TABLE OF CONTENTS. Introduction 1. Re-Engaging Iran 2. The Great Powers Respond 5

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2 TABLE OF CONTENTS Introduction 1 Re-Engaging Iran 2 The Great Powers Respond 5

3 1 INTRODUCTION We at Wikistrat recently asked our analysts to consider how the relationship between Iran and Eurasia might change following the Iran nuclear deal, and what the possible consequences could be for these countries and other important actors. Many of our experts concluded that both Iran and its northern neighbors stand to benefit financially, politically and diplomatically from the lifting of international sanctions under the Joint Comprehensive Plan of Action (JCPOA) as it opens up a plethora of economic opportunities for them. Commercial in Confidence Copyright 2015, Wikistrat Inc. All Rights Reserved. Patent Pending.

4 2 RE-ENGAGING IRAN Of the Central Asian countries, Tajikistan is most likely to engage with Iran, including enhanced cultural ties and bilateral water agreements; these talks resumed in June of this year. However, the Tajik population is very poor and only three percent Shi a. The country is also unstable due to insurgency, and is quite dependent on Russia as well. Turkmenistan will probably build on already negotiated economic deals such as the Iranian provision of railcars to Ashgabat and commitments to joint infrastructure projects by making greater commitments to bilateral trade and increasing the strength of transportation linkages. A stronger Iran-Turkmenistan relationship may curb recent gains made between Washington and Ashgabat regarding security, but it will benefit Turkmenistan s painfully stalling economy in the short-term. At the same time, a post-sanction Iran will seek to leverage its power as a net gas exporter, likely cutting imports of Turkmen gas in the process. Seeking to fill the export void, Turkmenistan will likely give serious consideration to the construction of the Trans-Caspian Pipeline to Europe, a proposal that would bypass Iran through the Caspian Sea. But this strategy though providing the much sought-after gas linkage between Ashgabat and Europe could significantly harm Turkmenistan-Iranian relations. As a result, Turkmenistan is more likely to seek out an EU-Iran-Turkmenistan pipeline solution that could maintain the approval of all parties involved. However, the most likely case is that Turkmenistan will appeal for Iranian military cooperation. Islam Karimov President of Uzbekistan Iran s relations with Uzbekistan are likely to improve only modestly. Uzbekistan wants to transfer goods to the Middle East through Iranian territory, and since Tashkent is not a member of any economic union, the government does not have to deal with the hassles of collective customs regulations. However, the Uzbekistani government is also highly secular, concerned about Iran s regional ambitions and loath to antagonize the United States a fact that is likely to pervade their relationship even after the implementation of the JCPOA. Emomalii Rahmon President of Tajikistan Gurbanguly Berdimuhamedow President of Turkmenistan Nursultan Nazarbayev President of Kazakhstan Kazakhstan s leadership is looking to diversify relations beyond Russia and China, which Iran can easily exploit. However, Kazakhstan s economic relations with Iran will be limited by competing energy exports and regional transportation bottlenecks. Kyrgyzstan may be more Almazbek Atambayev President of Kyrgyzstan open to Iranian influence, but Kyrgyzstan is landlocked and more dependent on Russia and China than Kazakhstan, which has many natural riches.

5 3 In the South Caucasus, Georgia will attempt to pursue stronger relations with Iran, but such cooperation will remain limited until after tensions between the West and Iran have thawed further. Georgia is committed to its Western orientation and institutions and would not want to risk its integration into organizations like NATO and the EU. Additionally, Georgia could eventually get involved in the transport of Azerbaijani gas to the EU via the Trans-Anatolian Natural Gas Pipeline (TANAP), 1 further risking Georgia s relations with Iran. As with many of Tehran s developing ties, the full extent of cooperation between the two will depend heavily on Iran s other regional relationships. Armenia and Iran have shared interests in the region, with both holding similarly strained relations with Azerbaijan while also competing with Turkey for influence in the Caucasus. The two nations have recently agreed to the construction of a hydroelectric plant built by Iran in Armenia. Talks are currently underway for a proposed Iran-Armenia railway, and a gas-oil deal has also recently been struck. Yerevan will work quickly to relaunch several stalled infrastructure/investment projects between it and Tehran, with the ultimate goal of expanding bilateral trade beyond energy. In doing so, Armenia will decrease its economic dependence on Russia but risk nullifying recent gains made in its relationship with the U.S. The situation in Armenia s capital could even result in a tugof-war between Washington, Moscow and Tehran. Iran is primarily driven by three motivations in its relations with Azerbaijan: Azerbaijani independence s attraction for the Azeri minority in Iran, the strong relations between Baku and the West in security and energy, and the Azerbaijani government s strict secularism, which Iranian leaders have struggled to reconcile with their perception that the two states share a common cultural and religious history. It is unlikely, though not outside the realm of possibility that Tehran could use Hezbollah-like tactics to overthrow the government in Baku, particularly as Iran gains financial stability and independence. Giorgi Margvelashvili President of Georgia Serzh Sargsyan President of Armenia Tehran is more likely to continue with at least the appearance of good relations, largely due to the number of ethnic Azeris living within Iran s borders. Iran could consider selling its own gas to Azerbaijan for resell to customers like the EU, but Tehran is more likely to call for other concessions, such as the demarcation of maritime boundaries, before it allows the construction of a Trans-Caspian Gas Pipeline. Ilham Aliyev President of Azerbaijan For its part, Azerbaijan will probably pursue a strategy of caution and opportunism following the nuclear deal. On one hand, Azerbaijan will be eager to capitalize on the potential easing of tensions on all fronts that a nuclear deal will bring, and will place particular attention on the energy prospects that will emerge. To this end, Azerbaijan will be likely to begin diplomatic efforts towards persuading Iran to link its immense natural gas supply into the TANAP. Such an effort would not only provide Azerbaijan with even greater economic gain, but also serve regional stability that could lay the groundwork for greater all-around amicability in the post-sanctions era. However, a warming relationship with Iran might push away the United States, which has provided Baku with significant diplomatic, economic and security-related benefits, and risk shrinking the range of options at Baku s disposal. 1 The TANAP is a pipeline with a proposed completion date in 2018 that will connect Azerbaijan to Europe through Georgia and Turkey. Commercial in Confidence Copyright 2015, Wikistrat Inc. All Rights Reserved. Patent Pending.

6 4 Mohammad Ashraf Ghani President of Afghanistan After sanctions are lifted, Iran will be able to even better influence regional dynamics. For example, third party actors could encourage Tehran to deepen its relationship with Kabul. Russia may be willing to accept a more prominent Iranian presence in Afghanistan (even potentially accepting de fact Iranian rule in the border regions) if it meant curbing the flow of opiates into Russia and the Commonwealth of Independent States. China and India will likely become more regionally involved as Iran, Afghanistan and Pakistan discuss the plausibility of constructing gas pipelines to the east (which may well become the subject of a bidding war between Beijing and New Delhi). But difficulties remain: Iran s relationship with Afghanistan is likely to continue to be challenged by sectarian differences, and Iran has also been accused of supporting the Taliban.

7 5 THE GREAT POWERS RESPOND Despite the recent deal, Washington still has little interaction with Tehran and instead is engaged in a large-scale effort to reassure its regional allies, particularly in the Persian Gulf. This has involved a combination of strong diplomatic initiatives, such as the issuing of firm statements in continued support of U.S. allies, and security moves like enhanced arms sales. Such an effort will bring three major benefits to the United States: forcing Iran to realize that Washington is not weak or wary of continued involvement in region, proving to Saudi Arabia and other regional allies that the U.S. undisputedly supports them, and ultimately preventing escalating tensions between the two. In terms of the shared security interests between the U.S. and Iran, Washington will at best continue to pursue the same degree of uncoordinated cooperation with Tehran against ISIS in Iraq as it has for the past year being sure to keep the effort discreet and indirect though it may later seek more overt cooperation in ensuring stability in Afghanistan. Both will likely wait to hold serious discussions until the other s principles are tested and confirmed through the JCPOA. There still exists a considerable amount of distrust between the two nations; as demonstrated in relations between the U.S. and Vietnam, it can sometimes take decades for such discontent to truly thaw. The end of many UN sanctions against Iran will lead Russia to seek a deeper partnership in the face of greater international competition for Iranian attention and spoils in both Central Asia and the broader Eurasian region. The RussiaIran security partnership will grow (as recently seen in Syria) while Russia will also engage in greater trade with Iran to capitalize on the newly opened markets as a counter to its own sanctioned-restricted economy. Furthermore, Russia Commercial in Confidence Copyright 2015, Wikistrat Inc. All Rights Reserved. Patent Pending.

8 6 has already utilized the Iranian nuclear deal as a justification for further opposing the U.S. missile defense deployments in Europe. In addition, one of the most prominent avenues for cooperation is the desire of both states to curb the transfer of drugs across Iranian territory into Russia. Moscow may also look to Tehran to help prevent Russian citizens from joining ISIS. Despite several potential avenues for cooperation, Russia will also recognize the potential for regional rivalry to emerge between the two in Central Asia, an area traditionally dominated by the Russian sphere of influence where Iran now appears poised to increase its influence. Russia will therefore seek to subtly contain Tehran through the fortification of the Moscow-led Eurasian Union project. This would involve Russia expanding infrastructural investment by a moderate, but still notable, degree in Central Asia while continuing to develop the Eurasian Union in an effort to profit from and contain a newly sanction-free Iran. In the end, Moscow may find that its Eurasian strategy is too expensive to maintain in light of continued sanctions and greater competition from the West and China. Some analysts even see the possibility of increased competition between Tehran and Moscow over Iran s rise as a regional gas exporter. Beijing will attempt to bring the two countries even closer together in the wake of the Iranian nuclear deal, though Tehran is likely to push to keep its ties with Moscow and Beijing relatively equal. China will seek to resume its arms exports to Iran at a pace that will soon be greater than ever before. Chinese companies like Sinopec will participate in the Iranian economy more fully now that restrictions on financial institutions will be reduced. The PRC could assist with investment in consumer goods, aerospace, computers, and road and railway infrastructure. In addition, China will seek greater oil and gas exports from Iran. By pursuing these policies and moving closer to Iran, China will ensure that neither the U.S. nor Russia can achieve absolute dominance in Central Asia and will be in a strong position to cooperate with Iran to dilute U.S. influence. However, with Iran s economy now open to the world, China will also face strong economic competition from Europe. Iran will become more interconnected with the Western nations that have so often drawn Iran and China together, though a limited regional security relationship will still continue. Beijing s strategy will also risk overreaching into the Russian sphere of influence and jeopardizing its thus far lucrative relationship with Moscow. The relationship between India and Iran could be strengthened by the lifting of international sanctions, particularly concerning the development of pipelines for exporting oil eastward. Economic ventures will dominate most aspects of the Iranian-Indian relationship moving forward. The Iranian port of Chabahar could become a major economic hub as both nations cooperate on joint-tech ventures, civilian nuclear technology and resource acquisitions. Iran has vast natural gas deposits and with much of the European market and Chinese market saturated and facing slowing growth rates, India will serve as a growing alternative market. India and Iran are currently discussing the possibility of delivering natural gas to northern Iran, with Indian assistance in Turkmenistan, in exchange for swaps from southern Iran to India. The two governments are also discussing the construction of the Mideast-India Deepwater Pipeline (MEIDP) to replace the now essentially defunct Iran-Pakistan-India pipeline. Iran has the potential to become India s transport link to Central Asia, thus providing both with the opportunity to pursue further economic growth. The International North-South Transport Corridor (INSTC) will become central to Iranian economic policy in Central Asia as it links India with Iran, enriching the states along the way, establishing Iran as an important regional economic player and developing Iran s east. Iran will also work to make sure the INSTC works in conjunction with, rather than against China s Silk Road Initiative, maintaining economic balance. Despite likely protests from Pakistan, Iran may also be more inclined to offer some docking facilities to the Indian navy in order to offset U.S. forces across the Gulf. India s young and growing population could also permit more cultural exchange programs with Iran. Pakistan s main strategy regarding post-sanctions Iran will be the rapid establishment of the long proposed Iran- Pakistan (IP) gas pipeline, which will greatly boost Islamabad s ability to handle its perennial energy shortage. Though the nuclear deal and regional political tensions have previously prevented significant trade between the

9 7 two countries, Pakistan will seek to bolster the presently weak bilateral trade figures between Islamabad and Tehran. Together, these strategies for strengthened relations will bring Pakistan much-needed financial benefit, but will also stir tensions among its other regional partners particularly by inciting competition with the U.S.-favored Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline and causing a general uneasiness in Saudi Arabia, a major ally of Pakistan, which would risk dragging Pakistan into the deeper political contest between Iran and Saudi Arabia. Despite its ideological differences with Iran and the potential for regional rivalry, Turkey will still attempt to reap economic gains from the end of sanctions. Ankara will push for greater economic involvement in a newly open Iranian market not only for the overall economic growth benefits, but also to enhance the prospects for the traditionally less prosperous regions of Turkey that border Iran. Still, any relationship between Tehran and Turkey will depend heavily on each country s dealing with third parties, such as the Kurds, Russia, Azerbaijan and Armenia. In particular, the rift between Turkey and Iran regarding Syria could grow, though by focusing on economic aspects rather than the regional security dimension, Turkey will strive to avoid raising tensions while aiming to secure its short- and long-term economic interests. Of all the actors involved, the Iranian nuclear deal presents some of the greatest opportunities to the European Union, as Europe will be better poised to realize a deeper, lucrative relationship with Iran. The most important aspect of EU policy towards a sanction-free Iran will be an active push to import significant amounts of oil and link Tehran to Europe via a gas pipeline. In addition, the EU and its individual member-states especially Germany, France, and Italy will seek to cultivate stronger business and economic ties to supply European goods to the attractive Iranian consumer market. Commercial interests are likely to continue to drive the policies of the United Kingdom, France and Germany. A Conservative government will likely to remain sympathetic to U.K. business investment and interests in Central Asia, but this could change should a Labour government win the next elections. France and Germany, on the other hand, are likely to pursue investment so steadily that it could undermine the implementation of the JCPOA s snapback sanctions. Germany has historically been one of Iran s most financially supportive Western partners, though German public opinion towards Iran is quite unfavorable, and for historical reasons, Berlin will have to tread extremely carefully around Tehran s anti-semitic propaganda. Despite the fact that the deal will, if implemented properly, prevent Iran from acquiring nuclear weapons, NATO will probably continue to ignore Iranian and Russian criticism and continue plans to build a comprehensive shield against Iranian short- and medium-term missile threats to Europe. Nonetheless, while Europe shares little interest in any kind of military relationship with Iran, these increased economic relations will likely help lessen or at least distract both parties from the security tensions that have historically persisted between the two regions. In addition, this normalization trend is likely to continue as both sides grow closer due to their common fight against Sunni extremism and an increasing perception in Europe that Iran is an anchor of stability in a volatile region. The main risk that Europe faces from this strategy towards a post-sanctions Iran is that of being blinded to security realities by economic hopes. Commercial in Confidence Copyright 2015, Wikistrat Inc. All Rights Reserved. Patent Pending.

10 8 ABOUT US Wikistrat is the world s first crowdsourced consultancy. It leverages a global network of subject-matter experts via a patent-pending Collaborative Competition methodology to provide a variety of analytic services. Scenario generation, policy planning, risk assessment and red-teaming exercises are conducted by Wikistrat on a real-time, interactive online platform. DISCLAIMER This report is for informational purposes only and does not constitute financial, investment, economic, financial planning, trading or any other advice. You should consult with a competent independent financial advisor before making any investment or other decisions and should independently verify information on which you rely. The report is provided without any express or implied warranty of any kind including warranties of accuracy, completeness, or fitness for any particular purpose. Without limitation, although we have prepared this report based on sources we believe to be reliable, legally derived, and unbiased, we can provide no assurance with respect to the objectivity or any other aspect of its content. In addition and without limitation, this report may contain predictions, estimates or other information that might be considered forward-looking or predictive. Such statements are subject to risks and uncertainties that could cause actual results to differ materially. We assume no obligation to update the report or any part thereof or to correct any inaccurate or outdated information and reserve the right to remove or modify the report, in each case without notice to you or any other party. Without limitation, this report is subject to the Terms of Service posted on our internet website at ATTRIBUTIONS [cover] This work, cover, is a derivative of Islamic Republic of Iran Flag in row by Alborzagros, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license. [banner] This work, banner, is a derivative of Hassan Rouhani by Mojtaba Salimi, licensed under the Creative Commons Attribution 3.0 Unported license. [page 1 4] The President of Tajikistan Emomali Rahmon by sulton1987, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license; Meeting Vladimir Putin and Almazbek Atambayev by The Presidential Vladimir Putin Press and Information Office ( licenced under the Creative Commons Attribution 3.0 Unported License; Встреча Владимира Путина с Нурсултаном Назарбаевым by Пресс-служба Президента России( licenced under the Creative Commons Attribution 3.0 Unported License; President of Uzbekistan Islam Karimov, October 2013 by Ernests Dinka, Saeimas Kanceleja, licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license; Gurbanguly Berdimuhamedow by Saeima, licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license; President Ghani s official portrait by \\ arrior 786, licensed under the Creative Commons Attribution-Share Alike 4.0 International license; Ilham Aliev by Claude TRUONG-NGOC, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license; Serzh Sargsyan official portrait published on President official website by the Republic of Armenia; Prasidenten Margvelashvili by Bundesministerium für Europa, Integration und Äusseres, licensed under the Creative Commons Attribution 2.0 Generic license.

11 IRAN S EURASIAN OPTIONS AUTHORS: Ian Armstrong Daniel Urchick Lexie Van Buskirk Richard Weitz EDITOR: Steve Keller Eva Dubinsky GRAPHIC DESIGNER: Sheila Elizan