Russian Companies to Benefit From Trump's Iran Withdrawal

Published May 13th, 2018 - 09:00 GMT
Even though Trump’s move has benefited Moscow in several ways, the question is how much Putin can capitalize on them. (Shutterstock)
Even though Trump’s move has benefited Moscow in several ways, the question is how much Putin can capitalize on them. (Shutterstock)

Russian President Vladimir Putin signalled his disapproval of US President Donald Trump’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement with Iran. Putin, though, benefits in several ways from Trump’s move.

Because not just Russia and China but also the United States’ European allies continue to support the JCPOA, Moscow benefits from how Trump’s withdrawal creates a rift between the United States and Europe.

To the extent that Trump’s move serves to raise oil prices, Russia (as well as other oil-producing countries) will benefit economically.

Increased Iranian-US hostility should serve to make Tehran more dependent on Moscow.

Although Israel, Saudi Arabia and the United Arab Emirates support Trump’s withdrawal from the JCPOA due to their fear of Iran’s regional policies that the agreement does not address, all have sought good relations with Russia and are likely to continue doing so despite their differences with it on the JCPOA and Iran generally.

In other words, Trump siding with those countries on the JCPOA issue while Putin is not doing so has not involved any costs for Russia.

Tension between Iran on the one hand and Israel, Saudi Arabia and the United Arab Emirates on the other allows Russia to play the role of mediator since it gets along with all sides while the Trump administration does not talk to Tehran.

Indeed, there does not appear to be any downside for Russia in Trump’s withdrawal from the Iranian nuclear accord. The conspiracy-minded might even think that he made the move to benefit Russia.

Even though Trump’s move has benefited Moscow in several ways, the question is how much Putin can capitalise on them, especially beyond the short term.

Trump’s withdrawal from the JCPOA causing a rift within the alliance is reminiscent of how George W. Bush’s determination to intervene in Iraq without UN Security Council approval also caused one. The earlier rift, though, did not last long and Putin was not able to gain from it.

There is no guarantee, then, that European-US differences over the JCPOA will interfere with their overall relations, especially at a time when many European governments are increasingly concerned about Russian behaviour in their neighbourhood.

While oil prices may not only rise but remain elevated because of Trump’s move, prolonged higher oil prices would lead to increased American shale oil production, which will put a ceiling on how high oil prices can go and may result in a prolonged lower oil price environment.

While increased Iranian-US hostility should logically (at least when viewed from Moscow) result in greater Iranian dependence on Russia, Tehran has not proven especially amenable to Russia during periods of tense ties with Washington.

This time could be different but, given the longstanding Iranian public distrust of Russia, it is doubtful that this will disappear. Indeed, Iranians might see Russia not as protecting it from the United States but taking advantage of Iranian-US hostility for its own benefit.

While Israel, Saudi Arabia and the UAE are likely to pursue good relations with Russia despite its support for the JCPOA, none of them is likely to reduce their dependence on the United States. They are all going to continue to rely on the power that shares their concerns about Iran and not one that doesn’t.

Although Russia’s ability to talk to the opposing parties in the region raises not just the possibility but the expectation that it can mediate among them, it is doubtful that it can actually do so.

Being a successful mediator does not just require the ability to talk with all sides in a dispute but the ability to provide benefits for making peace.  The US-sponsored Camp David Accord between Israel and Egypt, for example, was facilitated by Washington’s willingness and ability to provide both sides with a significant amount of assistance. Putin, by contrast, does not seem willing or able to do this.

Thus, while Trump’s withdrawal from the JCPOA raises the prospect of Russia benefiting in several ways from the move, Putin cannot be certain that he can successfully do so over the long term.

On the other hand, Western leaders cannot be certain that Putin will be unsuccessful. It surely would have been better if Trump had not given Putin the opportunity to exploit the situation.

By Mark N. Katz

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