https://www.wsj.com/articles/iran-and-russia-are-cementing-an-alliance-with-grain-drones-and-satellites-11661605200
Iran and Russia cement alliance with grain, drones and satellites
The two U.S. rivals are accelerating efforts to build trade and military ties as they face international isolation
By
Benoit Faucon
Aug. 27, 2022 9:00 am ET
TEHRAN — Iran and Russia are forging closer ties than ever, as their international isolation pushes the two staunch US foes toward more trade and military cooperation, alarming Washington.
In July, Iran became the world’s largest buyer of Russian wheat. This month, Russia launched an Iranian satellite into space, a rare success for Tehran’s space program. And last week, the Iranian military held joint drone exercises with Russian forces, as the United States warns that Moscow is preparing to receive Iranian drones for use in the war in Ukraine.
The flurry of activity shows how the war in Ukraine has accelerated efforts to bring Russia and Iran closer together, which have often spoken of closer ties but with little results. Both states share an opposition to a US-led world order and both suffer from harsh US sanctions. But until this year, their relationship had been weighed down by competing agendas in Syria, Iran’s historic suspicion of foreign interference, and Russia’s historic role as the dominant power in Central Asia and the Caucasus.
A closer Russia-Iran alliance would help both countries mitigate the impact of Western sanctions by finding new markets for their products and strengthening military cooperation that could help Moscow’s war in Ukraine and regional activities. from Tehran to the Middle East. US National Security Adviser Jake Sullivan recently called the burgeoning relationship between Russia and Iran a “deep threat”.
The growing ties were punctuated by Russian President Vladimir Putin’s visit to Tehran in July, on his second trip abroad since ordering the February 24 invasion of Ukraine. Iranian President Ebrahim Raisi visited Moscow in January, when the two countries pledged and military cooperation.
Overall, bilateral trade has increased by 10% between Russia and Iran this year. In 2021, trade between the two countries jumped 80% to $4 billion, according to Russia.
Some observers say that apart from food and military cooperation, the relationship still has a long way to go. China traded $14.8 billion worth of non-oil goods and services with Tehran last year, according to Beijing customs statistics, and the two countries have a 25-year $400 billion trade deal. China is also a big consumer of Russian oil which is shunned in much of the Western world.
Esfandyar Batmanghelidj, managing director of the Stock Exchange & Bazaar Foundation, a think tank focused on economic diplomacy, said a revived nuclear deal – which Washington and Tehran appear close to concluding – could spur more Russian investment in Iran.
Russians have flocked to the Islamic Republic in recent months, often to discuss ways around sanctions, Iranian businessmen say. Russian is often heard in shops and hotels in Tehran these days, as Iran remains open to Russian travelers who have been cut off from much of the West.
At the city’s grand bazaar, Hossein, a carpet seller, said the number of Russian customers had doubled since February and now accounted for half of his clientele. In the lobby of a luxury hotel in Tehran, the only Europeans were Russians who brought their laptops for a business meeting with Iranians in black suits.
Deals on the table include Iran selling clothes to Russian buyers to replace Western brands and auto parts to struggling Russian automakers. Discussions have taken place on an export corridor from Russia to India via Iran and on the establishment of a banking system completely immune to American sanctions.
Tehran’s state-run National Iranian Oil Co. has also signed a deal with Russian energy giant Gazprom PJSC to invest $40 billion in Iran’s natural gas industry.
Both countries badly need trade partners, even if they are limited in their ability to help each other. The International Monetary Fund predicts that Russia’s gross domestic product will contract by 6% this year. The IMF expects Iran’s GDP to grow by 3% this year, but the country is struggling with 50% inflation and a currency that has hit a record high against the US dollar this year.
Iran is offering Russia its expertise to avoid Western sanctions while Moscow appears to have given Iran the preference for agricultural exports amid fears of food shortages.
Among the biggest signs of warming economic ties: Iran overtook Egypt and Turkey as Russia’s top wheat buyer in July, picking up twice as much as those two countries with shipments of 360 000 metric tons, according to data intelligence firm Kpler.
Iran and Russia have both struggled to find banks to handle their commodity deals, trade experts say. Their booming trade is a marriage of convenience at a time when European traders are avoiding new contracts for Russian grain and other commodities.
“Iran can only buy wheat from a limited number of sources,” said Masha Belikova, a grain analyst at commodity pricing agency Fastmarkets in London. “When the war broke out, Russia was the target of sanctions and had to deal with payment problems. Iran was one of the few countries willing to accept “such a political risk”.
Iran’s hardline Islamic Revolutionary Guard Corps is holding a military unmanned aerial vehicle, or UAV, competition with the Russian military at their Kashan airbase, south of Tehran. Iranian state television showed IRGC members displaying Russian flags as they led a parade of soldiers from Moscow.
The White House has alleged that Iran hosted a Russian delegation in Kashan in June to showcase its attack drones. He says Iran is training Russian soldiers to potentially use the weapons in Ukraine.
Tehran-designed drone technologies have become a key instrument of asymmetric attacks carried out by the Islamic Republic against Saudi oil fields and by allies in the Gaza Strip, Iraq and Yemen.
Tehran denies Russia’s war aid plans in Ukraine. Brig. General Ali Balali, a senior IRGC air force officer, said last week that the drone drills were aimed at combating global terrorism. The military drone competition, which also involves Russian allies Armenia and Belarus, was first launched in 2015 but is normally hosted in the former Soviet Union rather than Iran.
On August 9, Russia launched an Iranian satellite from a facility it controls in Kazakhstan. Iran says the satellite will help strengthen “management and planning capabilities” in the fields of agriculture, water resources, disaster management or border surveillance.
The United States suspects the satellite could be used by Tehran to help monitor Ukrainian troop movements.
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