by Deepika Saraswat
The Iranian leadership has traditionally fended off popular anger against the country’s economic situation by pushing for self-reliance in both the economic and security domains. In 2012, at the height of crippling sanctions over Iran’s controversial nuclear program, Ayatollah Khamenei defended President Mahmoud Ahmadinejad’s defiant position on nuclear issue and argued for an “economy of resistance” to make the Iranian economy less vulnerable to U.S.-led international sanctions.
A key promise of the 2015 nuclear deal was that it would normalize Iran’s economic relations with the world. But President Donald Trump’s unilateral withdrawal from the agreement and the slow progress made by the EU in creating alternative mechanisms for trade with Iran has diminished Tehran’s hopes of normalizing relations with the West, leading Khamenei to advise the government to favor the East over the West. Through its new narrative of a post-West world order, Tehran is using diplomacy in an activist manner to criticize the West for failing to keep a multilateral agreement and mobilizing support from Asian countries to counter U.S. economic sanctions.
Tehran’s hardening stance on the EU was visible at the end of last month when the UK, France, and Germany announced the much delayed non-dollar special purpose vehicle—the Instrument in Support of Trade Exchange (INSTEX). “Iran will not wait for the implementation of the mechanism for facilitating trade between Europe and Iran,” Foreign Minister Javad Zarif said, adding that it “should be of greater importance for Europeans to prove their independence from the United States than for Iran.”
The implementation of INSTEX has encountered some confusion about whether it will facilitate trade only in non-sanctioned essential products, something that it would do initially, or trade in sanctioned goods, which would be made available for business with third parties. Tehran also opposes the EU’s linking of the payment mechanism to Iran joining the Financial Action Task Force (FATF). Joining FATF is a controversial issue in Iran. In October 2018, the Guardian Council dismissed a controversial bill on combating “terror financing.” The bill was one of four bills the government put forward to meet FATF standards. Close on the heels of its announcement of INSTEX, the EU also stepped up its criticism of Iran’s ballistic missile activity, Iran’s “hostile activities” on European territory, and the country’s continued military presence in Syria. Although the EU is following a fairly traditional dual-track approach of pressure and engagement, Tehran has reacted strongly, calling the EU approach non-constructive for Iran-Europe relations.
Tehran’s narrative of a post-West world order reflects Iran’s flagging hopes of Europe taking proactive steps to implement the deal as well as Iran’s shifting focus to Asia. According to this narrative, the current transitional world has opened new spaces for multiple new actors to shape the world. Outlining this post-West world order at the Raisina dialogue in New Delhi, Foreign Minister Javad Zarif argued that the “West—as a geographic or political construct—does not possess a monopoly over all consequential global developments.” Later, at the India-Iran business forum, Zarif was confident that the two countries would find ways to circumvent the illegal measures and bullying of the United States. Tehran’s tireless criticism of U.S. sanctions as illegal and as a violation of an international law has much to do with projecting Iran as a responsible, multilaterally oriented state that is willing to engage constructively with the world.
As multiple regional powers are seeking to expand their geo-economic reach in Eurasia, Iran’s pragmatic leadership is asserting that networking rather than competition should define the emerging post-West world order. Instead of the zero-sum dynamics of competition, Iran is seeking to cultivate a network of relations based on mutual benefits. Seeking closer economic integration in its Asian neighborhood, Iran has become a crucial link in the ambitious Chinese project of reconstructing the old Silk Road connecting China with Europe. Iran is receiving massive Chinese investment in infrastructure, especially in the expansion and upgrading of its railway network.
Similarly, India is developing Iran’s Chabahar port as well as a $1.6 billion rail link between Chabahar and Zahedan on the Iran-Afghan border. New Delhi may have looked at Chabahar as the crucial escape out of its post-partition geopolitical entrapment, with Pakistan blocking India’s access to Central Asia and Afghanistan. However, Tehran, in a testament to its networking approach to economic projects in the region, offered to participate in the China-Pakistan Economic Corridor. To allay their concerns over Indian role in the port, Iran even invited Pakistan and China to participate in the Chabahar port project and link Chabahar with Pakistan’s Gwadar port.
Similarly, in Eurasia, Iran-Russia cooperation is developing along regional lines. In May 2018, Iran signed an agreement on the formation of a free trade zone with the Russian-led Eurasian Economic Union (EAEU), with a full-fledged agreement expected within three years. In November 2017, the two countries signed an agreement to ensure Russian support for shipping gas supplies from Iran to India. In September last year, Russia and Pakistan also agreed to build an underwater pipeline from Iran to Pakistan and India. These agreements are evidence that networking can trump competition. By channeling Iranian gas to South Asia, Russia will not only safeguard its dominance of European markets against potential competition but also expand Russia’s operational reach to new markets in South Asia. For its part, Iran will sidestep U.S. sanctions as Russia will be delivering Iranian gas to these markets.
The narrative of a post-West world order is about fostering mutually beneficially relations with all the relevant actors in its extended Asian neighborhood. This allows Iran not only to beat the U.S. gambit of isolating the country economically but also realize Tehran’s long-held dream of becoming the energy hub of Eurasia.
Deepika Saraswat is a research fellow at Indian Council of World Affairs, a New Delhi-based think tank. She holds a PhD in political geography from Jawaharlal Nehru University, New Delhi. Her research interests include Iranian foreign policy and the geopolitics of the Middle East and Eurasia.
There is no such thing as an Iranian economic agenda. There is only the Ayatollahs economic agenda. It has totally destroyed Iran. But not for long.
The Iranian people have seen through this agenda and are united against it. They have demonstrated peacefully and non-violently. They have resisted the Ayatollahs’ and IRGC anger.
Iranians are civilized and have never solved their problems violently. That is what the aliens wanted to do over thousands of years of our civilization, and failed. This theocracy is nothing but a short-term menace.
very well researched and reasoned article, congratulation for your academic achievements.
Yes Chabahar is truly a win win for both Iran and India since Chabahar is the shortest and least expensive trade route for southeast asian countries to Central Asia and especially to north and east europe. Best wishes to civilizational friends Iran and India. Iran as policy should focus, use and expand her trade and economy with her immediate neighbours as well as south and east asian countries. Lifting economy of her neighbours and their standard of living is the best security Iran can get.
If the Asian powers avoid the trap of sanctions as a post colonial western tool of affecting world trade, they would be able to project their power in worldwide scale more securely. West wants a conflicting atmosphere instead of cooperation to secure a reference situation which can arrange and continue to control their relationship based on old colonialism ambitions.
This commentary makes a lot of geopolitical and economic sense to me; kudos to Dr. Saraswat. (But now FM Zarif has resigned…what does that portend?)
(I recall reading several months ago about an Irani water availability-supply-use crisis. I wonder if such a fraught issue is being addressed as it surely must be addressed, with urgency…a good use for the noted networking and cooperation?)
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