Tehran-Moscow Relations and New Opportunities

Wednesday, August 27, 2014

Mehdi Sanaei
Iran's Ambassador to Russian Federation & President of Iran and Eurasia Research Center (IRAS)

During the past months, Iran and Russia have been offered with new opportunities to boost their bilateral relations. The new opportunities have had no precedent in the history of the two countries’ ties and are potentially capable of promoting bilateral relations and paving the way for further expansion of trade volume between the two countries. This conditions and opportunities call on both countries’ industrial sectors and businesspeople to take serious steps and make the best use of mutual target markets in Iran and Russia. Therefore, it is incumbent on trade and industrial sectors in Iran and Russia to squander no time for taking advantage of these opportunities.

There are three types of prominent opportunities which stand out among many opportunities that the two countries are currently facing, which will be enumerated as follows.

1. Signing a memorandum of understanding to boost economic and commercial cooperation between Iran and Russia

This memorandum of understanding will be potentially able to provide suitable grounds for cooperation between the two countries in a wide spectrum of industrial and trade areas such as railroad, energy, various industries, nuclear energy, commercial exchanges, mines, power plants, oil and gas industry, and various kinds of technologies. As a result of the same memorandum of understanding efforts will be made to remove certain obstacles that have been facing Iranian businesspeople for many years. Therefore, subsequent to the signing of the aforesaid agreement, both the public and private sectors in the two countries will be in a better position to pursue their projects with a higher degree of trust and self-confidence. The Oil Ministry of the Islamic Republic of Iran, as the Iranian authority in charge of the two countries’ joint economic commission, in addition to Ministry of Industry, Mine and Trade, have been designated to collect projects offered by the Iranian private sector in this regard.

The meeting of the two countries’ joint economic commission, which has been slated for September 8-11, 2014, will be a good opportunity for promoting two-way dialog between economic and industrial entities of the two countries. The Russian side has prepared a big delegation consisting of several hundreds of people to take part in the joint commission session.

2. Russian opens its fruit and vegetable market to Iran

In reaction to recent sanctions imposed against the Russian Federation by the United States, the European Union and Canada, Moscow has imposed reciprocal bans on those countries. As a result, Russia has banned the import of many agricultural goods, including vegetables, various plant seeds, dairy products, farm products, as well as meat and fish from the aforesaid countries. In their recent remarks, the Russian minister of agriculture as well as the country’s prime minister have pointed to the possibility of finding alternative sources for the aforesaid commodities by replacing European markets with markets in other countries. They have added that the needed agricultural commodities can be imported by Russian businesspeople from Iran, Turkey, Uzbekistan, the Azerbaijan Republic, as well as Latin American countries.

According to the latest figures, Russia’s imports of agricultural products, meat, fruits, and vegetables has hit as high as 40 billion dollars in certain years. For example, Russian entities imported about one billion dollars of such products from Poland, which has been currently stopped as a result of the European Union’s sanctions against Moscow. Russian media had focused on this issue during the past week noting that despite serious efforts made by a number of countries to own a certain part of the Russian market for agricultural products, Iranian businesspeople have not appeared very active in this regard. It is, therefore, incumbent on exporters of fruits and vegetables in Iran to take rapid advantage of this opportunity through government’s support.

3. Mutual investments by Iran and Russia

Russian investors have invested a lot of money in European and other countries during recent years. Under present circumstances, they have been trying to take some of their investments out of those countries and other countries that are considered as allies of the West. Therefore, at present, Iran and its growing economy and market can be considered as good options for the attraction of those investments.

On the other hand, Iranian investors can focus on various fields of investment in Russia, including the agricultural sector and the possibility of planting agricultural products in that country.

The available opportunities are not limited to the aforesaid instances. For example, two major Iranian carmakers, Iran Khodro and Saipa, which have already started to export vehicles to Russia, can take good advantage of the existing opportunity. As a result and through suitable planning, they will be able to increase their car exports to Russia to tens of thousands of vehicles over a five-year period.

Given the sheer size of the Russian market, it goes without saying that only powerful companies with heavy investment, which will make them capable of competing with other rivals companies, can secure a firm foothold in that market. However, Iranian businesspeople and industrial entities can count on the Iranian government’s all-out support for their activities in Russia.

Without a doubt, further strengthening of the two countries’ relations in addition to more serious presence of Iranian and Russian entrepreneurs and businesspeople in either country can lead to strengthening of Iran's and Russia’s national interests and pave the way for economic growth of the two countries. Such a state of affairs will also help to strengthen regional and international stability.

Key Words: Tehran-Moscow Relations, New Opportunities, Iran, Russia, Economic and Commercial Cooperation, Fruit and Vegetable Market, Mutual Investments, Sanaei

Source: Iran and Eurasia Research Center (IRAS)
Translated By: Iran Review.Org

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