Russia’s major infrastructure and trade ambitions with Iran, including the vital North-South Transport Corridor and Caspian port upgrades, face costly delays and uncertainty amid Iran’s instability and war fallout.
As the Israel-Iran war comes to some sort of conclusion, Russia’s part in this has been much debated. Given its relationships with both sides, Russia’s role as a swift mediator was rejected by the Americans. Embroiled in its war and not technically obligated to come to Iran’s aid under their strategic partnership, most analysis tended to focus on whether Russia stands to gain or lose from the conflict; there is a prevailing train of thought that technically any global chaos is beneficial for Russia, detracting as it does from Russia’s war in Ukraine.
However, there are other stakeholders in Russia with significant interests in maintaining a stable relationship with Iran, and Russia’s extensive economic deals with the Iranian regime are likely to be put on hold, or at least delayed by the war.
Political and financial turbulence in Iran is expected to pose temporary difficulties for Russia in advancing the bilateral relationship. However, there is a risk that Russia will bear the lion’s share of the financial responsibility for their joint infrastructure projects.
Russia Is Not Very Committed to Helping Iran
For Russia, Iran is an essential pillar of its foreign policy, with a now well-documented relationship involving Iran’s supply of drones for the Ukraine war; growing economic ties through the export of Russian oil, and mutual dissatisfaction with the West. While their recently ratified strategic partnership falls short of an actual defense pact, it does signify a new level of intelligence sharing and cooperation.
Russia’s Foreign Policy Concept names both Iran and Israel as one of the priorities for building relationships, the way it is phrased officially puts Russia in a role of mediator, helping to ‘normalize the relationship’ between powers in the Middle East.
The overall strategic direction of these main bilateral relationships is decided at a high level. Still, in practice, Russia tends to use its ethnic Muslim republics as implementers to cement its foreign policy links with the Middle East. This is a valuable tool that plays up Russia’s attractiveness to ethnic minorities and emphasizes its common religious links with what the Kremlin likes to refer to as the “Islamic World.”
Against this backdrop, the maintenance of the relationship with Iran is primarily led by Russia’s North Caucasus republics, specifically Chechnya and Dagestan. The war might have the most significant economic and political consequences for them, as well as the surrounding regions that benefit from the relationship.
Chechnya and Dagestan: Russia’s Islamic Republics
Chechnya has often played an outsized role in Russia’s foreign policy, particularly in the Middle East. Its leader, Ramzan Kadyrov, is Putin’s unofficial emissary abroad.
Kadyrov is notably the face of Russia’s foreign policy in the Gulf and hosts senior delegations from Iran. Chechnya has, for the last 10 years, been a regular point of contact for Iranian ambassadors, and Tehran played an essential role in boosting Chechnya’s economy after the two Chechen Wars.
Religiously, Chechnya and Iran differ, Iran is adherent to Shiite Islam, whereas Chechnya follows Sufism, and there have been tensions between the two over this interpretation of Islam. However, despite this, Kadyrov first hosted the International Islamic Conference in 2007, and it became an annual event by 2010. These connections appear to have developed in tandem with Russia’s official deepening of its relationship with Iran.
In 2020, the Iranian ambassador visited Chechnya twice within a six-month period to discuss trade links.
On 12 June, a day before the Israeli airstrikes on Iran began, Ramzan Kadyrov met the Iranian ambassador to Russia in Grozny (Chechnya’s capital), and maintained that Iran’s Foreign Minister had invited him to Tehran. Kadyrov has typically been outspoken in his views of the war and criticism of Israel, as his region has spent many years building links with the Iranian regime.
Although much of Iran’s leadership on the foreign policy side appears intact, the resultant political turmoil in the country will require a period of transition. Kadyrov lacks experience in handling significant political changes in Iran, and rumors of his ill health, which appear to be valid, put him in a weaker position to lead in building new engagements with the leadership.
Iran Wants to Use Dagestan’s Ports
If Kadyrov tends to lead on the political side, much of Iran’s practical interests in Russia’s North Caucasus are concentrated in Chechnya’s neighbor, Dagestan. Dagestan’s location on the Caspian Sea makes it a vital link to ports in Iran. Iran’s Bandar Anzali port is one of the most important on the Caspian Sea, capable of handling 10 million tons of cargo. Russia’s port in Makhachkala, Dagestan, is linked to Iran’s port. It is the only deep-water facility Russia has on the Caspian Sea that can function year-round with larger vessels.
Makhachkala is also a crucial node in Russia’s plans to revive the International North-South Transport Corridor (INSTC), a long-term project involving land and sea routes designed to link Russia and Iran to the Persian Gulf, as well as to India, to circumvent Western sanctions.
The project has been in the pipeline for over twenty years and has been repeatedly shelved, but it has gained new impetus since Russia’s war in Ukraine. Russia’s Deputy Prime Minister, Marat Khusnullin, stated in 2024 that the INSTC was one of Russia’s most important projects, as it encompasses the expanded development of Russia’s inland waterway system and links it to the Caspian Sea, offering new economic opportunities for Russia in the Middle East and India.
But the Makhachkala port is currently at capacity. Iranian investment plans to modernize the Makhachkala port, expanding its capacity to 11 million tons by 2030, are likely to be stalled by the war, and could leave a hole in Russia’s regional budget, the Makhachkala port also ships to Kazakhstan, so planned increases of cargo in line with the port’s expansion may need to be shelved. Any hold on the INSTC’s plans also increases long-term pressure on the Trans-Siberian Railway, the main export route from Moscow to Beijing; the INSTC was intended to relieve the TSR of some of its cargo burden.
The International North-South Transport Corridor May Fail Due to Sanctions
Without an injection of foreign investment, which remains elusive due to sanctions and an unappealing business climate in Russia, plans to develop both the INSTC and the Caspian Sea ports are likely to be paused, with potential economic consequences for southern Russian regions that rely on this, such as Volgograd and Astrakhan. Other countries with investments in the INSTC are also expressing concerns.
Reliant on Iranian investment, India’s Chabahar Port may struggle to fulfill its plans to increase the port’s capacity, potentially facing difficulties in sourcing raw materials and manpower as a result. The INSTC has already absorbed a significant chunk of cash from the Russian side, the whole project comes at a cost of over $38 billion, designed to be completed before 2030, and significant delays to it as a result of the war are likely to have uneven consequences for the Russian regions that rely on exports along this route, and have budget projections accordingly.
Technically, funding has always been an issue for Russia’s projects with Iran; the country has its share of economic problems, including sanctions, a recession, and relative trade isolation. Indeed, it had been made clear from the start that Iran was unable to finance much of the INSTC, with the Kremlin being forced to loan €1.3 billion for the Iranian side of the project.
The war may have temporarily disrupted Russia’s plans for expanded trade routes, regional budgets, and investment plans, but this is unlikely to be insurmountable for the overall bilateral relationship.
However, it does demonstrate some of the uncontrollable political and security risks that Russia faces when attempting to court alternative partners, as well as the difficulty the Kremlin faces in overhauling its trade away from the West.
About the Author: Emily Ferris
Emily Ferris is a Senior Research Fellow in the International Security Studies department at RUSI, specialising in Russian domestic politics. Emily has a particular interest in Russia’s military and civilian infrastructure including its railways, road and port systems, and the role this plays in advancing Russia’s political ambitions in the Indo-Pacific region, as well as deployed in conflict zones such as Ukraine. She also researches domestic political administrations in Russia’s Far East, and Russia’s military and political relationship with Belarus.
Image Credit: Shutterstock/ID1974.
