OPINION | The Iran Nuclear Deal: Implications for Ukraine by ICPS Ukraine
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OPINION | The Iran Nuclear Deal: Implications for Ukraine by ICPS Ukraine

OPINION | The Iran Nuclear Deal: Implications for Ukraine by ICPS Ukraine

By International Centre for Policy Studies, Ukraine

The US-Russian compromise on Iran is perceived as an element of broader geopolitical agreement of the parties, including on Ukraine. The willingness of Russia to make concessions to the US in the agreement on Iran was made possible after a series of contacts at the highest level, which were then fixed at Victoria Nuland’s and Grigoriy Karasin’s level.

For the Obama administration, the Ukrainian question is of only second priority after the Middle East. "Islamic State" has become a major threat to US interests and its allies in the Middle East. Despite the confrontational nature of US-Russian relations, Washington does not deny the possibility of cooperation with Moscow on the Iran issue, the  threat of "Islamic State" and other problems of world politics.

The United States has joined Russia’s demands and urged Ukraine to make constitutional amendments on the special status of the insurgent-controlled territory of Donbas and hold elections in that area simultaneously with other local elections in the country. Besides geopolitical priorities, the US feels “Ukraine fatigue” resulting from the Ukrainian government’s inability to make progress on the conflict settlement, carry out promising reforms and tackle rampant corruption. American policymakers repeatedly mention the popular saying that Ukraine never misses an opportunity to miss an opportunity. Therefore, the Obama administration has opted for a tactical pause in fierce confrontation with Russia over Ukraine for the sake of addressing numerous Middle Eastern threats.

The Iran nuclear deal has obvious short-term effects on Ukraine, namely that the country is implicitly forced to agree with previously unacceptable conditions legitimating DPR and LPR groups. Meanwhile, the long-term effects of the US-Russia compromise on INP and the Ukrainian crisis are not as clear. Ukraine still has chances to restore itself as a subject in negotiations in case Kyiv takes a number of successful steps: implements reforms, combats corruption, resumes economic growth and pursues consistent and sophisticated policy towards the occupied territories of Donbas and Crimea based on national interests.

However, Russia’s strategic gain in the Iran nuclear deal and the changing developments in Syria and Kyiv’s acceptance of constitutional amendments on Donbas seems ambiguous. Moscow may be proud of the tactical advantage rather than the strategic victory so far. Falling oil prices will increase the costs of Russia’s aggression in Ukraine and weaken the oil-dependent economy. Subsequently, the decline in oil revenues will affect both the welfare of Russian citizens and DPR/LPR economic and military capabilities. Russia is expected to face so many long-term internal challenges – ranging from a non-modernized economy to an authoritarian political system – that none of the short-term diplomatic advantages could make up for its problems. Nevertheless, Putin’s regime is endurable enough to survive the current low oil prices for over a year. The US-Russia arrangement does not necessitate Ukraine’s strategic loss, but it signals the mistakes of counting on foreign assistance given fragile state institutions, the lack of internal progress, flourishing corruption and inactive foreign policy.

Following the Iran nuclear deal, the evolving international situation has given an opportunity for cooperation between Kyiv and Tehran, although its prospect remains conditional so far. Besides energy, the end of Iran’s isolation will enable closer bilateral economic cooperation. Ukrainian producers who lost the Russian market but are not competitive enough in the EU may diversify their exports by virtue of third countries. Iran, with a population of 78 million, people is very promising sales market for some Ukrainian goods, namely agricultural production. However, Ukraine will have to take into account European and Russian economic penetration in the populous Middle Eastern country. There are also two motivating factors in Iran-Ukraine cooperation in the field of aviation. Firstly, Ukraine is currently searching for new aviation partners following the breach of contracts with Russia and the increased focus of Middle Eastern countries on the industry. Secondly, Iranian aircrafts, hardly hit by the sanctions, are in need of renovation. Ukraine is capable of supplying numerous aviation spare parts to address the needs of the Iranian aircrafts. Finally, Ukraine will come across fewer obstacles in case the country is engaged in perspective projects with Iran on a multilateral basis.

Ukraine needs both a modernized economy and diplomacy to avail itself of the new opportunities to the fullest. However, Ukraine can hardly compete with European, American, Russian and Chinese companies in Iran without replacing Soviet-style management and technologies.