TEHRAN (Basirat)- Following the extension of EU sanctions against Russia as well as renewal of Iran Sanctions Act (ISA) by the US, it is expected that Iran and Russia will increase their trade business and cooperation in various spheres in the future, including foodstuffs, small-scale business, and weapons.
Following the extension of EU sanctions against Russia as well as renewal of Iran Sanctions Act (ISA) by the US, it is expected that Iran and Russia will increase their trade business and cooperation in various spheres in the future, including foodstuffs, small-scale business, and weapons. BY Dr. Motahareh Hosseini
Russia has long been one of Iran's main economic partners. A major portion of Iran’s trade with Russia used to be done in Qajar era. Perhaps it was in the era of the deposed regime of Mohammad Reza Pahlavi that Russia's trade share in Iran’s economic market witnessed a significant decrease. But before and after Iran's last monarch, Russia’s share of the Iranian market has been large for different reasons. Maybe the main reason is that Russia has had the largest economy in Iran’s neighboring countries.
In the past years, anti-Tehran sanctions were one of the economic issues which tied Iran and Russia closer together, and now the European Union’s (EU) sanctions against Moscow is doing the same. Therefore, Iran edged closer to Russia and China for economic cooperation and to reduce the effects of sanctions. It was also inclined to smaller economies among its neighbors and even farther like ones in Latin America. Having interaction with dynamic economies such as Turkey and Persian Gulf’s southern littoral states, Iran managed to meet its needs with higher price and lower quality alongside the black-market economy. Now, it is Russia which has been put in Iran’s place and is experiencing the sanctions era. Even statements by Russian officials show that Moscow views Iran as a model and tested experience of sanctions era.
Russia, as a large economy which has a good knowledge of Iran’s market, has been a major manufacturer and exporter of certain basic structures and technologies like railway system, arms and atomic energy to Iran in the past years. In the meantime, it has been a promising market for Iran’s agricultural products and foodstuffs before and after sanctions. During the sanctions era, the two countries signed major trade agreements from among which we can refer to initial deals of subway train wagons, oil tankers, fertilizer, and development of Iran’s Karoun power plant. Iran is also continuing its cooperation with Russia in the field nuclear energy.
Taking a look at goods traded between the two countries in recent years, one can learn about Iran-Russia’s trade priorities. In 2010, Russia exported goods worth about $415 million to Iran, including raw timber logs, nuclear reactor’s equipment, paper, coal and coke, iron and meal. Also, Iran’s export of pistachio, pickled cucumber, raisin, cabbage, jam, jelly, potato, date, kiwi, tomato paste, and tobacco to Russia in the same year stood at around $329 million.
But the total turnover between Iran and Russia surged in 2011 and reached to $758 million. Similar goods but this time high in volume were imported to Iran, However, Iran’s export to Russia did not change much compared to the same period last year and reached $366 million.
In 2012, Russia’s imports to Iran witnessed a growing trend as Moscow exported goods worth around $1570 million, including wheat, steel, coke, paper, steam tribunes, bean and soya bean. Iran’s exports to Russia also grew in 2012 and reached $494 million. The goods mainly included agricultural commodities, cement, heater, house hold commodities, and Polyethylene.
In 2013, the growing trend was halted as Russia’s exports to Iran fell sharply and reached $309 million compared to the same period last year. Also, Iran’s imports from Russia decreased in the same year and stood at $677 million. Raw timber logs, sunflower oil, corn as livestock feed, barely, iron products, wood pulp, meal, camera, book, tractor and locomotive accounted for most of the imported goods. Iran also mainly exported cucumber and pickled cucumber, complementary medicine, vegetable, white cement, tomato paste, kiwi, cabbage, pistachio, date, sour cherry, potato and watermelon to Russia. At present, direct trade between Iran and Russia stands around $500 million.
Iran mainly exports foodstuffs and agricultural commodities to Russia while Russia exports raw timber logs and paper more than other goods to the Islamic Republic.
Russia’s imports from Iran in 2014 were mainly cucumber and pickled cucumber ($30 million), complementary medicine ($29 million), white cement ($26 million), vegetable ($15 million), grapes ($13 million), kiwi ($12.5 million), cabbage ($12.2 million), and pistachio ($19 million). Russia is eager to import more fruits, vegetable and dairy from Iran. Meanwhile, Iran’s tourist destinations can develop a great capacity for attracting Russian tourists similar to Turkey as it annually hosts 6 million tourists from Russia.
Sanctions have affected nature, quantity and quality of Iran-Russia economic relations. Given the fact that Russia’s trade ties were mainly with Europe and Turkey in the past, Iran should now work to provide facilities and infrastructure needed for trade with Russia, like proper sea and air transportation systems. Cooperation in the field of transit with Central Asian and Eastern Asian countries is also top of the agenda of the two governments. Iran and Russia have also held several joint economic conferences and exhibitions for exploring ways to increase their cooperation. Additionally, Iran, after India and China, is the third main importer of Russian arms. Arms deals between the two countries, which date back to the eight-year war on Iraq, resumed even years after the collapse of the Soviet Union in 1991.
Overall, factors such as standing up to US influence in Central Asia, Caucasus, and the Middle East, opposing NATO expansion in east, preventing foreign and multinational companies from establishing dominance on oil and gas resources in the region, and using Iran’s leverage for bargaining with the US were main reasons behind closer business ties between Iran and Russia.
Following the extension of EU sanctions against Russia as well as renewal of Iran Sanctions Act (ISA) by the US, it is expected that Iran and Russia will increase their trade business and cooperation in various spheres in the future, including foodstuffs, small-scale business, and weapons.