Domestic Economy

Bulgaria, Iran's Gateway to Europe

Business & Markets Desk
Bulgaria: Gateway to Europe
Bulgaria: Gateway to Europe

Iran is pushing ahead towards economic growth, although many of its industries require major overhauls in terms of both equipment and technologies, as well as renewed links with other countries to have a say in the global arena.

"Bulgaria can be Iran’s gateway to Europe," Bulgaria’s Minister of Transport, Information Technology and Communications Ivaylo Moskovski declared.

The European minister was visiting Tehran at the head of a 69-strong delegation on Sunday to attend the 18th session of Iran-Bulgaria Economic Commission.

Bulgaria rightly offers an opportunity for developing Iran’s trade and transportation ties with Europe. The country is situated between Turkey and Greece to the south, Macedonia and Serbia to the west, Romania to the north, and most importantly, has access to Ukraine, Georgia, Russia and Turkey’s coastlines with the Black Sea.

In an interview with Financial Tribune in Tehran on Tuesday, Moskovski said the southeastern European country, which is also a member of the European Union, is “crossed by five of Europe’s major transport corridors.

 Post-Sanctions Links

Following the removal of western economic sanctions against Iran over its nuclear program on Jan. 16, business delegations from the four corners of the world have been flocking to Iran with proposals for implementing joint ventures and making technological and financial investments.

Iran is one of the last frontier markets to arise in the global economy and no country wants to be left behind.

The post-sanctions era witnessed the arrival of German, Italian, French, Czech and South Korean industrialists, as well as other industrial giants who signed deals to bring the country’s industrial sectors back on track.

The next crucial step for the country is to rev up the process of vitalizing its transportation sector. Iran seeks to be a major exporter of oil, minerals, food and industrial products to markets that were off-limits in recent years. The potential opportunities are huge.

While Iranian crude oil carriers have historically been a force to reckon with in petroleum transportation, the country’s rail and land infrastructure have been lagging behind. And it is not only about outmoded freight trains or above average transportation costs, as more rails and roads need to be built, mountains must be crossed and Iran needs to be connected to Europe.

Rail Transportation

Railroads are a major mode of freight transportation in the country, although highways carry a progressively larger share of freight.

Bulgaria has 6,238 kilometers of rail tracks linking it to Romania, Turkey, Greece and Serbia, and express trains serving direct routes to Kiev, Minsk, Moscow and St. Petersburg.

“Bulgaria is geographically the closest member of EU to Iran. This is a source of opportunity that should not be underestimated,” Moskovski said.

"There is great potential in developing transport relations between Tehran and Sofia in the context of Iranian-EU cooperation.”

Moskovski stressed that the most important thing for bolstering ties between Iran and Bulgaria is “to use our geographical advantages”.

Iran is ready to do so, by connecting its railroad network to Bulgaria through Turkey, and also making the Iran-Azerbaijan/Armenia-Georgia-Bulgaria-Greece rail corridor operational, according to Iran's Minister of Roads and Urban Development Abbas Akhoundi.

The Iranian minister made the statement during a session of the joint commission.

Iranian officials drafted a preliminary agreement in 2015 and sent it to the involved states.

Although the Turkish transit route has been a convenient choice for Iranian transport companies due to the country’s geopolitical status, a series of problems over the past few years have compelled Tehran to think of alternative routes.

Moskovski said the implementation of this corridor will help utilize the growing trade opportunities among countries in Europe, Middle East and Central Asia by creating an efficient and reliable freight transport connection.

However, there are roadblocks to developing the corridor.

“There is a mountainous area in the way and a very heavy investment will be needed to develop this project. However, I was at Georgia about two months ago and officials there assured me that they are completely ready and able to undertake the project,” he said.

He noted that Bulgaria is ready to provide the corridor project with the logistics and engineering services, emphasizing that Bulgarian engineers are well-prepared to undertake feasibility and preparatory studies as well as railroad designing and planning.

The European country has also established a permanent ferry connection between Bulgaria and Georgia through the Black Sea, further boosting trade and transportation through the corridor.

Trade and Investment

Tehran-Sofia relations go back a long way, as according to Moskovski, Iran used to be Bulgaria’s leading trade partner in the Middle East back in the 1980s.

“This partnership was based on the solid grounds of the economic and scientific potentials of the two countries. I believe this base still exists and I am sure that it will contribute significantly to the revival of our bilateral ties,” he said.

Although the potential of trade turnover between Iran and Bulgaria is far from its heyday, it has been growing during the past few years. Annual trade value grew about tenfold from 2004 to 2014, to as much as $166.2 million, according to the minister.

The ambitious connectivity project could substantially boost mutual trade.

The Bulgarian minister said commodities with high value added can be manufactured in Iran, or Bulgaria, and then transported as a finished product to Western European countries.

Investment in Bulgaria and producing finished industrial products is a process through which “everybody wins”, he added, especially considering that “Bulgaria has one of the lowest taxes in Europe”, levying only 10% corporate and income tax.

Bulgaria has the potential and interest in cooperating in sectors such as energy, pharmaceuticals, chemicals, machinery manufacture, electronics, information technology and agriculture.

“We are ready to support all business activities and ideas by holding business forums, trade visits or any other means with the aim of creating direct contacts between the companies of our two countries,” he said.