Ukraine Crisis Could Complicate Iran Nuclear Negotiations

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Heightened tensions in Eastern Ukraine could upset delicate diplomatic balance; Increasing competition for influence in Middle East changing geopolitical landscape  

Monday, April 28, 2014 5:10 am EDT

"Middle East defense budgets grew by 12.1 percent in 2013, the fastest globally"

DUBAI (April 28, 2014) – Events in Ukraine could impact the outcome of the Iranian nuclear talks in Vienna, according to new analysis released today at the IHS Forum in Dubai. IHS Inc. (NYSE: IHS), the leading global source of critical information and insight, discussed the current state of nuclear talks and their potential impact on the Middle East with businesses gathered from around the world.

“The on-going crisis in Ukraine has the potential to complicate nuclear negotiations and undermine the unity of a deal,” Tate Nurkin, managing director of IHS Aerospace, Defense and Security, said.

“Continued Russian efforts to erode Ukraine’s sovereignty and destabilize its government—especially if successful—will almost certainly lead to additional US and/or European retaliatory diplomatic and economic sanctions against Russia. This would also result in the hardening of diplomatic relations between Western powers and Moscow.”

Heightened tensions could upset delicate balance

“The success of nuclear negotiations requires unity of position among involved countries. This is a delicate balance that has proven difficult to achieve in past negotiations.”

Heightened tensions in Eastern Ukraine and the resulting deteriorating relationship between the US and Western Europe and Russia could undermine this balance and drive Russia to offer watered down versions of proposals outlining the future dimensions of Iran’s enrichment activity. 

Such action from Russia would be extreme and would bring harmful effects for Iran and Russia and for Middle East security, but it may well support broader and more deeply held Russian foreign policy objectives of, in the words of Russia’s Deputy Foreign Minister Mr. Sergei Ryabkov, “the restoration of historical justice” in the former Soviet space.

“While the US, Russia, China and Europe do share the common interest of ensuring Iran does not develop a nuclear weapons capability, these interests should be thought of as roughly overlapping rather than fully aligning,” Nurkin said.  

“The US, Europe, the Gulf, Israel and most of the rest of the Middle East view a nuclear Iran as a far more fundamental concern than Russia and China, who view Iranian proliferation as problematic and challenging, but ultimately manageable.”

Change in Middle East geopolitical landscape is complicating negotiations

Further complicating negotiations is the fact that negotiations are taking place within the context of an increasingly competitive and uncertain regional geopolitical landscape. The region is marked by a perception of inconsistent US leadership, US tensions with traditional regional allies and partners over the situations in Syria, Iran and Egypt, and growing Russian activity and influence. Increasingly, we are also seeing China trying to secure deeper relationships with its notable energy suppliers and to begin to provide a hedge against US influence in the region. These competitions are especially prominent in the region’s emerging defense markets. 

Increasing competition for influence seen in regional defense markets

“Middle East defense budgets grew by 12.1 percent in 2013, the fastest globally,” Nurkin said. 

“Russian and Korean companies, among others, are active in this growing market and are positioning themselves for future opportunities. For example, Iraqi imports of Russian defense equipment will jump from $41 million in 2009 to $666 million in 2014. This year, Iraq became the fifth largest importer of Russian defense equipment in the world.”

The jump in Iraqi imports of South Korean equipment is even more drastic. In 2009, South Korea exported $33 million in defense equipment to Iraq. In 2015, that number will skyrocket to $848 million, making Iraq South Korea’s largest defense market.

With $644.7 billion expected to be spent on defense in the MENA region over the next five years, key influencers may be changing. Reports in February of a $3 billion defense export agreement between Russia and Egypt is one of several other recent deals indicative of the nascent, but evident, competition for defense business in the Middle East and for the access and influence these relationships typically bring.

Nuclear deal pathway narrowing

“Developing a compelling and mutually acceptable long-term deal on Iran’s nuclear program is one of the most consequential current issues in international affairs and will have significant implications for regional stability and global security, regardless of the dimensions of any final agreement,” said Nurkin.

“However, the pathway to a deal is growing narrower with each passing day as the combination of intensifying competitions in the Middle East, fragile partnerships and, significantly, hardening domestic political fault-lines all build. This environment is also increasingly affected by, connected to and playing a role in broader geostrategic competitions anchored in East Asia and more recently and urgently, Eastern Europe.”

IHS Forum Dubai Media Accreditation

Members of the press can register for a complimentary pass to the IHS Forum in Dubai, held at the Intercontinental Dubai Festival City, from 27-29 April. To register, please send an email with your name, title and outlet details to press@ihs.com

Agenda

A full agenda for the IHS Forum Dubai and additional information can be found here:  http://ihsglobalevents.com/forum/dubai2014/agenda/

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