Streetwise Professor

July 31, 2010

Remember That the Eagle Has Two Heads

Filed under: Economics,Energy,Military,Politics,Russia — The Professor @ 7:14 pm

On Monday I gave a talk on Russian, Chinese, and Venezuelan energy policies to a group of State Department officers and some other government folks from places like ONI.  All of the people involved have energy as some part of their portfolio, and were on a trip to Houston to learn about a variety of energy issues.

At the Q&A after my talk, one person asked me: “At the Iran desk we are confused about Russia’s policy towards Iran.  It would seem that they have an interest in keeping Iranian energy, especially gas, out of the market, so would have an interest in robust sanctions.  How do you explain their lukewarm support and their dealings with Iran?”  After recovering from the “you’re asking me?” shock, I responded that it doesn’t confuse me at all.  The Russians want their cake and to eat it to.  They are playing a double game.  They benefit from turmoil in the Middle East, especially in the Gulf.  It is quite useful to them to have the US distracted by Iran, leaving Russia more space in the Near Abroad.  Russia has  strong economic interests–in nuclear power, and arms, in particular.  They don’t want to see Iranian gas to to Europe, but have no problems with it going south and east.  At the same time, they are trying to reach some kind of accommodation with the US, and aren’t thrilled about an Iran with nuclear weapons.

So Russia wants a Goldilocks approach–not too tough, but not too lax.  It wants to keep Iran on a low boil, not too hot and not too cold.

Hence the to-ing and fro-ing, the double dealings, and so on.  Alleviating pressure from their western flank by agreeing to weak sanctions–that give Russia the flexibility to engage in business dealings with Iran, including the sale of advanced S-300 antiaircraft missile systems.  When Ahmadinejad throws a hissy over Russian support for sanctions–no matter how tepid–they try to assuage him.  They criticized the EU’s more robust sanctionsRussia and Iran signed an energy cooperation “roadmap.” And of particular interest, given that the Iranian regimes greatest vulnerability to sanctions is in motor fuels (given its inadequate refining capacity), Thursday it was announced that Russian companies including Rosneft, Gazprom Neft, and Tatneft  would start “serious deliveries” of gasoline to Iran.

In short, Russia is playing both sides against the middle, extracting concessions from the US and the EU, including special treatment, to agree to sanctions, and then turning around and dealing with the Iranians.  The resulting state of not war-not peace suits them just fine.  It seems pretty obvious, and it would be rather unsettling if the State Department really finds this befuddling.  Russia is pursuing its own interests, and those interests are not congruent with ours.  That the Russians are doing so by talking out of both sides of their mouths should be expected.   Indeed, I would be more worried if they didn’t.

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    Pingback by Tweets that mention Streetwise Professor » Remember That the Eagle Has Two Heads -- — July 31, 2010 @ 7:25 pm

  2. Wow, do you consider it encouraging to get such question from folks responsible for foreign affairs?

    Comment by Deith — July 31, 2010 @ 7:49 pm

  3. @Deith–definitely not. Like I say, I was shocked. I would consider it very, very disturbing if said folks really didn’t understand what game Russia is playing. It’s not like they haven’t played it from time immemorial.

    The ProfessorComment by The Professor — July 31, 2010 @ 8:04 pm

  4. Yeah… I mean, they don’t deserve salaries because they are paid exactly for answering such questions on their own…

    Comment by Deith — July 31, 2010 @ 8:12 pm

  5. “The Russians want their cake and to eat it to.”

    I believe the correct expression of the paradox is “x wants to eat their cake and then have it too.”

    If you have a cake, of course you will eat it.

    But, if you eat your cake and then also have it, that is a mystery.

    Hat tip to Jack O’Neill of Stargate Command.

    Comment by michael webster — July 31, 2010 @ 10:39 pm

  6. The only thing more disturbing than the officials’ asking that question would be their not asking the question and remaining clueless.

    Comment by Ivan — August 1, 2010 @ 1:39 am

  7. The Russkies are all about keeping it real.

    Comment by So? — August 1, 2010 @ 3:00 am

  8. @MW. Picky, picky, picky. “‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.'” LOL.

    The ProfessorComment by The Professor — August 1, 2010 @ 8:52 am

  9. @Ivan:
    Yup, Americans are lucky, their leaders could be even worse. On the other hand, asking a question doesn’t mean they listen to the answer and accept it. Especially when the one answering is professor of economics and not of international relations, it might always be turned down as opinion of unreliable source.

    I do consider it very, very disturbing because as you said, it is not like Russians behave this way just when it comes to Iran. If guys from State Department don’t understand Russian intentions there, they can’t understand their motives anywhere else.

    Comment by Deith — August 1, 2010 @ 11:32 am

  10. I don’t see anything disturbing. Encouraging, actually. That they’re asking these questions doesn’t mean they’re dumb or incompetent, chances are they’re scouring out many sources of opinion. No? (I don’t know, I’m just offering another suggestion).

    Your explanation to the SD folks was sophisticated and balanced (though standard opinion, I think, amongst those who follow this issue). Though, maybe, you could have also added:

    1) There are different factions in the Kremlin who favor ties with Iran/the US to varying extents. The Medvedev “liberal” faction places more stress on a modernization alliance with the US. The siloviks lean more towards continuing cooperation with Iran.

    2) Another dimension is that Iran supports Russian policy in several security spheres. It does not fund Islamic militants in the North Caucasus (unlike individuals from certain US-aligned Muslim nations). It has ties with Russian ally Armenia, and is in a cold war with Azerbaijan. And of course as you said, the most important thing about it is that it offers Russia leverage against the US in the Near Abroad.

    But overall, good performance!

    Comment by Sublime Oblivion — August 1, 2010 @ 2:57 pm

  11. @MW. I was just paging through a chapter in “Balancing the Banks” written by Jean Tirole. One section heading: “Having One’s Cake and Eating it Too.” Seems that usage is not unusual:)

    I know a very successful Chicago trader, originally from Mississippi, who says: “He wants his cake and cookie too.”

    The ProfessorComment by The Professor — August 1, 2010 @ 4:28 pm

  12. @SO:
    Officials started question with “we are confused” which translates as “we have no clue.” It really doesn’t look like scouring out many sources of opinion.

    Medvedev liberal faction, that’s a good one. You call the guy who signed the new FSB law liberal?

    Comment by Deith — August 1, 2010 @ 5:50 pm

  13. So am I now to be faulted for repeating (as opposed to critiquing) Western media tropes on Russia?

    Call them “civiliki” if you want instead.

    When someone says “we are confused”, I wouldn’t necessarily take it literally. They could just have been polite and self-effacing so as to draw in other opinions.

    Comment by Sublime Oblivion — August 1, 2010 @ 10:24 pm

  14. @SO:
    Nope, you are faulted for believing Western media and its reporters whose knowledge of Russia consists of: a)it is that big country in the East and b)people like vodka over there.

    Comment by Deith — August 2, 2010 @ 7:14 pm

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