By Dmitry Simes, CNSNews, 8/25/22

Moscow (CNSNews.com) – Russia and Iran are moving to strengthen energy, industrial, and logistical ties as the two countries seek to ease the burden of U.S. sanctions against them.

On Wednesday [August 24th], Iranian Oil Minister Javad Ouji announced that Iran and Russia were close to finalizing a natural gas swap deal, allowing Iran to import Russian gas and then deliver a certain amount of it to third party countries. Ouji told reporters Moscow and Tehran were also negotiating about jointly developing 14 oil and gas fields in Iran.

Last month [July], the two signed a $40 billion memorandum of understanding under which Russian state energy conglomerate Gazprom agreed to help develop seven oil and gas fields in Iran. Habibollah Zafarian, an energy expert at Tehran’s Amirkabir University of Technology, told the Fars news agency that the deal opened the door for Iran to become a “regional hub” for Russian gas.

“Now there is an opportunity for Iran and Russia to sit around the same table and divide the gas market between them,” he said. “Russia is the first and Iran is the second holder of gas resources in the world and they can define an optimal strategy for market development by working together.”

Zafarian argued that Iran could begin purchasing surplus Russian gas that was originally designated for the European market, and then resell it to neighboring countries such as Pakistan and Iraq. Russia has sharply reduced its gas deliveries to Europe in recent months, citing sanctions issues and disputes over payment methods.

Some Western diplomats fear Iran could likewise become a “back door” for sanctioned Russian oil into Europe if the 2015 nuclear deal is resurrected. Politico recently reported that Tehran could begin “importing Russian crude to its northern Caspian coast and then sell equivalent amounts of crude on Russia’s behalf in Iranian tankers leaving from the Persian Gulf.”

Beyond energy, the Kremlin is increasingly looking to Iran for help in filling gaps created by Western sanctions and the exodus of multinational corporations from Russia.

During a trip to Moscow on Tuesday, Iranian Industry Minister Reza Fatemi-Amin declared that the two countries were expanding cooperation in the shipbuilding, car, and aviation industries.

He said Iran hoped to conclude a free trade agreement with the Eurasian Economic Union, a Moscow-led trading bloc that includes Russia and several of its traditional allies in the post-Soviet space.

Iran’s assistance is potentially significant since the car and aviation industries are the two sectors of the Russian economy that have suffered the most from sanctions.

New car sales have plummeted by 60.5 percent year-on-year during the first seven months of 2022, with many foreign brands ceasing their operations in Russia and domestic manufacturers struggling to acquire critical components. Meanwhile, Russian airlines have begun stripping planes for spare parts no longer readily available due to sanctions, according to Reuters.

Earlier this month [August], Iran’s leading automaker announced that it was paying “special attention” to the Russian market and would begin exporting its cars to the country later this year. On Tuesday, Russian and Iranian automakers and parts manufacturers signed $700 million worth of deals on the sidelines of a car industry show in Moscow.

A similar story has played out in the aviation sector. Last month, the two countries signed a memorandum of understanding allowing Iran to begin exporting spare parts and equipment to Russia and to provide Russian aircraft with repair, maintenance, and technical services.

Another way Iran can help Moscow bypass sanctions is by offering itself as a new logistical hub for Russian goods headed to the outside world.

The main option for now is the International North-South Transport Corridor (INSTC), a 7,200 kilometer network of ship, rail, and auto routes connecting Russia and India through Iran. According to a study from India’s Federation of Freight Forwarders, the INSTC is 30 percent cheaper and 40 percent shorter than the traditional Suez Canal route.

Although Russia and Iran have been holding talks about launching the INSTC for more than two decades, the project began to move ahead after the U.S. and European countries in March banned Russian ships and planes from their ports and airspace.

Those new restrictions “virtually wrecked” Russia’s trade logistics, according to Transportation Minister Vitaly Savelyev, and forced the Kremlin to look for alternative routes. At the same time, India’s importance as an economic partner for Moscow significantly increased as New Delhi went on a buying spree for Russian oil.

In June, Iran’s state-run shipping company announced that it had successfully delivered the first batch of Russian goods to India through the INSTC.

Since then, around 3,000 tons of goods and 114 containers have been shipped along the route, according to India’s Economic Times. Iranian officials have indicated that Russia could potentially help to construct new railways in Iran as part of the INSTC, in exchange for oil barter.

By Dmitry Trenin, RT, 8/30/22

Over 20 years after it began as an attempt at cooperation between five-Russian led post-Soviet states and an emerging China, the Shanghai Cooperation Organization (SCO) has become a major global institution, representing close to half of the world’s population.

From September 15-16, Samarkand, one of the ancient centers of human civilization, will host the annual summit of the group. The Uzbek presidency’s priorities include strengthening the SCO’s capabilities in assuring regional security and stability; promoting friendship and good-neighborliness; raising its global profile; countering threats in the information and ideological spheres; expanding parliamentary links; energizing economic interaction; enhancing connectivity; intensifying cultural and humanitarian contacts; and raising the general effectiveness of the collective and its mechanisms.

All of this looks impressive, but quite anodyne, and the documents to be formally approved at the summit do not promise any major sensations – beyond the long-expected admission of Iran as the SCO’s ninth member state.

Yet the environment in which the Samarkand summit will be held differs greatly even from last year’s gathering in Dushanbe. Russia’s military operation in Ukraine has led to a proxy war between Moscow and Washington. Meanwhile, Sino-US relations, already confrontational, have become palpably strained over the recent visit to Taiwan by US House of Representatives Speaker Nancy Pelosi.

NATO’s new strategic concept adopted last June in Madrid describes Russia as the most significant and direct threat, and China – for the first time – as a challenge to Western interests, security and values. As a result, the international community has moved visibly closer to a Cold War-style division between two camps in an intensifying rivalry over the world order.

That said, the SCO is unlikely to become the non-West’s version of NATO. While the US-led bloc is now more united than ever in its effort to preserve the order built and developed in the heyday of its global dominance, non-Western nations do not display anything similar to that sort of unity, hierarchy, and internal discipline. Russia and China, although they both reject US global hegemony, pursue very different grand strategies and – despite their public declarations of a cooperation that “knows no limits,” and a partnership that is “more than an alliance” – are careful not to damage their other important connections – e.g., China’s with the US and EU; and Russia’s with India – as they cooperate with each other. Moreover, China and India, not to mention the latter and Pakistan, while all members of the SCO, view each other as major security threats.

Despite such diversity and complexity, however, the SCO, at the start of its third decade, is not only still in business, but is steadily getting more active and becoming more attractive to others. In 2001, it started at six; after 2017, the membership expanded to eight, with another 20 countries or so listed as observers, dialogue partners, or in the process of joining. Iran’s accession this year is spurring the interest of Turkey and a number of Arab countries, notably the United Arab Emirates, Saudi Arabia, Egypt, and Qatar. The SCO community could potentially include much of the Eurasian continent between Belarus and Cambodia. Such enlargement carries obvious risks in terms of even wider diversity of interest, conflict, and frictions between the countries that aspire to join. Yet, the example of China and Russia; India and Pakistan finding the SCO useful to their interests is a convincing argument for accession.

In fact, the SCO’s lack of a single leader; its consensus-based decision-making procedures; its emphasis on national sovereignty and non-interference is a welcome contrast to the US-dominated NATO or like-minded groups such as the G7. Being in the SCO does not mean following Beijing’s or Moscow’s guidance. So far, so good. Yet, to flip the coin, what can the SCO actually give its members, observers, and partners? The general answer is, security in their mutual relations and stability across the continent. The organization, after all, originated from talks on border and military security issues between China on the one hand, and Russia and the Central Asian states on the other. Membership itself does not guarantee that there will be no conflicts, but it provides for means to prevent or manage them. Thus, it provides a unique platform for regular high-level and top-level contacts between Delhi and Beijing. Anti-terrorist cooperation – for all the differences in defining ‘terrorism’ – is another obvious bonus. After last year’s US withdrawal from Afghanistan, SCO member states have stepped up their efforts to bolster stability in the region.

Economic development has long featured as one of the key areas of SCO cooperation. China’s Belt and Road Initiative has been followed by the North-South corridor linking Russia, Iran, the Arab countries, and India. Peace in the South Caucasus could be cemented by restoring connectivity within the region and its links to the north and the south. The unraveling of ‘Chimerica’ and the EU-Russia decoupling in the wake of the Ukraine war signal the replacement of globalization with regionalization. Asian and Eurasian countries which for the past couple of centuries were much more closely involved with distant Western powers than with their own neighbors are now focusing on opportunities in their dynamic neighborhood. Western economic sanctions imposed on Russia are also opening doors much wider to Asian and Middle Eastern investment in Russia and trade with it. 

A new impetus for Eurasian interaction has been created in the post-Ukraine environment by the seizure by the West of half of Russia’s currency reserves. The central issue that has entered a number of countries’ strategic calculus is the reliability of the US dollar-based global financial system. Increasingly, national currencies of the SCO member states and observers, such as the Chinese yuan, the Indian rupee, the Turkish lira, the Iranian riel, as well as the Russian ruble are being used in trade between these countries. In parallel, national payment systems of these and other countries are becoming connected, allowing them to conduct transactions directly, rather than via Washington or its allies. At this point, the mechanisms are still cumbersome, but therein lies the beginning of a new international financial system which is free from diktat by a hegemonic outside power. The sanctions imposed on Iran, and now on Russia, could in the future be slapped on other nations that find themselves in conflict with the US.    

The international system as it emerged from the end of the Cold War is going through a deep crisis which will take a long time to resolve. The present system is founded on organizations either rooted in or inspired by the Cold War – like NATO or AUKUS, or heavily dominated by Western powers, like the international financial institutions, the OSCE, and the UN system as a whole. It is doubtful that the prime beneficiaries of the existing situation will do more than budge a little to make room for emerging players; they will certainly do their best to retain control over the system that they have devised and operated. While the future of the world order is being decided in the ongoing major power competition, a practical way of altering the situation to better serve the interests of the growing number of autonomous players is through developing organizations such as the SCO – independent, non-hegemonic, and inclusive. Potentially, the SCO could become a model for the 21st century order in the world’s most important regional space.

Dmitry Trenin is a Research Professor at the Higher School of Economics and a Lead Research Fellow at the Institute of World Economy and International Relations. He is also a member of the Russian International Affairs Council.   

Link here.

Sachs’ comments on his attempts to reach the White House prior to February 24th regarding diplomacy based on Russia’s concerns and the response that it wasn’t going to happen – this is consistent with State Department official Derek Chollet’s comments during an interview in April that the US wasn’t going to seriously negotiate NATO expansion with Russia.

Link here.

Alexander Mercouris and Alex Christoforou discuss the Ukrainian counteroffensive in Kherson, September 2nd.

Oliver Boyd’s written summary is here.

By James Carden, Asia Times, 8/27/22

On August 23, it was reported that the US will be sending yet another multibillion-dollar aid package to Ukraine. This time it’s $3 billion in “security assistance” including six additional National Advanced Surface-to-Air Missile Systems (NASAMS); laser-guided rocket systems (Raytheon’s M982 Excalibur); 245,000 rounds of 155mm artillery ammunition; and 65,000 rounds of 120mm mortar ammunition.

That would bring total US lethal and non-lethal aid to Ukraine to $57 billion since the war began six months ago.

America’s seemingly unconditional support for Kiev’s maximalist war aims, which include the recapture and reincorporation of Crimea and the Donbas, leave one with the distinct impression that the West’s policy is evolving toward one of unconditional surrender on the part of Moscow – or, better yet from the perspective of Washington, regime change.

This seems especially true when one takes into account the US-led sanctions regime that has sought to collapse the ruble and crush the Russian economy. Indeed, the US and its NATO allies seem to be pushing the current proxy war between Russia and the West into a total one.

Kiev’s maximalist war aims have won easy US support in part because maximalism has long been a feature of American foreign policy.

Writing in the late 1990s, columnist William Pfaff noted that “the overall conception of American foreign policy in modern times ultimately derived from a Protestant conception of the United States as the secular agent of God’s redemptive action.”

Both Pfaff and the scholar-diplomat George F Kennan have criticized Woodrow Wilson’s maximalist conception of America’s involvement in the First World War. Pfaff described Wilson’s identification of the Great War as “the war to end war” as a “goal of such moral absolutism as to abolish the possibility of compromise.”

Kennan was of a similar cast of mind. Writing a half a century before Pfaff, in 1951, he noted that as World War I progressed, it “did not bring reasonableness, or humility, or the spirit of compromise to warring peoples. As hostilities ran their course, hatred congealed, one’s own propaganda came to be believed, moderate people were shouted down and brought into disrepute, and war aims hardened and became more extreme all around.”

Worryingly, the rhetoric of American leaders has become saturated with the language of maximalism. Recall that in March, President Joe Biden publicly called for a change of regime in Moscow, telling an audience in Poland, “For God’s sake, this man [Vladimir Putin] cannot remain in power.”

Biden and his national-security team have repeatedly warned the American people that, in the president’s words, “We need to steel ourselves for the long fight ahead.”

Biden’s undersecretary for policy at the Pentagon, Colin Kahl, said the new aid package was “aimed at getting Ukraine what they’re going to need in the medium to long term…. It is relevant to the ability of Ukraine to defend itself and deter further aggression a year from now, two years from now.” Note the expectation here is that the war will continue a year or two into the future.

Kiev’s maximalism is pushing the US, bit by bit, up the escalatory ladder. As Kennan noted, “A war fought in the name of high moral principle finds no early end short of some form of total domination.”

Though he did not live to see the hysteria that marks the current moment, Pfaff, who passed away in 2015, observed that Wilson’s legacy among the American foreign-policy elite was secure. And this troubled him.

“It is hard to explain,” he wrote, “why Wilson’s fundamentally sentimental, megalomaniacal, and unhistorical vision of world democracy organized on the American example and led by the United States should continue today to set the general course of American foreign policy under both Democrats and Republicans, and inspire enthusiasm for American global hegemony among policymakers and analysts.”

The unthinking maximalists of the US foreign-policy establishment discount the escalatory risks that Biden’s rhetoric and the billions of dollars in lethal aid carry in large part because of the messianism that has imbued the American foreign-policy tradition for much of the past century.

They play down, even outright dismiss, even the possibility of diplomacy with Moscow, all the while certain in the rightness of their crusade.

We’ve been here before.

James W Carden is a former adviser to the US-Russia Bilateral Presidential Commission at the US Department of State.