Russia and Iran’s New Comprehensive Partnership Agreement

After two and a half years of preparation, Russia and Iran are on the verge of signing a historic “comprehensive partnership agreement,” set to be finalized on the sidelines of the BRICS forum in October. This agreement follows a similar 20-year comprehensive accord signed by Moscow and Tehran in 2001.  The anticipated 2024 agreement is poised to usher in a new chapter in Russia-Iran relations, deepening their strategic and economic ties at a critical moment when both nations face increasing isolation from the West. This partnership underscores a shared commitment to countering Western influence, particularly in light of the Ukraine conflict and the sweeping sanctions that have followed. Of course, the development raises critical questions: Why is this agreement being pursued at this juncture? What is the significance of this partnership for both countries? And what implications will their unprecedented closeness hold for the West?

Effects of the Ukraine Crisis

The significance of this agreement lies in its timing rather than its content. The negotiation of the partnership agreement has gone on since early 2022, when Russia’s invasion of Ukraine led to widespread international sanctions and prompted the Kremlin to seek non-traditional security partners. Shortly after the invasion began, Russia began to import military equipment from Iran, particularly its low-cost Shahed drones. This greater military cooperation soon led to closer bilateral ties in other areas ties as well; since 2022, there has been a notable increase in cultural, educational, and economic exchanges, largely in response to the unprecedented global isolation imposed on both nations.   

The two countries are key allies in bypassing Western sanctions. Following the invasion, bilateral trade volume  between Moscow and Tehran reached almost $5 billion, growing by 20% in 2022 alone. In 2023, Russia became the largest foreign investor in Iran, accounting for roughly two-thirds of its total FDI. Joint projects have been developed in the oil and gas sector, as well as in energy and logistics; Russia supplies Iran with grain and oilseed, lumber, inorganic chemicals, machine-building equipment, paper and cardboard, and measuring instruments.  In turn, Iran has exported vegetables and fruits, nuts, dairy products, plastics, ferrous metal products, building metals, and plumbing products to Russia. New collaborations have also begun to crop up.  On June 26, 2024, Gazprom and the National Iranian Gas Company signed a strategic memorandum on the prospects for a Russian natural gas pipeline to Iran.

Following Russia’s exclusion from international financial institutions such as the SWIFT banking system in the aftermath of the Ukraine invasion, it has worked with Iran to develop alternative financial systems and circumvent the use of the U.S. dollar in their transactions. In the first quarter of 2024, a currency agreement was scheduled to be signed between Iran and Russia by which the countries will be able to trade in both rubles and rials. Sberbank and Bank Melli, the largest banks in Russia and Iran, each agreed to open credit lines for 6.5 billion rubles, and a pilot project in accepting payment by cards using the Russian ‘Mir’ system will be launched in Iran. Moreover, Hossein Eivazloo, Deputy Director of Foreign Investment at the Iranian Development Fund, revealed plans for Iranian and Russian national wealth funds to build joint investment committees. Various projects will be realized in the fields of oil, gas, petrochemicals, high-tech, and pharmaceuticals.

The two states have also worked together to develop their military and defense strategies and capabilities, despite the wide range of sanctions levied against them. Iran has supplied Russia with thousands of Shahed drones for use in Ukraine; Iranian military officials have trained Russian soldiers on the use of the drones, and the two countries are working together to construct a drone factory inside Russia proper. In January, Iran also confirmed the existence of an order for the purchase of Russian Su-35 fighters, as well as other military equipment, including helicopters and missiles. In November 2023, Iranian deputy Defense Minister Seyyed Mehdi Farhi told the Tasnim news agency that a deal had been struck on the purchase of Russian MI-28 attack helicopters, SU-35 fighters, and Yak-130 combat training aircraft. In March 2024, the country’s permanent mission to the UN announced the completion of the deal to purchase the SU-35 from the Russian Federation, with the first deliveries expected in the spring.

Consequences for Western Security

As Agnes Helou of Defense News wrote, the comprehensive partnership agreement will “formalize” defense collaboration between Moscow and Tehran against Western security interests. Further engagements in military technology and intelligence sharing between the two countries are expected. After the assassinations of Hamas political leader Ismail Haniyeh in Tehran and Hezbollah senior commander Fuad Shukr in Beirut, there is the possibility of a further escalation of conflict in the Middle East. Mohammed Soliman, Director of Strategic Technologies and Cyber Security Program at the Middle East Institute, shared that the timing of the agreement “could be interpreted as a signal of Russian support for Iran, particularly given the heightened tensions with Israel. Lebanon, a potential flashpoint, could become Israel’s next battleground.” This reflects the discourse of political elites and stakeholders of Russia in April, when Iran launched over 300 drones and missiles at Israel, expressing their full support to Iran. Ahead of the US elections, a potential Russian involvement in a Middle Eastern conflict based on its strategic partnership agreement with Iran might offer Russia further opportunities to strengthen its military posture in the region, further directly challenging Western influence in the Middle East.

Secondly, according to Mohammed Soliman, “A comprehensive agreement might formalize closer political ties, potentially strengthening their shared opposition to the West, particularly in light of the Ukraine conflict and sanctions.” This may lead to further collaboration in geopolitical reach: for example, working closer through BRICS and the Shanghai Cooperation Organization, and enlarging their objectives. It is not a coincidence that the agreement is expected to be signed on the sidelines of the BRICS forum in Kazan in October 2024. Iran has adopted a strategy aimed at developing logistical projects and promoting national companies such as the IRISL Group, within the  International North-South Transport Corridor. This initiative is crucial to building alternative logistics and routes to continue bypassing Western sanctions. As noted, Russia had secured the leading position in terms of investment volume in Iran in 2023, challenging the economic security of Western countries.  These developments highlight Iran’s focus on strengthening its economic resilience and strategic alliances. However, despite these efforts, Iran’s posture toward the West has remained consistent, even under the relatively moderate leadership of President Masoud Pezeshkian, who has shown potential openness to normalizing relations.

Despite the consensus that President Masoud Pezeshkian is relatively moderate, given his potential willingness to normalize relations with Western states, Iranian posture towards the West has not yet changed. Prior to the July election, Iran’s acting President Mokhber assured Russian President Vladimir Putin, “Iran’s strategy toward Russia has been developed by the Supreme Leader and [he] told me to tell you that the relations between Iran and Russia are very deep and will not change with the change of governments”.

President Pezeshkian also expressed Tehran’s readiness to sign the agreement during a recent phone conversation with Vladimir Putin. This readiness confirms Iran’s dedication to the partnership, and its ongoing initiatives, which have been developed since the Ukraine crisis. In other words, this treaty offers the opportunity to open new avenues for collaboration in many sectors, including geopolitical reach. Russia may not take the role of a security guarantor for Iran, but this comprehensive partnership in collaboration with Iran is likely to further strengthen its military, economic, and geopolitical presence in the region.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.