How does Iran show Russia can get around them?

A country in which there is a latent nuclear issue, whose economy depends on energy commodities and which today suffers sanctions from the West. In a guessing game, perhaps the first guess would be Russia, but Iran also fits the description.

Tehran has been the target of measures for more than four decades, but they intensified from 2012 onwards and gained even more weight in 2018, when the US nuclear agreement, then led by Donald Trump, was disembarked.

Since then, there has been an American action to prevent the purchase of Iranian oil. Thus, Iran is the target of economic blockades to try to bring it back to the negotiating table for a new agreement – which is in progress, including the relaxation of restrictions.

Moscow has also faced sanctions for more than ten years, since the war in Georgia (2008). The measures gained more substance with the annexation of Crimea in 2014, and much more force after the invasion of Ukraine on February 24 this year. Banks were subject to restrictions. Individuals and companies had their assets frozen. And large foreign corporations have abandoned the country.

The strategies of Russians and Iranians in facing sanctions do not differ much. According to Cristina pecequiloprofessor of international relations at Unifesp and in the postgraduate course of the San Tiago Dantas program, the two countries are based on the diversification of external partnerships, seeking to escape the western core —that is, allying themselves mainly with China, in addition to the regional and from the Middle East.

regional alliances

The regional partnership is important to make financial transactions possible for Iranians. “For example, to buy a computer that cannot be purchased in dollars, they pay the region’s banks”, explains economist Fernando Azevedo, a specialist in financial warfare.

China, in turn, relieves Tehran’s economy by buying oil, in an approach that has increased since 2012. Before that, says Azevedo, sanctions were not so intense.

“In the 1990s, sanctions prohibited Americans and companies and the US government from working together with Iran. In 2006, that changed, and Washington began to coerce third parties, such as Europeans, to not do business in Iran either.” , points out the economist. “It gets worse because it’s not just another country, albeit a powerful one, that is carrying out direct and indirect sanctions.” The situation reached its peak in 2012, when Tehran sought to approach other partners.

Search for agreements

Another practice has been to seek agreements with nations in the same situation, there seeing a link between Russia and Iran on military and technology issues, so that Moscow can access drones and satellites, exemplifies Pecequilo. The presidents of the two countries even met recently in Tehran.

Not only in partnerships, however, is the explanation for Tehran evading Western sanctions. “Iran managed to do a procedure, which Russia now imitates, which is to sell oil informally”, explains Azevedo. “They manage to hide the origin, adopting some mechanisms such as turning off the ships’ transponders and saying that they came from another Middle Eastern country.”

In the Russian case, highlights the economist, it is more difficult to hide the origin, as gas and oil have been sold at a much lower price. Still, Azevedo counters that the US has not been able to do with Moscow what it did with Tehran, which is to prohibit third parties from negotiating with the country commanded by Putin.

“Other countries, in Latin America, Africa and Asia, still trade with the Russians, including from the oil point of view, even because Moscow is selling very cheaply and does it outside the Western system. [para enviar pagamentos internacionais]which is Swift, adopting a system of theirs, which is being implemented”, which, in effect, alleviates the sanctions.

“Financial Mattress”

Moscow, however, did not rely only on this strategic political and economic preparation in the diversification of partnerships. “Russia had a very important financial cushion. I don’t know if it was preparing for an eventual conflict, which had been brewing for a long time, but it had very high foreign exchange reserves”, explains Héctor Saint-Pierre, professor at Unesp and founder of Gedes (Defense and International Security Study Group).

Part of that cushion was secured by increasing gold reserves to back the ruble, and the purchase of foreign currencies such as the Chinese yuan and the euro.

“This was a central move in relation to the strengthening of reserves, so much so that Russia has managed to pay all its commitments”, explains Pecequilo. “And there’s still that permanent dilemma in which you either completely cut Russia’s gas consumption or some revenue will always come in some way. That’s the crux of the whole issue. It was in February and it still is now.”

Russian dependency

It is precisely the energy issue that weakens the sanctions imposed on Moscow, unlike what is seen with Tehran. There are countries like Bulgaria, where 85% of consumption is fueled by Russian gas, and Germany, where the share is around 50%.

Insecurity generates tension, with pressure from both companies that need energy to function and consumers, who suffer from rising prices caused by the scarcity of the product. In this sense, the European Union has already announced a goal of reducing consumption by 15% from now, in the summer, to try to guarantee some reserve for the cold months.

“To what extent are European populations willing to pay for Ukraine’s sacrifice?”, points out the Unifesp professor. “Europe has been doing a lot of propaganda saying that it will import more gas from the United States or Nigeria, but this requires another infrastructure that is currently very incipient.”

That is why, underlines Saint-Pierre, sanctions have a much greater impact on Europe while Russia works more or less well. “The companies that left, some have already returned or been replaced, taken over by a Russian administration,” he explains.

The Unesp professor adds that the measures led Moscow to take measures that in the end favored it, such as paying for oil in rubles. This led to an appreciation against the dollar, while the US currency depreciated in the international market.

In addition to gas, Saint-Pierre warns that there is also an impact on wheat, the European food base. “There was a miscalculation”, analyzes the professor, adding the political impacts with the fall of governments in Europe and the loss of popularity of Joe Biden, in the US, while Putin sees his indexes favored domestically. “So the sanctions worked very well for Russia,” he concludes.

differences

The two countries, of course, occupy different strategic positions in the international context. Russian territory is about nine times the size of Iran’s (about 1.6 million square kilometers), which implies a wider range of available resources – including a power nuclear power already developed.

In addition, Russia is still a European nation, which provides it with an economic and political situation that affects relations with the rest of the world, as pointed out pecequilo. “So it’s more dangerous to have an unstable Russia than eventually an unstable Iran,” she says.

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