NEW GREAT GAME REVISITED, Part 1

Iran and Russia, scorpions in a bottle

By Pepe Escobar

HONG KONG - Things get curiouser and curiouser in the Iranian wonderland. Imagine what happened last week during Friday prayers in Tehran, personally conducted by former president Ayatollah Hashemi Rafsanjani, aka "The Shark", Iran's wealthiest man, who made his fortune partly because of Irangate - the 1980s' secret weapons contracts with Israel and the US.

As is well known, Rafsanjani is behind the Mir-Hossein Mousavi-Mohammad Khatami pragmatic conservative faction that lost the most recent battle at the top - rather than a presidential election - to the ultra-hardline faction of Ayatollah Ali Khamenei-Mahmud Ahmadinejad-Iran Revolutionary Guard Corps. During prayers, partisans of the hegemonic faction yelled the usual "Death to America!" - while the pragmatic conservatives came up, for the first time, with "Death to Russia!" and "Death to China!"

Oops. Unlike the United States and Western Europe, both Russia and China almost instantly accepted the contested presidential re-election of Ahmadinejad. Could they then be portrayed as enemies of Iran? Or have pragmatic conservatives not been informed that obsessed-by-Eurasia Zbig Brzezinksi - who has US President Barack Obama's undivided attention - has been preaching since the 1990s that it is essential to break up the Tehran-Moscow-Beijing axis and torpedo the Shanghai Cooperation Organization (SCO)?

On top of it, don't they know that both Russia and China - as well as Iran - are firm proponents of the end of the dollar as global reserve currency to the benefit of a (multipolar) basket of currencies, a common currency of which Russian President Dmitry Medvedev had the gall this month to present a prototype at the Group of Eight (G-8) meeting in Aquila, Italy? By the way, it's a rather neat coin. Minted in Belgium, it sports the faces of the G-8 leaders and also a motto - "Unity in diversity".

"Unity in diversity" is not exactly what the Obama administration has in mind as far as Iran and Russia are concerned - no matter the zillion bytes of lofty rhetoric. Let's start with the energy picture.

Iran is world number two both in terms of proven oil reserves (11.2%) and gas reserves (15.7%), according to the BP Statistical Review of World Energy 2008.

If Iran ever opted towards a more unclenched-fist relationship with Washington, US Big Oil would feast on Iran's Caspian energy wealth. This means that whatever the rhetoric, no US administration will ever want to deal with a hyper-nationalist Iranian regime, such as the current military dictatorship of the mullahtariat.

What really scares Washington - from George W Bush to Obama - is the perspective of a Russia-Iran-Venezuela axis. Together, Iran and Russia hold 17.6% of the world's proven oil reserves. The Persian Gulf petro-monarchies - de facto controlled by Washington - hold 45%. The Moscow-Tehran-Caracas axis controls 25%. If we add Kazakhstan's 3% and Africa's 9.5%, this new axis is more than an effective counter-power to American hegemony over the Arab Middle East. The same thing applies to gas. Adding the "axis" to the Central Asian "stans", we reach 30% of world gas production. As a comparison, the whole Middle East - including Iran - currently produces only 12.1% of the world's needs.

All about Pipelineistan
A nuclear Iran would inevitably turbo-charge the new, emerging multipolar world. Iran and Russia are de facto showing to both China and India that it is not wise to rely on US might subjugating the bulk of oil in the Arab Middle East. All these players are very much aware that Iraq remains occupied, and that Washington's obsession remains the privatization of Iraq's enormous oil wealth.

As Chinese intellectuals are fond of emphasizing, four emerging or re-emerging powers - Russia, China, Iran and India - are strategic and civilizational poles, three of them sanctuaries because they are nuclear powers. A more confident and assertive Iran - mastering the full cycle of nuclear technology - may translate into Iran and Russia increasing their relative weight in Europe and Asia to the distress of Washington, not only in the energy sphere but also as proponents of a multipolar monetary system.

The entente is already on. Since 2008, Iranian officials have stressed that sooner or later Iran and Russia will start trading in rubles. Gazprom is willing to be paid for oil and gas in roubles - and not dollars. And the secretariat of the Organization of Petroleum Exporting Countries (OPEC) has already seen the writing on the wall - admitting for over a year now that OPEC will be trading in euros before 2020.

Not only the "axis" Moscow-Tehran-Caracas, but also Qatar and Norway, for instance, and sooner or later the Gulf Emirates, are ready to break up with the petrodollar. It goes without saying that the end of the petrodollar - which won't happen tomorrow, of course - means the end of the dollar as the world's reserve currency; the end of the world paying for America's massive budget deficits; and the end of an Anglo-American finance stranglehold over the world that has lasted since the second part of the 19th century.

The energy equation between Iran and Russia is much more complex: it configures them as two scorpions in a bottle. Tehran, isolated from the West, lacks foreign investment to upgrade its 1970s-era energy installations. That's why Iran cannot fully profit from exploiting its Caspian energy wealth.

Here it's a matter of Pipelineistan at its peak - since the US, still during the 1990s, decided to hit the Caspian in full force by supporting the Baku-Tblisi-Ceyhan (BTC) oil pipeline and the Baku-Tblisi-Supsa (BTS) gas pipeline.

For Gazprom, Iran is literally a goldmine. In September 2008, the Russian energy giant announced it would explore the huge Azadegan-North oilfield, as well as three others. Russia's Lukoil has increased its prospecting and Tatneft said it would be involved in the north. The George W Bush administration thought it was weakening Russia and isolating Iran in Central Asia. Wrong: it only accelerated their strategic energy cooperation.

Putin power play
In February 1995, Moscow committed to finishing construction of a nuclear reactor at Bushehr. This was a project started by that erstwhile, self-proclaimed "gendarme of the Gulf" for the US - the shah of Iran. The shah engaged KWU from Germany in 1974, but the project was halted by the Islamic Revolution in 1979 and hit hard between 1984 and 1988 by Saddam Hussein's bombs. The Russians finally entered the picture proposing to finish the project for $800 million. By December 2001, Moscow also started to sell missiles to Tehran - a surefire way of making extra money offering protection for strategic assets such as Bushehr.

Bushehr is a source of immense controversy in Iran. It should have been finished by 2000. As Iranian officials see it, the Russians seem never to be interested in wrapping it up. There are technical reasons - such as the Russian reactor being too big to fit inside what KWU had already built - as well as a technology deficit on the part of Iranian nuclear engineers.

But most of all there are geopolitical reasons. Former president Vladimir Putin used Bushehr as a key diplomatic peon in his double chessboard match with the West and the Iranians. It was Putin who launched the idea of enriching uranium for Iran in Russia; talk about a strategic asset in terms of managing a global nuclear crisis. Ahmadinejad - and most of all the Supreme Leader - gave him a flat refusal. The Russian response was even more foot-dragging, and even mild support for more US-sponsored sanctions against Tehran.

Tehran got the message - that Putin was not an unconditional ally. Thus, in August 2006, the Russians landed a new deal for the construction and supervision of two new nuclear plants. This all means that the Iranian nuclear dossier simply cannot be solved without Russia. Simultaneously, by Putin's own framework, it's very clear in Moscow that a possible Israeli strike would make it lose a profitable nuclear client on top of a diplomatic debacle. Medvedev for his part is pursuing the same two-pronged strategy; stressing to Americans and Europeans that Russia does not want nuclear proliferation in the Middle East while stressing to Tehran that it needs Russia more than ever.

Another feature of Moscow's chessboard strategy - never spelled out in public - is to keep the cooperation with Tehran to prevent China from taking over the whole project, but without driving the Americans ballistic at the same time. As long as the Iranian nuclear program is not finished, Russia can always play the wise moderating role between Iran and the West.

Building up a civilian nuclear program in Iran is good business for both Iran and Russia for a number of reasons.

First of all, both are military encircled. Iran is strategically encircled by the US in Turkey, Iraq, Saudi Arabia, Bahrain, Pakistan and Afghanistan, and by US naval power in the Persian Gulf and the Indian Ocean. Russia has seen the North Atlantic Treaty Organization (NATO) gobbling up the Baltic countries and threatening to "annex" Georgia and Ukraine; NATO is at war in Afghanistan; and the US is still present, one way or another, across Central Asia.

Iran and Russia share the same strategy as far as the Caspian Sea is concerned. They are in fact opposed to the new Caspian states - Kazakhstan, Turkmenistan and Azerbaijan.

Iran and Russia also face the threat of hardcore Sunni Islam. They have a tacit agreement; for instance, Tehran has never done anything to help the Chechens. Then there's the Armenian issue. A de facto Moscow-Tehran-Erevan axis profoundly irks the Americans.

Finally, in this decade, Iran has become the third-largest importer of Russian weapons, after China and India. This includes the anti-missile system Tor M-1, which defends Iran's nuclear installations.

What's your axis?
So thanks to Putin, the Iran-Russia alliance is carefully deployed in three fronts - nuclear, energy and weapons.

Are there cracks in this armor? Certainly.

First, Moscow by all means does not want a weaponized Iranian nuclear program. This spells out "regional destabilization". Then, Central Asia is considered by Moscow as its backyard, so for Iran to be ascendant in the region is quite problematic. As far as the Caspian goes, Iran needs Russia for a satisfactory juridical solution (Is it a sea or a lake? How much of it belongs to each border country?)

On other hand, Iran's new military dictatorship of the mullahtariat will react savagely if it ever had Russia fully against it in the UN Security Council. That would spell a rupture in economic relations - very bad for both sides - but also the possibility of Tehran supporting radical Islam everywhere from the southern Caucasus to Central Asia.

Under these complex circumstances, it's not so far-fetched to imagine a sort of polite Cold War going on between Tehran and Moscow.

From Russia's point of view, it all comes back to the "axis" - which would be in fact Moscow-Tehran-Erevan-New Delhi, a counter-power to the US-supported Ankara-Tblisi-Telaviv-Baku axis. But there's ample debate about it even inside the Russian elite. The old guard, like former prime minister Yevgeny Primakov, thinks that Russia is back as a great power by cultivating its former Arab clients as well as Iran; but then the so-called "Westernizers" are convinced that Iran is more of a liability.

They may have a point. The key of this Moscow-Tehran axis is opportunism - opposition to US hegemonic designs. Is Obama - via his "unclenched fist" policy - wily enough to try to turn this all upside down; or will he be forced by the Israel lobby and the industrial-military complex to finally strike a regime now universally despised all over the West?

Russia - and Iran - are fully committed to a multipolar world. The new military dictatorship of the mullahtariat in Tehran knows it cannot afford to be isolated; its road to the limelight may have to go through Moscow. That explains why Iran is making all sorts of diplomatic efforts to join the SCO.

As much as progressives in the West may support Iranian pragmatic conservatives - who are far from reformists - the crucial fact remains that Iran is a key peon for Russia to manage its relationship with the US and Europe. No matter how nasty the overtones, all evidence points to "stability" at this vital artery in the heart of the New Great Game.

Next: Iran, China and the New Silk Road

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

He may be reached at pepeasia@yahoo.com.

(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)



NEW GREAT GAME REVISITED, Part 2

Iran, China and the New Silk Road

By Pepe Escobar

Part 1: Iran and Russia, scorpions in a bottle

HONG KONG - Does it make sense to talk about a Beijing-Tehran axis? Apparently no, when one learns that Iran's application to become a full member of the Shanghai Cooperation Organization (SCO) was flatly denied at the 2008 summit in Tajikistan.

Apparently yes, when one sees how the military dictatorship of the mullahtariat in Tehran and the collective leadership in Beijing have dealt with their recent turmoil - the "green revolution" in Tehran and the Uighur riots in Urumqi - reawakening in the West the ghostly mythology of "Asian despotism".

The Iran-China relationship is like a game of Chinese boxes. Amid the turbulence, glorious or terrifying, of their equally millenarian histories, when one sees an Islamic Republic that now reveals itself as a militarized theocracy and a Popular Republic that is in fact a capitalist oligarchy, things are not what they seem to be.

No matter what recently happened in Iran, consolidating the power the Khamenei-Ahmadinejad-IRGC axis, the relationship will continue to develop within the framework of a clash between US hyperpower - declining as it may be - and the aspiring Chinese big power, allied with the re-emergent Russian big power.

On the road
Iran and China are all about the New Silk Road - or routes - in Eurasia. Both are among the most venerable and ancient of (on the road) partners. The first encounter between the Parthian empire and the Han dynasty was in 140 BC, when Zhang Qian was sent to Bactria (in today's Afghanistan) to strike deals with nomad populations. This eventually led to Chinese expansion in Central Asia and interchange with India.

Trading exploded via the fabled Silk Road - silk, porcelain, horses, amber, ivory, incense. As a serial traveler across the Silk Road over the years, I ended up learning on the spot how the Persians controlled the Silk Road by mastering the art of making oases, thus becoming in the process the middlemen between China, India and the West.

Parallel to the land route there was also a naval route - from the Persian Gulf to Canton (today's Guangzhou). And there was of course a religious route - with Persians translating Buddhist texts and with Persian villages in the desert serving as springboards to Chinese pilgrims visiting India. Zoroastrianism - the official religion of the Sassanid empire - was imported to China by Persians at the end of the 6th century, and Manichaeism during the 7th. Diplomacy followed: the son of the last Sassanid emperor - fleeing the Arabs in 670 AD - found refuge in the Tang court. During the Mongol period, Islam spread into China.

Iran has never been colonized. But it was a privileged theater of the original Great Game between the British Empire and Russia in the 19th century and then during the Cold War between the US and the Soviet Union in the 20th. The Islamic Revolution may at first imply Khomeini's official policy of "neither East nor West". In fact, Iran dreams of bridging both.

That brings us to Iran's key, inescapable geopolitical role at the epicenter of Eurasia. The New Silk Road translates into an energy corridor - the Asian Energy Security Grid - in which the Caspian Sea is an essential node, linked to the Persian Gulf, from where oil is to be transported to Asia. And as far as gas is concerned, the name of the game is Pipelineistan - as in the recently agreed Iran-Pakistan (IP) pipeline and the interconnection between Iran and Turkmenistan, whose end result is a direct link between Iran and China.

Then there's the hyper-ambitious, so-called "North-South corridor" - a projected road and rail link between Europe and India, through Russia, Central Asia, Iran and the Persian Gulf. And the ultimate New Silk Road dream - an actual land route between China and the Persian Gulf via Central Asia (Afghanistan, Tajikistan, Uzbekistan).

The width of the circle
As the bastion of Shi'ite faith, encircled by Sunnis, Iran under what is now a de facto theocratic dictatorship still desperately needs to break out from its isolation. Talk about a turbulent environment: Iraq still under US occupation to the west, the ultra-unstable Caucasus in the northwest, fragile Central Asian "stans" in the northeast, basket cases Afghanistan and Pakistan to the east, not to mention the nuclear neighborhood -Israel, Russia, China, Pakistan and India.

Technological advancement for Iran means fully mastering a civilian nuclear program - which contains the added benefit of turning it into a sanctuary via the possibility of building a nuclear device. Officially, Tehran has declared ad infinitum it has no intention of possessing an "un-Islamic" bomb. Beijing understands Tehran's delicate position and supports its right to the peaceful use of nuclear energy. Beijing would have loved to see Tehran adopt the plan proposed by Russia, the US, Western Europe and, of course, China. Carefully evaluating its vital energy and national security interests, the last thing Beijing wants is for Washington to clench its fist again.

What happened to the George W Bush-declared, post-9/11 "global war on terror" (GWOT), now remixed by Obama as "overseas contingency operations" (OCO)? GWOT's key, shadowy aim was for Washington to firmly plant the flag in Central Asia. For those sorry neo-cons, China was the ultimate geopolitical enemy, so nothing was more enticing than to try to sway a batch of Asian countries against China. Easier dreamed of than done.

China's counter-power was to turn the whole game around in Central Asia, with Iran as its key peon. Beijing was quick to grasp that Iran is a matter of national security, in terms of assuring its vast energy needs.

Of course China also needs Russia - for energy and technology. This is arguably more of an alliance of circumstance - for all the ambitious targets embodied by the SCO - than a long-term strategic partnership. Russia, invoking a series of geopolitical reasons, considers its relationship with Iran as exclusive. China says slow down, we're also in the picture. And as Iran remains under pressure at different levels from both the US and Russia, what better "savior" than China?

Enter Pipelineistan. At first sight, Iranian energy and Chinese technology is a match made in heaven. But it's more complicated than that.

Still the victim of US sanctions, Iran has turned to China to modernize itself. Once again, the Bush/Dick Cheney years and the invasion of Iraq sent an unmistakable message to the collective leadership in Beijing. A push to control Iraq oil plus troops in Afghanistan, a stone's throw from the Caspian, added to the Pentagon's self-defined "arc of instability" from the Middle East to Central Asia - this was more than enough to imprint the message: the less dependent China is on US-subjugated Arab Middle East energy, the better.

The Arab Middle East used to account for 50% of China's oil imports. Soon China became the second-largest oil importer from Iran, after Japan. And since fateful 2003, China also has mastered the full cycle of prospection/exploitation/refining - thus Chinese companies are investing heavily in Iran's oil sector, whose refining capacity, for instance, is risible. Without urgent investment, some projections point to Iran possibly cutting off oil exports by 2020. Iran also needs everything else China can provide in areas like transportation systems, telecom, electricity and naval construction.

Iran needs China to develop its gas production in the gigantic north Pars and south Pars fields - which it shares with Qatar - in the Persian Gulf. So no wonder a "stable" Iran had to become a matter of Chinese national security.

Multipolar we go
So why the stalemate at the SCO? As China is always meticulously seeking to improve its global credibility, it had to be considering the pros and cons of admitting Iran, for which the SCO and its slogan of mutual cooperation for the stability of Central Asia, as well as economic and security benefits, are priceless. The SCO fights against Islamic terrorism and "separatism" in general - but now has also developed as an economic body, with a development fund and a multilateral economic council. The whole idea of it is to curb American influence in Central Asia.

Iran has been an observer since 2005. Next year may be crucial. The race is on to beat the clock, before a desperate Israeli strike, and have Iran accepted by the SCO while negotiating some sort of stability pact with the Barack Obama administration. For all this to happen relatively smoothly, Iran needs China - that is, to sell as much oil and gas as China needs below market prices, while accepting Chinese - and Russian - investment in the exploration and production of Caspian oil.

All this while Iran also courts India. Both Iran and India are focused on Central Asia. In Afghanistan, India is financing the construction of a US$250 million road between Zaranj, at the Iranian border, and Delaram - which is in the Afghan ring road linking Kabul, Kandahar, Herat and Mazar-i-Sharif. New Delhi sees in Iran a very important market. India is actively involved in the construction of a deep water port in Chabahar - that would be a twin for the Gwadar port built in southern Balochistan by China, and would be very helpful to landlocked Afghanistan (freeing it from Pakistani interference).

Iran also needs its doors to the north - the Caucasus and Turkey - to channel its energy production towards Europe. It's an uphill struggle. Iran has to fight fierce regional competition in the Caucasus; the US-Turkey alliance framed by the North Atlantic Treaty Organization; the perpetual US-Russian Cold War in the region; and last but not least Russia's own energy policy, which simply does not contemplate sharing the European energy market with Iran.

But energy agreements with Turkey are now part of the picture - after the moderate Islamists of the AKP took power in Ankara in 2002. Now it's not that far-fetched to imagine the possibility of Iran in the near future supplying much-needed gas for the ultra-expensive, US-supported Turkey-to-Austria Nabucco pipeline.

But the fact remains that for both Tehran and Beijing, the American thrust in the "arc of instability" from the Middle East to Central Asia is anathema. They're both anti-US hegemony and US unilateralism, Bush/Cheney style. As emerging powers, they're both pro multipolar. And as they're not Western-style liberal democracies, the empathy is even stronger. Few failed to notice the stark similarities in the degree of repression of the "green revolution" in Tehran and the Uighurs in Xinjiang. For China, a strategic alliance with Iran is above all about Pipelineistan, the Asian Energy Security Grid and the New Silk Road. For China, a peaceful solution to the Iranian nuclear dossier is imperative. This would lead to Iran being fully opened to (eager) European investment. Washington may be reluctant to admit it, but in the New Great Game in Eurasia, the Tehran-Beijing axis spells out the future: multipolarity.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

He may be reached at pepeasia@yahoo.com.

(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)