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September 12, 2022

On July 19, Russian president Vladimir Putin arrived in Iran on an official visit and held meetings with its president, Ebrahim Raisi, and its supreme leader, Ali Khamenei.  There are substantial grounds to believe that during those meetings, a plot was hatched to upend the West’s “maximum pressure” strategy, which involves the levying of heavy economic sanctions on the two countries as well as on their ability to procure new armaments.

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The plot, it now appears, is driven by two main elements.  First, the weaponization of Gazprom — the Russian state-owned multinational energy behemoth — as the primary tool employed to realize its goals.  Second, intensifying pressure on Western countries to conclude a new nuclear deal with Iran, which would also involve the lifting of sanctions on the exportation of Iranian oil and gas.

Apparently, the initial grounds for the plot were being laid already in May.  That month, Russian deputy prime minister Alexander Novak arrived for talks in Tehran.  The Russian news agency Interfax quoted him as saying, “We discussed the issue of supplying energy resources to the north of Iran so that logistically, Iran (since all its production facilities are located in the south) would not need to supply the north of the country.  In turn, it will be easier for us to use for sales their products that are formed in the south, which is closer to our markets.”

Accordingly, Iran would import Russian crude off its northern Caspian coast and then sell an equivalent amount of crude in Iranian tankers originating from the Persian Gulf to Asia-Pacific markets.  Iran will refine the Russian oil to meet its domestic demand, and once a nuclear deal is reached, Iranian oil exported from the south will be exempt from sanctions.

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Once this framework was put in place, implementation of the plot began in earnest.  Within a week of Putin’s visit to Iran, on July 25, Gazprom announced that it would reduce “the daily throughput” of the Nord Stream 1 pipeline to Germany to 33 million cubic meters, alleging that it was shutting down for equipment repairs.  The net impact was to cut gas supplies to Europe to 20% of capacity.

German officials were clear-eyed in assessing the Russian move: “Putin is playing a perfidious game,” German economy minister Robert Habeck told the European news agency dpa.  “He is trying to weaken the great support for Ukraine and drive a wedge into our society.  To do this, he stirs up uncertainty and drives up prices.”

The Russian coup de grâce followed soon after.  On August 30, Gazprom announced the indefinite suspension of all gas deliveries to Europe, citing an oil leak it supposedly detected at the Nord Stream 1 Portovaya compressor station.

When Russia announced its intention to restrict supply in July, within a day, it had pushed up the wholesale price of gas in Europe by 10%.  Gas prices are now approximately 450% higher than they were this time last year.  Not surprisingly, the Euro zone inflation rate hit a new record high in August at 9.1%, with a 38.3% increase in energy prices constituting the largest component of this rise.  A slowdown in European economies looks inevitable, and an accelerated pace toward a continental recession may have begun and may take effect this winter.  The only question remaining may be how deep it will be and how long it will last.

Putin certainly is having his revenge.  Not only is he punishing the European Union (E.U.) for its support for Ukraine, but he may expect some of its members (Hungary in particular) to peel off and search for a separate energy deal with Moscow.  Undoubtedly, he aims to force the West to cease or at least curtail its indispensable military and financial aid to Ukraine after Russia’s nuclear saber-rattling had failed in doing so.  As energy scarcity continues to grow, Putin may even hope for civil unrest to erupt in some countries, particularly in Germany, the continent’s largest economy, whose reliance on Russian gas amounts to just over half (55%) of the gas consumed there — the heaviest among the European countries.

However, for now, this has been a win only for Putin.  For the plot to work and the grand scheme to succeed, the mullahs in Tehran have to win as well.  The Russo-Iranian stratagem fully envisions that as the energy and economic crises in Europe worsen pressures among the Union’s members and on Washington to reach forthwith a nuclear deal with Iran would mount dramatically.  European nations would see a new agreement as their best hope for lifting the Iran sanctions and for Iranian gas and oil exports to resume in full volume, thus alleviating their predicament.  Such an outcome will not only boost the Iranian economy, with billions of dollars flowing in, but enable the Russian-Iranian swap deal to finally materialize.