Iran-Finland Dialogue on “The Regional Geopolitical Developments and Energy Security” Iran-Finland Dialogue on “The Regional Geopolitical Developments and Energy Security”
On April 12, 2016, the Institute for Middle East Strategic Studies (IMESS) in collaboration with the Aleksanteri Institute held a joint seminar on “the Regional Geopolitical Developments and Energy Security.” IMESS’s resident and visiting research fellows, faculty members, as well as a number of Ph.D. and postgraduate students from different univer...

April 12, 2016

On April 12, 2016, the Institute for Middle East Strategic Studies (IMESS) in collaboration with the Aleksanteri Institute held a joint seminar on “the Regional Geopolitical Developments and Energy Security.” IMESS’s resident and visiting research fellows, faculty members, as well as a number of Ph.D. and postgraduate students from different universities in Tehran attended the seminar. From IMESS’ side, Director of IMESS Dr. Kayhan Barzegar, Dr. Maryam Pashang and Mr. Behzad Ahmadi Lefouraki, both visiting research fellows at IMESS, and from the Aleksanteri Institute’s side, Director of the Institute Dr. Markku Jalmari Kivinen, Dr. Veli-Pekka Tynkkynen and Dr. Markku Kangaspuro, senior scholars of Russian energy policy exchanged their views on the afore-mentioned subject.
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Dr. Kayhan Barzegar: Good afternoon! Welcome to the Institute for Middle East Strategic Studies. My name is Kayhan Barzegar and I am the director of this Institute. This is the first Iran-Finland dialogue and today we are going to discuss about energy security in the light of the regional geopolitical developments. We have good speakers from Aleksanteri Research Institute affiliated to the Helsinki University and it is a great opportunity to discuss energy security issues. 

I have already passed the CVs of our guests from Finland, so no need for further introduction. We have five speakers, each of them will talk for five to eight minutes, to just open the discussion laying out their main points, then we will have some time for the questions and answers section. The audience are our Institute’s researchers, Ph.D. and graduate students from different universities in Tehran.  

To just give you some introductory remarks, I would like to say that how much the nuclear deal between Iran and six world powers known the Joint Comprehensive  Plan of Action (JCPOA) has positively affected the international energy security through bringing peace and stability in the region. Right now no doubt there is a better prospect of good relations between energy consumers and producing actors especially between Iran and China, Russia and Europe and this is mostly related to the reality that Iran needs to be engaged in the regional issues resulting to further stability which will be key for the international energy security. But I just wanted to open up this discussion and I do not go further. I have some more insights on that which I hope I can come back to them in the Q and A section. Now let starts the seminar from our friends from Finland. We start with the director of the Aleksanteri Institute Dr. Markku Kivinen. The floor is yours. 

Dr. Markku Jalmari Kivinen: On behalf of the Aleksanteri Institute, we are very grateful for your institute for organizing us this meeting and the possibility to have a dialogue on this issue which is definitely an issue which will stay with us forever. I think the question of energy is so fundamental but for us in the Aleksanteri Institute which is a Finnish center for excellence in research on Russian studies, the energy issue is, let’s be honest, the key thing which we are covering in our research and have been covering I think for more than ten years we have organized research programs around this topic because also as it is the case with Iran also in the case of Russia, energy definitely is the key in many ways. 

Russia is highly dependent on energy. 25 percent of the Russian GDP, 50 percent of its debts and 75 or 67 depending like Iran on the indicators export is only energy. So it is a highly energy dependent country, not the worst case in the word highly dependent on energy and the real discussion in Europe has been considering how much this is a security issue. Is this a business issue or a security issue? 

And, then we tried to develop in theoretical modal in order to explain what is the case in this sense, how to explain all these aspects which are connected with energy because energy is not only the security; it is not only the business but it is also very much an environmental issue; it is very much a global issue also for example in terms of climate change and it is also an institutional issue connecting the institutional issue in that sense that the rules of the game of the energy sector are very different in different countries. 

In many countries, the state is the key player. I can even say that in most of the countries, the state is the key player. In such countries, Russia definitely in the energy sector is dominated by such firms, as Gazprom. But it would be integrating to say that Russia is completely a state dominated energy sector because there is a strong element that the private firms with strong privatization that are very happy with the privatization in 1995. When immediately out of one oil firm fifty firms emerged, some of them making huge fortunes for the Russians.

Now, for Finland the issue is of course toward this extremely good framework. How we should understand this. Is it for us a security issue or not? Is this a business issue? And, the Finnish parliament has quite recently made a fundamental decision to build new nuclear station in Finland based on Russian expertise and in cooperation with the Russian atomic agency and this happened in the conditions where the sanctions against Russia because of the Ukrainian crisis are still there. 

There was also an argumentation on this issue in Finland and the basic argumentation lines say that some were arguing against it because they argue that this is a security issue and some were for it because they were arguing that this is mainly a business issue and also an environmental issue because the environmental issue is connected with the nuclear energy and they are different from those of hybrid carbons which definitely the hybrid carbon issue is connected with the climate change and those kinds of problems are we know that the risks of the nuclear energy is connected with such names as Chernobyl and Fukushima. 

So, this is the problems we have in Finland now and for us I think we have been thinking and our main line of thinking has always been that this has to be both business issue, security issue and in line with the environmental issue. But how to find the kind of the balance between these arguments is the real thing. Of course if we think of the nuclear power and the Iranian nuclear issue that the real thing is of course the question of the nuclear weapons and the proliferation of the nuclear weapons and this is problematic. We are living in the post-nuclear world in a very fundamental sense, in that sense that all other games in the international arena are defined by the fact that the United States and Russia can destroy us all. If there were a major war, they could destroy us all and this defines the rules of the games in such places as Ukraine and Georgia in this European crisis. 

Now, the issue is that there is a strong element of high risk in this nuclear issue but on the other hand, this shadow of the nuclear power is also the light of the nuclear power in that sense that the nuclear details keep the great powers in some kind of (power). Whether the countries need nuclear weapons to protect their positions, if I have to decide, I will say that no. The proliferation on the nuclear weapons is extremely dangerous. The more we have countries that have nuclear weapons, the more we have the danger that this kind of crisis would happen.

 We have probable cases like in Pakistan and India which all may be more probable than the case of the United States or Russia. But this is my kind of introduction to this topic and I would give the floor to my colleagues. We are all very happy to be here. 

Dr. Kayhan Barzegar: Thank you! I thought this was very informative and knowing the European view of energy security. Now let’s listen to an Iranian view. Dr. Maryam Pashang is our senior fellow. She has a Ph.D. in international relations and currently works in Iran’s Oil Ministry. She would like to talk about the Iran-Finland energy relations. 

Dr. Maryam Pashang: Thanks for inviting me to speak here today. At first, I want to explain about the Iran’s oil and gas reserves and then I try to speak about the prospect of Iran-Finland energy relations. Iran holds the world's fourth-largest proved crude oil reserves and the world's second-largest natural gas reserves. Also, Iran has an important role in the world energy security and secures the supply of energy for consuming countries like Finland. Iran’s oil reserves: the British Petroleum said in its latest report that Iran’s crude oil reserves stand at 157 billion barrels, adding that the country ranks fourth in the world by having 9.3 percent of the world’s total oil reserves and accounting for 19.4 percent of the Middle East’s crude oil reserves. And, about the gas reserves, total volume of Iran's natural gas reserves has increased by 200 billion cubic meters to hit 33.8 trillion cubic meters, exceeding by 2.5 trillion cubic meters the natural gas reserves of Russia, which is currently the world’s top exporter of natural gas. 

The sanctions against Iran imposed by the United States and Europe hit Iran’s oil industry but with those sanctions this process has changed. We hold an optimistic opportunity in the main oil market players about the role of Iran in the security of the world. There is a positive atmosphere for investment in Iran for industry. As you know, they said our natural Iranian oil company is responsible for off-stream oil and gas natural projects and downstream private companies are active. 

International companies and other companies can participate in the exploration and developments in the oil and gas fields through a new model of contracts, IPC. IPC is replacing buy-back deals. Under the IPC, different stages of exploration, development and production will be offered to contractors as an integrated package, with the emphasis laid on enhanced and improved recovery. Historically, Iran is a reliable supplier of the oil and gas. On the other hand, security situation in Iran is more stable than other main producing countries in the region. 

Finland lacks domestic sources of fossil energy and must import substantial amounts of petroleum, natural gas, and other energy resources, including uranium for nuclear power and Finland is highly dependent on importing fossil fuels, and energy policy is at the heart of the government’s concerns.
 
About the prospect of energy relations between Iran and Finland, I want to say that Finland can find many opportunities in Iran’s oil and gas industry including investing in off-stream and downstream of Iran’s oil and gas industries, importing oil and products including gas in the form of LNG and technological cooperation. After lifting the sanctions, Iran increased its oil and product exports to other countries including counties in Europe and Finland can import oil products from Iran and this is a good opportunity for Finland. About Export gas to Finland, I should mention that Russia is exporting gas to Finland by diversifying energy resources and it is an important factor in energy security. Iran’s LNG can have an important role in energy diversification in Finland. 

About the investment in Iran to develop the joint fields and enhance recovery of oil reservoirs as well as secure development targets, Iran needs investment totaling 200 billion dollars. The upstream sector requires 130 billion dollars in investments, while 70 billion dollars needs to be injected into processing facilities and oil refineries. Much investment is therefore required to modernize the technology and operational mechanism to enable the country to compete with other sophisticated players in the oil and gas market. So, transferring the technology has a critical role in Iran’s development and also in the IPC contract. Thank you!  

Dr. Kayhan Barzegar: Okay! This was an Iranian perspective that how Iran and Finland should cooperate on energy relations with some facts and figures. I am sure you have some comments and insights to add to this but let’s take another Finnish perspective. Dr. Veli-Pekka Tynkkynen is the next speaker. He is the professor of Russian energy study in Aleksanteri Research Institute. Please in five minutes if possible.

Dr. Veli-Pekka Tynkkynen: Yes, I try to keep it in five minutes. Thank you! I try to concentrate on energy security as that was the topic and I would like to raise the question of how energy is understood as a leverage or how energy is understood as a weapon in some circles or how energy is understood as a form of diplomacy and of course I will discuss the EU-Russia energy relations. And if you look at the figures of course, the thing is that what we have is that the EU is the biggest buyer of Russian energy and Russia is the biggest seller for Europe but still in theory, if you look at it on the paper, Russia is more dependent on European markets than vice versa. 

But, of course, during the last years, during the Ukrainian crisis, this discussion has been very lively and if you look at the historical background of this issue whether Russia is utilizing energy as a weapon or as a leverage to have an effect on for example foreign policy of those countries that Russia does business with. Of course then the Ukrainian case is a special case in the sense because since the collapse of the Soviet Union, we can say that in Ukraine Russia has utilized the energy as more or less a hard weapon; in a way using sticks and carrots to promote those kinds of governments in Kiev that are in favor and think positively of Moscow’s policies. And that aside, if you then look at the situation in rest of the Europe for example the relations between Germany or France or Italy or Finland for that matter, then of course the way Russia is and has utilized the energy as a leverage is very different from the Ukrainian case. If in Ukraine it can be defined, at least some scholars define it as a hard energy weapon, then in the Western Europe the way Russia has utilized the energy can be defined as a soft energy weapon or as a leverage at least. And the way, for example in the gas business, Russian energy companies and of course first and for most Gazprom, the state’s gas giant, has utilized more carrots if in Ukraine as I said they used carrots and sticks in Western Europe it is mainly based on carrots. 

That is making the European gas companies and energy companies to compete with each other on who gets the best carrots, so to say, who gets the best benefits. This is, in a way, why these kinds of sweetened deal, as we can say, Russia has managed to prevent a common energy policy in the European space and this can be said and can be defined as leverage towards Europe. 

Of course, there are different strategies how to combat or how to in a way avoid this kind of leverage that Russia, I would say, very successfully has produced in the European space. Of course there are different tactics or different strategies how to combat this and one of them of course is diversification of your energy mix. For example, what Finland has done is a point in a case or a good case to show because our energy mix is very diversified. None of the energy sectors is dominating that is we have renewables; we have hydropower; we have nuclear power; we have gas, oil, coal despite the fact that most of the fossil energy comes from Russia. This kind of energy mix is a good, in a way, insurance towards this kind of leverage. 

In other European countries, this is of course not the case. For example, we have Baltic countries which are much more chronically dependent on Russian gas and there of course the situation is very different. Of course, another question is how to combat this you can say divide and rule tactic that Russia has utilized cleverly via energy is to of course to build a common European energy policy and of course this is something that has only recently moved forward mainly because of the Ukrainian crisis. So now we have seen discussions that we need energy union that would then control also how, for example, Gazprom does business with individual companies, individual energy companies in individual European member states and this is something that we will see in the future how this common energy policy will able to in a way combat this leverage that Russia, I would say, cleverly has utilized during the last decades or so. Thank you. 

Dr. Kayhan Barzegar: Well thanks, this was another European view of the energy security with a special focus on Ukraine. Now, we have Mr. Behzad Ahmadi who is our research fellow and a PhD student at Shahid Beheshti University.

Mr. Behzad Ahmadi Lefouraki: Good afternoon! Thank you Dr. Barzegar for giving me this opportunity to have my remarks about this interesting subject: Iran-Europe energy relations in the post-JCPOA era. Actually, because of the shortage of time, I will hint on my main points and I hope in Question and Answer section we can find enough time to go more in details. 

Regarding this issue, I can raise three questions. The first one is how the geopolitics in the Middle East is evolving or changing. The second question is what is the impact of JCPOA on evolving and changing the regional geopolitics and the third one is how JCPOA is creating an opportunity window to improve considerably energy relation between Iran and EU. 

Regarding the first question, I think it is better for me that I leave it to Dr. Barzegar. He can deliberately answer this question. But about the second question I think if we consider the evolving nature of the geopolitics of the Middle East, we can see that the consequences of this evolvement is mostly negative for the EU and you can find a lot of examples of this negative impact most importantly this refugee crisis and in this atmosphere, the JCPOA I think it is a turning point which is contrary to all negative dynamism in the region has enhanced regional stability and paved the way for better engagement between Iran and the world including EU and gave a new impetus to globalism in Iran’s foreign policy trend. 

The second main point regarding the second question is from the geo-political point of view in the post-JCPOA era I think Iran’s interest shows more overlap with the interest of international system including EU and Iran by accepting JCPOA and helping nonproliferation regime by supporting the nation state structure in the region I mean supporting the nation state’s structure in Iraq, in Syria and for supporting the diplomatic solution for the regional problems by avoiding identity politics and preventing tensions resulted from this policy and by complying with the universal norms has created the process; Iran has created this process in which the role and the place of Iran in international politics and in the region is reassessing. I mean this reassessment of Iran’s role actually is interest of Iran and provides the opportunity to expand ties and cooperation with the EU in various fields including energy relations and energy security. 

For answering my third question about the energy relation and JCPOA, I think the first point is before 2012 Iran was in the field of oil, the eighth supplier of crude oil to Europe. After relieving of sanctions, I think in short run the increase in oil production by Iran will keep oil prices low at the price level which is quite in the interest of the EU and this can help the EU in reducing inflation and rising the real incomes of its citizens.

The second point is in the field of natural gas. As you know and as Dr. Pashang said, you know the EU is the second largest gas consumer in the world and Iran actually is the largest holder of natural gas resources and I think this field can be a very good field for cooperation and Iran and the EU can be very good partners. On the consumer side, I think the EU’s economists have been searching for a secured and a more diversified energy sources and Iran could send gas to Europe through the Turkey corridor and conceivably through Trans Anatolian Natural Gas Pipeline or TANAP. The second point with regard to natural gas resources is reducing the dependence on Russian gas by diversification, as Dr. Tynkkynen said. I mean it is fully in line with the European Union interest including its energy security and it has a serious impact on the relation with Russia regarding Ukrainian crisis for example. 

The third point is the geographical location of Iran. It is very important that Iran can be a transit corridor that this geopolitical location allows Iran to be a conduit for transporting energy resources from the Caspian Sea, from CIS to Europe and as I said, we have routs such as TANAP or TOP. In conclusion, I will hint two points. In my opinion, in total JCPOA has provided a solution and a situation which allows Iran to have globalism as a foreign policy trend. That means Iran can use the region as a valuable asset to exploit and interact with international system. That means Iran is hardly trying to be a reliable partner in the region and in the field of security. 

The second point is that creating a long-term energy trade ties with the EU is an important aspect of Iran’s energy policy, energy diplomacy and as the other point is engaging international investors for longer periods of time, I think JCPOA and the rollback of sanctions by the EU in the field of gas and oil sectors give Iran an opportunity to come out of this isolation and once again create very good ties with the international partners and strengthening the economic ties between the EU and Iran. Thank you so much.  
  
Dr. Kayhan Barzegar: Thanks! Now we have Dr. Markku Kangaspuro who is a senior scholar of Russian studies again from Aleksanteri Research Institute.

Dr. Markku Kangaspuro: Thank you! I try to be also brief. I am not so much speaking about energy security but that is more about the energy and the global security. I just try to raise a couple of points about this issue. The first thing why Russia and energy are connected to the global security is of course the fact that Russia is a nuclear weapon superpower equal to the United States and that means that it has to be taken into consideration in all counting that if we want to create a sustainable security system global way, I am not only speaking about Europe. This is the first point. 

The second point is that given the fact that after the fall of the Soviet Union, Russia has been permanently in move and an unstable society and country. We can interpret also the Ukrainian crisis as somehow late consequences of the fall of the Soviet Union, the Soviet empire. And the situation is unbalanced and the unbalanced security, political and also economic situation in the era of the former Soviet Union and the Eurasia means that the energy is there. There are Gazprom gas pipes and in central Asia and the Caspian Sea area oil and gas sources which creates and connects the Russian interest and the development of Russian society and the global energy security all of them together. 

In the area of the Baltic Sea, we have seen a cause and on the reflections of the Ukrainian crisis it has reflected; also we do not have in the area of the Baltic Sea and Northern Europe; we do not have that kind of crisis and contradiction, I mean direct military contradiction between Europe and Russia we see the increased tension, also military tension and security draft or decreased draft on security issues on the area of Baltic area and that this has had a direct reflection and consequences of this I see the big changes of the former Soviet Union and current Russia and this development is continuing and it has not stopped and that for that reason the question of west and east after that how Russia and Russia’s domestic policy is developing, how Russia’s economy is developing, what is the directs that it will take because it has capacity to [save] the whole global security as well and as we feel, it is part of the Middle East or Syrian case as well not only in Europe. 

I see that Russia has in principle two main principle problems to be solved. The first is that and actually the ways how to do that is only one big problem and the big problem is that how it can get out from this energy source trap and energy dependence. As we can forecast as my colleagues just said, the price of energy will continue to stay at a low level and that means that Russia who has got used to that the energy prices double or triple of that level has constructed and also planted economic and social development on this oil price level and that means that it has a permanent crisis and a permanent need for structural changes. But we do not know if it has capacity to do it. Does it have resources to do it? Does it have a political will to do it? And after that there are, to exactly put it, two ways for the Russian state to keep its leverage over the former Soviet Union with its space of interests. 

The first one of course at the worst case is that it starts to rely on the military power. It is a big military power in the European context and that it has enough big capacity also to influence and they used military power on its own spare of interest and this is the worst case. The second case is that it really is able to start reforms diversification of the economy in a democratic section of the society and it starts to develop to get rid of this energy trap and start to develop more modern type of society and it is of course also the interest of the whole Europe and in a bigger picture also the interest of the whole world, global development. So these were my points. 

Dr. Kayhan Barzegar: Thanks! This last part was somehow related to the geopolitical implications of Russian energy policies somehow. I think the question raised is how the Russian military presence in Syria will impacts on the global energy security. Perhaps you would like at some point to answer this question. Now I think we have had a good setting of presentations. But before we go to the audience let me get back to my first point at the beginning. I wanted to emphasize that how much the nuclear deal of Iran will positively impact on the regional security improving the relations between those countries that are significant in the regional energy security like Iran-China relations, Iran-Turkey relations, Iran-India relations and even Iran-America relations. For instance,  when  the sense of insecurity resulted from the nuclear standoff is removed from the Iran-US relations, even a few steps, then this will positively act on regional stability and stability and this is good for the energy security in several aspects. Take for instance battling the so-called Islamic State called as Daesh which is now exporting its own oil, out of market, which itself brings instability for energy security by disrupting the global natural price and is an obstacle for foreign investments and exploration.  But let me again stop here and get some comments.  

Dr. Markku Jalmari Kivinen: Yes, thank you for very interesting points. I would like to comment briefly on all of these presentations. I think the idea that Finland could also benefit from Iranian energy production and to the fact that Iran is coming to the energy market is a valid point and it is also connected to another aspect, the both significant aspects, which is the security aspect that this nuclear deal really made it possible that Iran will prosper in the future because there is kind of, at least seeing from the outside, its prospect of having developmental partners which is based on Iranian energy resources which are competitive in the global market.
 
Then, as far the European Union is concerned, I think in those terms definitely I would maybe more than my colleagues emphasize that there is competition in the competitive aspect because I do not think that the idea of some kind of general energy policy of Europe is by any means realistic. It is not on the Russian making that the individual countries in Europe made their own choices. For example, the fact that Sweden has given up nuclear power completely as well as Germany is not the Russian making. It is something else. It is connected with their own choices which are significant on a global scale and also Germany to create competitive economic markets for the renewable sources as a unique solution in Europe which may have a global significance and these kinds of efforts can be raised on the fact that each of these countries has their own problematic concerns in Europe.

As far as the common European policy against Russia is concerned, I doubt this against Russia is relevant in economic terms rather it should be together with Russia creating interdependency which connects Russia to the European structures and I think this has been the German line difference and they are not naïve. They are not played by Russian some kind of interest but rather by their own solution, by their own policy priorities.

As far as Finland is concerned in Europe in general, I think what we need is competition. We do not really need a global diversification of energy resources and also very global solutions to the global energy problems which we have so that we have also the prospect of for example the fact that the energy demand is growing in the world all the time. It is very difficult to say why the energy prices now are down. I do not think that any economist can really predict how it will develop in the future. We should pay attention to the fact that is the energy price a big concern on the basis of today’s situation. This is something also.

As far as Finland is concerned and the economic business frame is concerned, for example the Russian gas we have received since 1974 and we have a hundred percent dependency on Russian gas without any interruptions because we know they will work on the prices. This is a normal economic interaction whereas Ukraine has never … the word price if there is such gas pipe. So I think Iran has a prospect of coming to Finland’s market by LNG because it means for us the diversification of the energy sources but it is not for us. Maybe it is the security issue, it is the business issue and to understand that this business is better when it is based on the competition than when it is based on the [contrasts], production [contrasts] or consumption [contrasts]. 

Dr. Kayhan Barzegar: Good points! Thank you Director. This has raised another question and that is how much Iran’s potential for exporting energy to Europe is significant? Now we go to the floor. Please raise your questions and comments in short. 

Question: I am a Ph.D. candidate of International Relations at the Islamic Azad University, Science and Research Branch. My comment goes to Dr. Tynkkynen. You said Russia is using its energy policy as a leverage. My comment is about the relation between the European markets for the Russians and the dependence of the Russians to European markets. As you know, last year, some contracts were signed between Russia and China. I think China can be the biggest consumer in the future for the Russian gas. Also, Russia has tried to connect its gas sources to the Indian market. I think in the future, Russia can use its energy leverage more against Europe. So, I think the Europeans in the future will be faced with diversified energy sources. I know that the American shale gas will be one of the best chances for Europe.

Dr. Kayhan Barzegar: The main point of the question is how Russia can diversify its sources? Next please.

Question: Hello and welcome to our Institute. My name is Anna Yousefian and I am a visiting fellow at this Institute. I have two questions. I think you somehow answered the comments at the end but I just want to ask them again. As you mentioned, there is this concern that how to bring balance between the security, business and environmental aspects of energy in this region. To what extent, the JCPOA can guarantee an initial framework to bring that balance? I mean you mentioned the security but you did not talk about the environmental aspect and business aspect. And, the second question is about that there is Russia phobia among the Europeans somehow. I want to know to what extent, that gave impetus to reach a deal with Iran? In other words, did it (Russia phobia) have any influence in reaching a deal? Thank you!  

Dr. Kayhan Barzegar: Okay, this is a question for all of our Finish guests. Next please.

Question: My question is about the United States shale gas. As you know, there are the LNG exports from the United States to Europe. Since the Western European countries are always importing energy from the other sources, do you think it is probable to expect competition between Russia and the United States in the Baltic zone? Because the Baltic zone has always been a backyard for the Russian energy exports. Now, if the United States penetrates in this area, how much is it possible for you to see dispute and competition in the Baltic zone? Thank you so much. 

Dr. Kayhan Barzegar: Okay, any other questions at this round? Mr. Director, would you like to start? 

Dr. Markku Jalmari Kivinen: Okay. I would like to say something about this environmental aspect but my colleagues can complete it, environmental issues as well as the economic aspect. We have a very diversified economic … it means economy is based on a very diversified energy sector and this is mainly privately organized and the private organizations are, how should I say, society-based. For example, our new … is based on industries, based on local energy companies who need local energy production and so forth. 

But we have to understand that the real environmental challenge is connected with energy of the globe. They are connected with the policies to get rid of hydrocarbons in the world now and how that will happen is contradictory. Even in this condition because even Finland has committed itself to Kiev Protocol and it is very much committed to this climate policy. 

When the price of coal is as cheap as it is now, the Finnish industry is using more and more coal instead of oil and instead of the natural gas which has also its position in Finland. So this is very contradictory because these prices are not regulated by Finland. We are depending on the energy prices on the global level and this creates us dilemmas which are not [in our favor]. But definitely we have a very strong climate change starting and our institute has established cooperation to what really climate change is and [how coalmines can help us]. We together with Veli-Pekka have formulated a manifesto in order to show that. This climate change problem is not something which we can solve on our own. This is global and it needs cooperation from such countries also as China and Russia. The problematic thing I think in this situation is this distention in the world. Although these countries are committed to get a protocol or they have new reforms. So this is kind of the answer to that question.  
 
As far as the Russia phobia is concerned, I think this is a real thing in Europe to some extent but not so much in Finland but it is also something which comes up and comes down. So we have to understand that because of the Ukrainian situation… if the Ukrainian situation escalates, then the Russia phobia in Europe will grow and I think if we hold the Russia phobia aspect, it is slowing down and this understanding is now spreading in Europe.

Dr. Markku Kangaspuro: If I can give a small notion about this Russia phobia, I would say that it does not prevent for example Germany to build up under the Baltic Sea the second gas pipeline from Russia to Germany and it did not prevent Italy to make pre-agreement with the Russians also to build a new pipeline. So, that means that I think the logic is more business and diversification and to try to get the cleaner energy than this Russia phobia in the politics. It will influence but I do not believe that it gives any special for Iranian business as well. 

Dr. Markku Jalmari Kivinen: If I may continue, concerning this need for common European energy policy, I think the problem with European energy policy is that there are double standards. There are double standards in gas policy; there are double standards in nuclear policy. For example, South Stream pipeline was brought by Brussels to be built via southern group to Europe and now Germany is moving forward with [no stream]. So that erodes the common will among Europeans because other countries cannot do it because it is considered as a security threat to European energy security and others can. The other example is Hungary is about to build a similar kind of nuclear power plant built via Rosatom, a Russian partner that was blocked by Brussels but the power plant in Finland is moving forward and that is what I mean that we need common European energy policy that does not have double standards in its own space. 

But what comes to those questions concerning the future of Russia’s leverage, I think definitely in 20 or 30 years China and India will become major partners with Russia; that is a new situation of course for us. But before that of course there is an urgent need to move towards renewable energy sources and what is needed on the side of renewable energy is increasing the share of the renewable energy that is gas and that is the reason why I think, in my view, for Europe and for the globe as a whole it will be better that we would have a strong common energy policy that would enable us to not to diversify away from Russia but to keep the partnership in energy and that we rely on Russian or Iranian or whatever gas it is to enable this increase in renewable energy resources because on the side, we need fluctuating when there is no sun, when there is no wind we need gas which is a good source on the side of the renewable energy sources. So that way I think this common European energy policy is related to our global challenge that is very strong.  
   
Mr. Behzad Ahmadi Lefouraki: Regarding the question about how much is there the possibility to export Iranian energy to EU, I think in the post-JCPOA era, of course it should be noted that there are a lot of political and geo-political complexities still involved in Iran sending its gas or oil to Europe. But especially in the field of gas, I think in the long-term it is a very high possibility that Iran can have a very tight cooperation with the EU. As professor Tynkkynen said, the diversification of energy resources and especially the need for all resources such as Iranian gas could be very highly possible. 

And, in my opinion, but the indirect coming back of Iran to the energy market is very important because the psychological effect of this turning back of Iran to the energy market it is somehow indirectly affecting the energy security in the market and any secured supplement of energy for the EU and in the field of oil, I think according to recent statistics we are exporting somehow 1.7 to 1.8 million barrels per day and according to official resources, we are exporting almost 35 percent of Iranian oil to the EU and that means if you have this 1.7 to 1.8 million barrels per day, that means we are almost exporting nowadays 500 thousand barrels per day to EU and considering that we are planning to increase our production of oil to 5 million barrels in a very short time. I think in the field of oil Iran has a very opportunity to have a very good cooperation with the European countries. Thank you so much. 

Dr. Kayhan Barzegar: Okay! When the Ukrainian crisis triggered and Russia intervened in Ukraine, there started this debate inside Iran that what would be the position of Iran in dealing with this crisis. I can tell you that that debate was somehow connected to the energy security. One strong debate inside Iran started to say that this is a great opportunity because we now can export our energy to Europe and Russia is a rival. But Iran did not take that position because it was too soon to say that if Iran has currently the potentials of exporting gas to Europe and some argued that this will be perceived by the Russians as an act of rivalry. So, Iran took a neutral position. Of course it is a bit positive neutral position but still somehow when you talked of Russia phobia, this triggered me to say the Iranian view of Russia phobia as well. It seems that it is a global matter to say about Russia phobia. We also have this debate inside Iran. But I think this Russia phobia sentiment is coming from the general passiveness of handling the Russian affairs at the global equations. The fact of the matter is that Russia as a country that has vast energy reserves and is trying to express itself in a way that preserves its national interests, of course we have the Russian energy policy conducted to impact strategic matters which is another thing. But still I think that Russia phobia is something that is more related to our own passiveness in dealing with Russia. But there is a great deal of connection between Iran and Russia energy security and Europe and somehow we need to consider this triangle into consideration.  But let’s go to Dr. Pashang to get her views on this. 

Dr. Maryam Pashang: I think I should explain about the shale gas. The production of shale gas in the United States has a regional effect. It does not have global effect. I think the EU and the Middle East have little effect from the increasing shale gas production in the United States. 

Question: I have a short question if it is possible. Actually, considering the current situation in the region, Iran and Russia particularly are focusing on these two factors. We can see some kind of security dilemma because these two countries are at the same time competitors and also they cooperate in some regional issues. We also consider the nuclear agreement where Russia also played a crucial role. How the EU and particularly Finland see this kind of competition and cooperation between Iran and Russia in which we are both gas producers and also competitors that we normally count on Russia’s support but at the same time, they do not like to see Iran as a rival. How do you see this? 

Dr. Kayhan Barzegar: Director, would you like to start?

Dr. Markku Jalmari Kivinen: Yes, I think competition is natural among different firms. If we speak of nuclear or other energy forms, there is always competition between firms and individual and it is quite natural that all the producers could be competing and the competition is kind of civilizing influence. It creates the pressure for example for us in a nuclear way. When they started their first case, they started to develop their technologies in order to be competitive and this is why our competition is something which produces the possibilities and it is something which is beneficial for people in general terms. 

Of course, it means to some extent contradiction but it is not a political contradiction. What is concerning is the Syrian situation and the cooperation in the security issues between Iran and Russia. I think everybody is against seeing the Daesh. That is not a problem at all. I think everybody would agree on that. But of course we see it from a small power; it is not a small country like Finland. We would see that there is also a complex form of creating competition not only economic competition but also about the results behind this kind of sphere of influence game where the small powers are not in but where regional powers like Iran and the global powers like Russia are in and this kind of sphere of influence game should be put into a some kind of realistic context. But first we should eliminate the immediate threat of terrorists. That cannot be an issue. 

But I doubt this kind of cooperation which Russia is to some extent trying to develop that they say that for example that the Syrian Shiites are closer to Orthodox in the West. I doubt all of these kinds of civilizational arguments in politics. I think the security politics is open to the religions. I am not saying that religion does not play a role but it is not the basis for creating coalitions or it is not the basis for some kind of inevitable contradictions. I am glad to rather argue that religions are used for different purposes and big powers presently like the United States and Russia used also the Shia and Sunni contradictions in their own interest. 

Dr. Markku Kangaspuro: Very shortly, I think that we see it in quite positive way that Iran is involved in these peace negotiations and try to settle the Syrian conflict or civil war there they are participating and also fighting terrorism and Daesh and the same way, we see that Russia is, in a realistic way of speaking, a part of this whole story and in this respect we have our own policies as being based on the fact that we used to recognize the power of the Soviet Union and we have recognized the meaning and importance of Russia as well and we base our own foreign policy on that basis and that is what we see also that what has to be done all over but at the same time, we see it very important that world order is not constructed on the base of who has to pick us the military power. We really support this role of game to international law and basic politics because it is the only thing that we can base our own influence and negotiations and these rules but we do not have any other means.

 Dr. Veli-Pekka Tynkkynen: Just briefly on the competition issue between Russia and Iran concerning the energy sector and energy developments. I think what is very interesting from the European point of view of course is how your cooperation in the field of gas is going to in a way develop in the future because as we know that Russia and Iran and then Qatar are the three biggest countries with gas deposits and of course what you do together has very big importance of course not only for the European energy future but I think also for China and India as well because of course it is going to be based on more and more LNG and in a way this kind of global markets may emerge. So that is why it would be interesting if we have time to hear about the Iranian point of view in this question. 

Dr. Kayhan Barzegar: We need to finish now. I think it was a very good seminar. We outlined some important points/ views from Iranian and Finnish perspectives. I thank you all for being here. We have a small reception and we take a group photo. Good luck and thank you very much for visiting us. We are looking forward to welcome you again (audience applause).


Report: Fahimeh Ghorbani, a research fellow at IMESS


For Academic Citation: 
Iran-Finland Dialogue on “The Regional Geopolitical Developments and Energy Security”, institute for Middle East Strategic Studies, April 12, 2016.

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