cooperation Council (an entity created to tacitly oppose Iran), reiterating the UAE’s claims to the strategic Abu Musa and Tunb Islands in the Persian Gulf. This caused Iran, which has laid claim to the islands since the 1970s, to furiously condemn the statement and summon the Russian ambassador to explain his country’s actions. Though reasons abound as to why Russia would aggravate such a vital ally, it is likely that sanction-burdened Moscow is seeking to increase its economic activity with the UAE and GCC. While a country as economically isolated as Russia will seek virtually any partner willing to do business, carrying water for some of Iran’s most vehement competitors shows that their newfound partnership has significant limits.
Conclusion
Despite underlying distrust and outright spats, Iran’s alliance with Russia shows few signs of impending collapse. Though moderates and reformist Iranians are deeply suspicious of Moscow’s intentions, hardline leaders in Tehran believe that continued cooperation acts as a form of insurance policy against the US, keeping it distracted in Europe while Iran continues pursuing its own interests in the Middle East. The possibility of Iran acquiring much needed Russian hardware while extending its influence across Eurasia outweighs the risk posed by its intervention in Ukraine, the consequences of which would be relatively minimal for Iran.
Looking forward, it appears that Russia’s continued reliance on Iran and tenuous domestic stability may lead to Putin acquiescing on Iranian action in the Caucasus and Central Asia, Russia’s traditional backyard. Likewise, Russia’s dependence on Iran for drone munitions and economic systems will make them far more reluctant to condemn Iran’s nuclear program at UN Security Council meetings, a net gain for leaders in Tehran.
Iran’s growing alliance with Russia fits neatly within the country’s “Look East” policy, which envisions the country turning to Moscow and Beijing for economic and political support at the expense of the US. However, the likelihood of Russia and Iran developing a formal, institutionalized relationship, a la NATO or OSCE, is unlikely given the sustained economic and political differences the two countries harbor across Eurasia. In fact, one could reasonably argue that the only thing preventing the two countries from actively competing is their shared antipathy toward the US. So long as the war in Ukraine keeps the US distracted and comes at little cost to Iran, it will continue supporting Russia while keeping a watchful eye on this former colonial oppresor.
