Domestic Economy

Russia Trade Prospects Murky

Russia Trade Prospects MurkyRussia Trade Prospects Murky

Controversies continue to surround an oil-for-goods contract between Tehran and Moscow. Just as the Kremlin confirmed on Tuesday that the barter deal was being implemented, Iran’s Oil Minister Bijan Namdar Zanganeh denied that any such agreement has been reached between the two countries.

“I have always said that we have not signed any deal with Russia concerning barter trade. We have signed something but it was not barter trade,” IRNA reported on Wednesday.   

It was reported more than a year ago that a barter deal worth up to $20 billion was being discussed between the two sides, involving Russia buying up to 500,000 barrels of Iranian oil a day in exchange for Russian equipment and goods. The five-year program was said to be aimed at reducing the effects of western sanctions while lifting Iran’s oil exports.

Russia’s Deputy Foreign Minister Sergei Ryabkov was quoted as saying on Monday that the goods comprise grains and construction materials, adding that the barter trade is not in violation of the sanctions regime against Iran (imposed by the West over Tehran’s nuclear energy program).

Iran and Russia have been trying to forge a new trade alliance in the face of an array of embargos that was imposed by the West on both countries’ economies.

Based on statistics released by Iran’s Customs Administration, The total value of Iran’s exports to Russia amounted to more than $263.4 million during the 11 months of the past Iranian calendar year (ended March 20), while Russia’s exports to Iran during the similar period stood at $619.2 million.

Both countries agree that bilateral trade can reach $3 billion per annum, which is about twice the current value of $1.7 billion.

In spite of the enthusiasm shown by both the Iranian and Russian governments, the stumbling blocks to bilateral trade are many. The most serious one pertains to banking transactions between the two countries, which has been made extremely complicated as a result of the sanctions.

“Many Iranian exporters have not yet received their money for what they have exported to Russia. That has made them distrustful to do further business with Russia,” Fatemeh Moghimi, a member of Iran’s chamber of commerce, mine, industry and agriculture told Persian daily “Forsate Emrooz” on Tuesday, warning that if things remain the same, Iranian businesses are likely to lose the Russian market.

Too busy with its own internal problems, says another Iranian businessman, Russia has failed to understand the importance of trade with Iran.

“The Russians fail to meet the international trade standards, and that is one difference between the Russians and Iranians. Iran is interacting with the world community and is closer to the international standards,” said member of board of directors in Iran’s chamber of commerce, mine, industry and agriculture, Hossein Barkhordar.

He added that the Russians are more inclined towards the Europeans as they think that it would make them immune to the European embargos and financial restrictions.

Expressing hope that the ongoing negotiations between Tehran and Moscow will improve bilateral commercial ties, he warned Iranian exporters, however, to consider national interest before conducting trade with the Russians.