Economy, Business And Markets

Iran Deal Opportunities for Bangladesh

Iran Deal Opportunities for BangladeshIran Deal Opportunities for Bangladesh

Following Iran’s nuclear deal, there has been plentiful analysis on its impact across the world. The focus largely has been on the impact in the Middle East.

Its impact on the Indian subcontinent has also been researched and commented upon, with a specific focus on how India and Pakistan may benefit.

However, little has been said about the nuclear deal’s impact on Bangladesh, wrote American bimonthly international affairs magazine The National Interest.

The nuclear accord’s effect on Bangladesh is an opportunity to benefit Dhaka in a positive manner. The successful execution of the deal holds promise for Bangladesh economically and in other sectors.

  Deeper Commercial Cooperation

The two countries share a history of cooperation particularly in the economic sphere. Bangladesh-Iran trade has increased by over 36% from 2005 to 2013. Exports to Iran increased from $38.09 million to $75.41 million in that period—a mammoth 98% increase in those eight years.

In 2013, Iran-Bangladesh Economic Commission agreed to increase trade volume two- or three-fold in the next three years. More recently, the head of Iran’s Chamber of Commerce, Mines, Industries and Agriculture called for the establishment of an Iran-Bangladesh trade committee to further increase trade cooperation. Members of the Federation of Bangladesh Chambers of Commerce and Industry, Bangladesh’s business owners’ representative organization, are scheduled to visit Tehran to discuss ways to broaden economic ties.

Members of FBCCI hope to take advantage of an Iranian economy, which will gain $100 billion from sanctions relief.

Iran’s Foreign Minister Mohammad Javad Zarif recently visited Bangladeshi Prime Minister Sheikh Hasina and Bangladesh’s Foreign Minister A.H. Mahmood Ali in Dhaka. The agenda contained, among other things, measures to restore Bangladesh’s trade with Iran on jute, which has suffered ever since Iran was subjected to sanctions over its nuclear program.

During his trip, Zarif acclaimed Iran as a trustworthy source of energy, of which Bangladesh should take full advantage. More broadly, in a press conference, Zarif asserted that “unjust sanctions” against Iran will now be lifted, thereby strengthening the bond between the two countries.

Zarif also announced a visit of Bangladesh’s minister of finance to Tehran in the near future, further emphasizing the focus on economic ties. He also spoke of cooperation with Dhaka on counterterrorism.

Meanwhile, Iran’s ambassador to Bangladesh has also indicated that Tehran is interested in importing clothes and agricultural products from Dhaka—both of which will contribute toward the previously stated goal of increasing trade.

Bangladesh, with its large and young population, also wishes to export manpower to Iran, thereby giving another dimension to trade between the two countries. Tehran has assured Dhaka of looking into this, once sanctions are eased.

  Intensified Energy Ties

Furthermore, there is great potential for Iran to increase its clout in the energy sector. After signing the nuclear deal, Iran has expressed a desire to increase the scope of a gas pipeline, speaking of its intent to now construct it not only to Pakistan, but also to Bangladesh.

Bangladesh’s power, energy and mineral resources minister was recently invited to Tehran to discuss the specifics of extending the pipeline to Dhaka. Iran has already indicated that it is willing to offer Bangladesh a “special rate” on crude oil imports.

Tehran has also promised to discuss rebuilding and increasing the capacity of Bangladesh’s sole oil refinery, Eastern Refinery, which was in fact originally built with assistance from Iran. Iran can greatly increase its role in Bangladesh’s energy industry not only by improving Eastern Refinery, but by serving as a critical partner in developing Bangladeshi oilfields discovered in the northeastern district of Sylhet.

Iran’s interest has grown in Bangladesh’s energy sector and the development of Bangladesh’s fledgling oil industry is sure to be on the agenda in any diplomatic talks between Tehran and Dhaka. Iran’s support may also be crucial for Bangladesh to develop its offshore natural gas reserves, which play a significant role in Bangladesh from fueling cars and lighting stoves to powering the country’s agriculture sector—meeting 56% of the country’s energy demands.

In a country where around 40% of the population have no access to electricity—and where the agricultural sector employs 47% of the labor force and contributes 15.1% to GDP, which needs a steady energy supply to operate smoothly—the impetus to improve energy security could not be greater in Bangladesh. Iran’s early steps will give it an advantage in navigating Bangladesh and in staking out a claim in the country’s growing energy sector.

In 2007, Bangladesh’s government requested assistance from Tehran in developing nuclear reactors to fuel the country’s huge energy needs. While Bangladesh has looked toward Moscow for technical support in building its two 1,200-megawatt nuclear reactors, Iran may plausibly show interest in building more nuclear infrastructure in Bangladesh—and particularly as the energy needs of Bangladesh are projected to increase, thanks to a rapidly growing economy.

Dhaka’s increased cooperation with Iran may soon extend to the nuclear energy sector, thereby making Tehran’s partnership even more vital.

  Tried-and-True Partnership

These increased convergences between Tehran and Dhaka should not be surprising, given the history that these countries share. Ever since former Iranian President Akbar Hashemi Rafsanjani’s visit to Dhaka in 1995, relations between the two countries have been on the ascent—including at unofficial, person-to-person levels.

A coterie of Bangladesh’s doctors has been trained in Iran, for example, while Iran has a cultural center in one of Dhaka’s most exclusive neighborhoods, Dhanmondi.

Additionally, the two countries have been discussing ways and means of increasing what they describe as “Islamic cooperation”. Iran’s cultural presence in Dhaka is quite robust. Screenings of Iranian-produced movies appear on state-run Bangladesh television, and large numbers of Iranian novels (translated from Persian) are available in bookstores.

Bangladesh is hungry for global partners to help increase its economic footprint and Iran is a natural, tried-and-true partner, considering the rapport the countries already share.