Trade representative of the Russian Federation said trade turnover with Iran in 2021 had hit a record

Trade turnover between Russia and Iran in 2021 amounted to about $4 billion, which was a historical high. This was announced on Friday Rustam Zhiganshin, trade representative of the Russian Federation in Iran in his interview with a TASS reporter.

"Over the first 11 months, the trade growth reached 89.4% compared to the same period last year and amounted to $3.758 billion. We have all the reasons to expect that by the end of 2021 we'll reach a record $4 billion," he said.

Zhiganshin also said that "the Federal Customs Service (FCS) of Russia will publish final data on the year results in the second decade of February." He added that "Russia's exports to Iran more than doubled - by 126.6% - and amounted to almost $3 billion, while imports from Iran to Russia grew by almost 22%."

According to the trade representative, "agricultural products account for almost 80% of trade between the countries." "In our exports, grains and oilseed crops grew the most," he said. Of the new export items, we can speak about the export of vaccines - $ 45 million worth of supplies were delivered to Iran."

"A number of projects in the energy sector are being implemented and their development rate increased in 2021. This turned to be a help for trade growth over the past year," Zhiganshin added. "Iranian imports primarily consist of vegetables, fruits, dried fruits and nuts," he said.

Real exports

The trade representative emphasized that the FCS data does not include trade that Russian and Iranian enterprises maintain through intermediary countries. "We are talking about companies that supply their products [from Russia to Iran and vice versa] through Turkey, the UAE, Azerbaijan and other countries. "That is, e.g. a Russian company supplies products through a Turkish intermediary, while the final destination is Tehran," he says. "Surely, this kind of indirect trade shall not be accounted for in the FCS statistics related to Iran and Russia."

According to Zhiganshin, the real trade volume of the two countries significantly exceeds the official indicators of the customs service. "We had expert estimates that based on the results of 2020, real trade volume with Iran could be $10 billion," he said.

Growth reasons

"Growth of trade volume between Iran and Russia in 2021 was due to the agro-industrial complex products. A number of circumstances played a role here, including the drought in Iran and the lack of own wheat in the Islamic Republic, - explains the head of the trade mission. "At certain stage, Iran reached self-sufficiency in terms of this indicator, and wheat was bought in Russia only for processing and temporary import - the Iranians bought and processed it, and then sold flour to Afghanistan and Iraq."

He added that "supplies of wheat and meslin grew by 6.3 times." "Moreover, the general political context played a role - we have excellent good neighborly relations with Iran. The increased economic pressure [on Tehran] from the United States in the form of unilateral sanctions also played its role, as a result, Tehran's cooperation with European and many Asian companies has decreased," Zhiganshin said.

Finally, according to him, "one of the key factors was Iran's temporary agreement with the Eurasian Economic Union (EAEU) that entered into force on 27 of October, 2019." "2020 was in a greater extent for a buildup, and 2021 has shown a real growth due to this agreement," the trade representative said.

A temporary agreement between the EAEU and Iran aimed at establishing free trade zone was signed for three years 17 of May, 2018 in Astana and entered into force on 27 of October, 2019. On 10 of December, 2021, the Supreme Eurasian Economic Council approved an extension of the agreement for another three years before a full-fledged free trade agreement entry into force.

Meeting of the Russian-Iranian Intergovernmental Commission

Zhiganshin said that the next meeting of the Russian-Iranian Intergovernmental Commission (IGC) could be held this spring.

"The possibility of holding the meeting of the intergovernmental commission until the summer of 2022 is being considered. But this will depend on the sanitary and epidemiological situation," he said.

The trade representative added that "the agreement to hold the next meeting of the IGC, which should be held in Russia, was reached during the visit of Iranian President Ebrahim Raisi to Moscow." "We expect that by the next IGC meeting, the Iranian proposals voiced during the Iranian politician's visit will result in a roadmap for cooperation in the energy sector," Zhiganshin said.

On 10 of January, the President of Iran arrived in Russia on an official visit, where he met with Russian leader Vladimir Putin and made a speech at the State Duma session. During the visit, the politician said that the draft agreement on strategic cooperation for a 20-year period had been provided to the Russian representatives.

Trade operations

According to Zhiganshin about 70% of trade operations between Russia and Iran are performed in national currencies.

"About 70% of the transactions are conducted in national currencies, and mainly in rubles," he said specifying that this type of business operation provides an opportunity to evade US sanctions against Tehran.

According to the Russian trade representative, restrictions against Iran can be leveled "primarily due to Iran's desire to work with neighboring countries, where there are fewer opportunities [for the US] to track such cooperation." "The operation of Mir Business Bank also had its effect. This is a Russian bank with 100% Iranian participation, which is also under sanctions and it provides banking services for bilateral transactions between Iran and Russia," he said.

In addition, Iranian companies themselves help to evade sanctions. "Iran has been under sanctions for over 40 years. Iranian companies operatinng in foreign markets, generally, already have their accounts abroad - in Iraq, Turkey, the UAE and even in Europe. Zhiganshin mentioned. "Iranian companies themselves offer Russian businesses payment options for the supplied products via third countries."

According to him, "it is possible to evade sanctions, among other things, by means of not making public the cooperation of certain Russian companies with Iran."

Iranian trade obstacles

However the trade representative remarks that "US sanctions against the Iranian banking system remain one of the key obstacles slowing down the development of Russian-Iranian trade, although many companies have learned how to deal with this obstacle." "The problem of payment delays and non-payments on the Iranian side also persists: Tehran experiences a shortage of foreign currency funds in the budget, which previously were generated primarily by the sale of oil that is now under sanctions," he said.

Another problem according to Zhiganshin is "the difference in mentalities." "There are also logistical problems, including difficulties at the Iranian-Azerbaijani border. Thus, our Iranian colleagues complain that long queues often line up at border crossings - both from Iran to Azerbaijan, and on the way from Azerbaijan to Russia", he said. "This is often caused by technical failures, but objective factors, such as mutual supplies growth, also play their role."

According to the trade representative, "due to this, both the Russian and Iranian sides, are interested in utilizing the route via the Caspian Sea." "Large budget amounts have been allocated for the upgrade of Astrakhan ports, there are also plans of new ships building. This can help to avoid transit routes and make the best use of the North-South corridor," he added.

Zhiganshin says that "the main obstacle related to the use of the Caspian route is the lack of modern vessels in the Caspian Sea." He added that "on the Iranian side, the construction of the railway in the port of Anzali is being completed, and the railway line in the port of Amirabad has already been completed." "We need to launch the sea routes for the ferry service to become regular. So far, almost all the ships are chartered for a specific voyage," the trade representative noted.

The US imposed the first sanctions on Iran shortly after the 1979 Islamic Revolution. Since then, Washington has repeatedly introduced new restrictive measures against Tehran. The new sanction phase was launched after President Donald Trump came to power in the United States. He declared a policy of maximum pressure against the Islamic Republic. On 8 of May, 2018, the US authorities unilaterally withdrew from the nuclear deal and imposed the most extensive sanctions in history against Tehran, including restrictions on oil sales.
Source: vch.ru
Image source: eastweststream.com