US Sanctions to Help Russia Overtake Europe in Iran Trade

EghtesadOnline: Russian companies working in Iran have an advantage over European rivals, as they are already under US sanctions and have nothing to lose, TeleTrade’s chief analyst said.

News ID: ۷۸۲۸۱۹

03 June 2018

“Russian companies will continue doing business in Iran as if nothing happened at all—in oil, gas and nuclear energy. They have this advantage over the Europeans who, like Total or Airbus, have major businesses in the US and are listed on American exchanges,” Petr Pushkarev also told RT.

Companies from Russia can simply ignore Washington’s threats of imposing fines for trade with Iran or for conducting projects in Iran, the analyst says.

Pushkarev noted that Russian trade with Iran accounts only for $2 billion, but it can grow significantly, according to Financial Tribune.

“This is quite real because Russia and Iran are natural allies in Syria. Rosneft has preliminary agreements with Iran worth up to $30 billion and even if only a small part of these plans are implemented with Russia, and not with European partners, it can be a significant gain for Moscow,” he said.

“Another possible sphere for boosting business ties between Moscow and Tehran are contracts for the delivery of civil aviation aircraft.”

Iran planned the purchase of 100 aircraft from Boeing, 80 from Airbus and another 20 from the Franco-Italian ATR.

“Russia will have a chance to deliver its MC-21 jets, if Iran agrees to wait for a couple of years, since the aircraft is just on the way and ends the testing phase,” he said.

Earlier last month, Maziyar Yazdani, deputy head of Islamic Republic of Iran Railways for technical and infrastructure affairs, said Russian as well as Chinese companies will replace European countries active in Iran’s rail sector as soon as the United States reimposes sanctions against Iran.

“Iran and Russia are currently conducting bilateral trade in local currencies, rial and ruble respectively, as well as euro,” a former official of Iran-Russia Chamber of Commerce, Qadir Qiafeh, said.

“Trade with Russia is conducted in rial and ruble, but since both Russia and Iran are among exporters of crude oil, oil products and heavy industrial products and these goods are priced in dollars, both countries are under the influence of dollar,” he was recently quoted as saying by Fars News Agency.

He added that banking relations between Iran and Russia are going unhindered, with several Russian banks such as Mir Business Bank, TransKapitalBank and Gazprom and Iranian lenders such as Bank Pasargad, Eghtesad Novin Bank, Mellat Bank and Bank Melli Iran handling the transactions.

“Considering the fact that Russians are also in thrall to US and European sanctions, their banks deal with Iranian banks with more flexibility because they can use the valuable experience of Iranians in bypassing sanctions,” the businessman said.

Meanwhile, Russian Energy Minister Alexander Novak said in April “Russia and Iran have also launched an oil-for-goods exchange program seeking to eliminate bilateral payments in US dollars and plan to keep it going for five years”.

Notably, the five-nation Eurasian Economic Union signed a three-year provisional agreement with Iran in Astana last month to welcome the Islamic Republic into the bloc’s free-trade zone.

The arrangement is the first step in implementing free trade between Iran and the five members of the union, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. It lowers or abolishes customs duties, setting off a three-year process for a permanent trade agreement.

Russian Chamber of Commerce and Industry Vice President Vladimir Padalko said the resumption of US sanctions on Iran will not push away entrepreneurs or disturb interaction with the agreement.

“This (the Astana agreement) is an extra signal to everyone that the Iranian market awaits our businessmen and we will proactively work there,” Padalko said.

“The business hopes that the free trade zone agreement will facilitate interaction between entrepreneurs from the EEU and Iran, receipt of visas to this country and that the agreement will also promote the transition to settlements in national currencies, because we cannot work with the dollar now in view of US sanctions.”

Earlier last month, the head of Iran’s Majlis Economic Commission said Tehran intends to boost economic ties with Moscow and the prospect of the return of US sanctions will only serve to strengthen them.

“Not only will the previous agreements remain in force, but there will also be new ones; there will be new contracts,” Mohammad Reza Pour-Ebrahimi also told RIA Novosti.