Wednesday, 01 October 2014

Is Iran Making a Comeback in Central Asia?

Published in Analytical Articles

By Stephen Blank (10/01/2014 issue of the CACI Analyst)

Iran is seeking to recapture lost ground in Central Asia and the Caucasus. Earlier signs that the nuclear issue might be moving towards a peaceful resolution has encouraged some of Iran’s neighbors to take preparatory steps to resume dialogue with Tehran. Iran has extensive ties with and influence in Afghanistan. Thus Iran’s vital interests are connected with the future of that country. As NATO winds down its presence there, the widespread concern about the future of Afghanistan may lead improved ties between Iran and Central Asian states who clearly want as many foreign governments as possible to exercise a moderating influence on Afghan developments.

BACKGROUND: Iran has for many reasons failed to utilize its proximity to Central Asia for maximum gain since 1991. Certainly one of those reasons is its support for Islamic terrorist groups, generally Shiite, whereas Central Asian governments regard all dissent as extremism or terrorism and are Sunni except for Tajikistan. Perhaps even more importantly, Iran’s nuclear program not only alarmed all members of the SCO, the sanctions imposed by Washington and the constant diplomatic pressure to isolate Iran has short-circuited any real possibility for both Iran and its Central Asian neighbors to maximize potential trade and investment deals.

Yet President Rouhani’s government has formulated a new regionalism concept whereby Iran will try to augment its influence in neighboring regions like the Caucasus and Central Asia. The new regionalism policy aims to overcome that setback to both sides’ potential for trade, investment, and mutual influence. And there are at least some signs of increased Iranian capacity in this regard. The ongoing evolution of some major infrastructural projects like China’s Silk Road and the obstacles to others like the TAPI gas pipeline from Turkmenistan to India led to a reconsideration of Iran’s eligibility to participate in the Silk Road or to an alternative gas pipeline from Iran through Pakistan to India. 

In August Iran announced that it no longer needs gas imports from Turkmenistan as it is increasing domestic production. This is not a negative move toward Turkmenistan but rather a change in Iran’s capacity and domestic policy, evidenced by the fact that the so called Ashgabat Agreement created a North-South corridor from Turkmenistan through Uzbekistan to Iran and Oman is steadily moving forward. This railroad and corridor should give a major boost to Central Asian countries’ efforts to reach the Gulf and other markets. It should also connect to China’s Silk Road and greatly increase the global interconnections of rail and other commercial traffic for all the countries involved. Likewise, the Iran-Turkmenistan-Kazakhstan railroad is scheduled to open in November. This project will provide similar gains to all of its members in accessing hitherto distant or relatively inaccessible markets and increasing a network of interconnecting north-south and east-west rail lines and corridors where Iran and its neighbors and partners stand to make very handsome gains.

Rouhani has tried to revive relations with Russia and major oil and food deals that will benefit Iran by getting it out of the sanctions regime and help Russia overcome its own sanctions due to the war with Ukraine.

Iran is also seeking to improve ties to Azerbaijan, which fell apart in 2012-2013 due to the uncovering of several Iranian terrorist plots. Azerbaijan’s President Ilham Aliyev made a state visit to Iran and Rouhani said there was no obstacle to the expansion of ties between them. Other Iranian officials have made similar declarations and the summit has led to new agreements on trade and cooperation.  The deterioration of U.S.-Azerbaijani relations undoubtedly plays a role here as do Baku’s anxieties concerning Moscow and its desire to create as many friendly relations with neighbors and key regional actors as possible. Another factor may be the concern that if ties between Tehran and Washington improve, Azerbaijan might be left out of key energy, trade, and strategic decisions that would follow. Nevertheless it is unclear just how much of a change this implies in the substance of Irano-Azeri relations as Baku is hardly surrendering its ties to Israel and certainly wants more support from Washington.

IMPLICATIONS: It is by no means clear to what extent Iran’s campaign to improve its overall position in Central Asia will succeed. Rouhani’s appearance at the annual summit of the Shanghai Cooperation Organization reaffirmed Iran’s quest for full membership in the SCO. Since the SCO is likely to expand to include India and Pakistan as full members by the 2015 summit, Iran will certainly push for that status too. Yet Iran still cannot get into the SCO as the bylaws of that organization prohibit its membership because of the sanctions that it continues to experience. Moreover, nobody in Central Asia wants a nuclear Iran or gratuitous provocations with Washington over that issue. Neither is it clear that the issue of support for terrorism will simply disappear since Iran has hardly disbanded its capabilities in this regard and as Sunni-Shiite suspicions are, if anything, rising across the Islamic world.

Nevertheless, we should take account of the tangible material developments that are occurring. China’s Silk Road is materializing and former Russian programs for an independent North-South corridor or network with a terminus in Iran or India will be integrated into it over time. Iran may eventually realize its ambitions to become a trade, energy, and economic hub but it must do so in conjunction with a vast increase in Chinese economic power across the region. Central Asian states too will benefit economically but it is unlikely that their smaller networks, whose degree of connection to larger projects like the Silk Road has yet to be decided, will be completely independent.

All of this is contingent upon a resolution of the nuclear issue, which has hit a roadblock over enrichment quotas. Iran’s recent demands for an industrial-size enrichment program will not break the deadlock in negotiations and may set them back. Certainly such demands do not alleviate neighbors and great powers’ suspicions concerning Iran’s objective in this region or in the Middle East. Until this issue is resolved, any effort to improve Iran’s relations with Central Asian states or to maximize their economic interaction will fail, and Iran will continuously be denied full membership in the SCO. Neither will its economy be able to serve as an entrepot for Central Asian states in search of new markets. 

Similarly Baku’s suspicions of Iran’s goals, capabilities, and policies will not abate unless the issues of terrorism and nuclear power are resolved. It is also unlikely that the littoral States of the Caspian Sea will truly warm up to Iran absent a change in the hitherto unyielding Iranian position regarding demarcation of the Caspian Sea.    On the other hand, should these issues be resolved in a satisfactory way, it is quite clear that the West will have a major interest in opening the Caspian Sea up to Iranian and Central Asian energy trade to Europe to realize the visions of a Trans-Caspian pipeline and a southern corridor given the vital importance of finding alternatives to Russia’s predatory energy policies in Europe and Central Asia.

Given all the perturbations occurring in world politics, it is clear that neither Iran nor Central Asia are unaffected by those developments and trends.  But the extent to which Iran and Central Asian states (including Azerbaijan) can forge more rewarding mutual ties still lies largely in Tehran’s hands. It is by no means clear that Iran is ready to make a major policy shift form the fruitless and unnecessarily antagonistic policies of the past to a different and potentially more successful policy line in Central Eurasia.

CONCLUSIONS: There is little reason to doubt that a different set of Iranian policies would evoke a positive response in Central Asia since all those states would like to see as many foreign partners as possible involved in, but not dominating, Central Asia. Those policies too would be extremely beneficial to Iran economically and geopolitically.  Not only would they enhance its economic growth and standing in the global economy, they would also add to its security given its concerns about Afghanistan and about its own Azeri minority. Most of all, the specter of further nuclearization, a threat that unites Central Asia, would be lifted to some degree from the area. Until now, change has consisted in some significant but not breakthrough moves in economics. It is now up to Iran more than any other actor to take the next big step forward and move its relations with Central Asia from one of nice words and atmospherics to genuinely substantive policy proposals. If Iran does take that bold step, it is almost certain to find a positive response from its neighbors, to everyone’s benefit and advantage.

AUTHOR’S BIO: Stephen Blank is a Senior Fellow with the American Foreign Policy Council.

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