Russia’s Halt to Nuclear Talks Leaves Iran in the Cold

(Bloomberg Opinion) -- Iran’s leaders thought the interruption of Russian oil and gas supplies would strengthen their hand at the negotiating table in Vienna, where the world powers have been discussing reviving the 2015 nuclear agreement. Instead, the Islamic Republic has found itself outmaneuvered by its supposed Russian allies, who on Friday halted the talks in a bid to block Iranian oil from returning to the market. The U.S. and its European partners can now press their advantage to get a better deal.

Soaring fuel prices, the regime in Tehran believed, would make President Joe Biden desperate for an accord that quickly lifted sanctions and brought Iranian supplies into the market. The reluctance of major producers like Saudi Arabia and the United Arab Emirates to increase their output — their rulers refused even to take Biden’s phone calls — would only make the U.S. more anxious to accommodate Iranian demands, which include the complete lifting of all sanctions, even those unconnected to its nuclear activities.

So, the Iranians talked up their ability to ramp up oil and gas production in a matter of weeks, even though this was always unlikely, given the parlous state of their extraction infrastructure. And they signaled their willingness to act against the interests of the Russians, who have been in their corner throughout the negotiations in Vienna. Vladimir Putin’s ability to threaten the West’s energy supplies would be undermined if Europe had access to alternative supplies from Iran.  

The Iranians calculated that Russia, having invested much sweat equity at the Vienna negotiations, would stay by their side. (Russia is one of seven countries that must sign off on the accord; along with the U.S. and Iran, the others are China, Germany, France and Britain.) Supreme Leader Ali Khamenei may have thought he could mollify Moscow by parroting Putin’s line that the war is the fault of the U.S. and its allies. For good measure, Iran abstained in the United Nations vote to condemn the Russian invasion of Ukraine.

But Putin isn’t so easily placated, and the war has changed his calculations. With his invasion of Ukraine running into unexpectedly fierce resistance and an avalanche of sanctions descending upon Moscow, he needs his oil weapon more than ever. While Biden has imposed a ban on all fuel imports from Russia and the U.K. has said it will stop taking Russian oil, Europeans — and especially the Germans — remain reluctant. That divide represents Putin’s best hope to extract concessions from the West.

This explains Russia’s decision to put the kibosh on the Vienna talks. Only days after Moscow’s lead negotiator expressed optimism that the revival of the nuclear deal was close at hand, Foreign Minister Sergei Lavrov last week abruptly introduced a new demand: that the sanctions imposed on Russia because of its invasion of Ukraine shouldn’t prevent it from doing business with Iran.

This is tantamount to one jailed criminal demanding that another inmate, on the verge of being released, be allowed to send him file-shaped cakes. Moscow must know the U.S. and Europe would never allow a loophole through which Russia can escape sanctions pressure.

But the demand was enough to bring the negotiations in Vienna to a halt, which was the real objective: By postponing a revival of the nuclear deal, Russia is in effect keeping the West from getting its hands on Iranian oil and gas.

This won’t only inconvenience the West, though. China, the principal buyer of Iranian crude as well as the world’s largest importer of fuel, will chafe at the high prices.

This might give the U.S. and Europe an opportunity to isolate Russia and pursue a separate deal with Iran. It might even create an opening for the Biden administration to push back against Tehran’s demands. Deprived of its chief supporter in Vienna, Tehran is vulnerable to pressure.

But taking advantage of the moment would require Biden to hold his nerve in the negotiations, and find other sources of oil and gas to compensate for the loss of Russian supplies. His officials have signaled a willingness to ease some sanctions on Venezuela for this purpose, and the UAE this week hinted it might be persuaded to pump more.

For their part, Iran is left in the awkward position of being abandoned by the very allies it had hoped to abandon. Reluctant to blame Russia, Tehran is claiming the U.S. is responsible for the suspension of the negotiations.

Nice try.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Bobby Ghosh is a Bloomberg Opinion columnist covering foreign affairs. A former editor in chief of the Hindustan Times, he was managing editor of Quartz and Time magazine’s international editor.

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