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October 2019, No. 92


Global Economy

New Developments in Iran-Russia Relations


What happened at the 2nd Iran-North Caucasus Business Forum, which was held concurrently with The 15th Iran-Russia Joint Economic Commission Meeting?


A new chapter in Iran-Russia economic and trade cooperation has been opened. Russian and Iranian officials and policy makers have begun a new phase in bilateral economic relations and interactions concurrent with holding two economic events: The 15th Iran-Russia Joint Economic Commission Meeting, and the 2nd Iran-North Caucasus Business Forum.

Among the most important issues exchanged among the decision makers of the two countries the following can be cited: The latest details of the free trade agreement between Iran and the Eurasian Union, Cooperation between Iran, Russia and the North Caucasus on development of banking relations, Review of the areas of food trade, Preparation of the Russian Federation for issuance of visa to Iranian businessmen and Creation of stronger links between the private sectors of Iran and Russia.

Some of the projects favored by Russian companies to negotiate with Iranian counterparts on the sideline of the Joint Economic Commission Meeting are: Establishment of a cargo line between Zhukovsky airport and Isfahan airport, joint production of freight wagons, production of joint turbines of less than 20 MW, joint production of heavy vehicles and export of meat from North Caucasus to Iran.

The 15th Iran-Russia Joint Economic Commission Meeting and the 2nd Iran-North Caucasus Business Forum were held in the presence of two ministers, five deputy ministers and dozens of experts and middle managers from the related ministries of Iran and Russia. Within the framework of the 15th economic commission meeting, nine working groups and three specialized committees were convened with five working groups chaired by deputy ministers. In the meantime, the working groups of industry, provincial cooperation, energy, transportation and ICT with 57, 37, 26, 15 and 9 members, respectively, had the largest numbers of Russian working group members.

The presence of various Iranian and Russian companies working in different fields of energy, wagon and locomotives, investment, agriculture, agricultural machinery, petrochemicals, thermal and renewable energy, colored metals, chemical and cellulosic industries, etc., in the form of these working groups and the presence of their representatives in different sessions were among the indexes of the meeting.

What happened at the 2nd Iran-North Caucasus Business Forum, which was held concurrently with The 15th Iran-Russia Joint Economic Commission Meeting? Last year, the first Iran-North Caucasus Business and Cultural Forum was held in North Ossetia. The second forum was held on the sidelines of the joint economic commission meet with the presence of Sergei Chebotarev, the Minister for North Caucasus Affairs and accompanying delegation in Tehran. The North Caucasus federal region consists of the republics of Dagestan, Ingushetia, Kabradino Balkaria, North Ossetia, Chechnya and Garachay Cherkessia, and the Stavropol area, with a population of about 10 million, covering 7% of the Russian population.

These regions in the agricultural fields, especially cereals, meat, chemical industries, construction, automation, energy and colored metals enjoy a good capacity for cooperation with Iran. This report will further discuss the details of commitments made by the policy makers of the two countries. 

New Economic Relations

What will be the status of economic relations between Iran and Russia? Less than two years ago, Russian President Vladimir Putin signed a Comprehensive Document on Development of Southern Ports of Russia aimed at establishing infrastructure for the development of relations with Iran. Unlike the usual procedure, the signing of this document reflects the determination of the Russian side to develop cooperation with Iran.

Subsequently, in May 2018, an interim trade agreement was signed between Iran and the Eurasian Economic Union (EAEU) comprising five EAEU countries (Russia, Kazakhstan, Belarus, Kyrgyzstan and Armenia). The contract was approved by the Iranian Parliament (Majlis) on May 19 this year. According to observers, the approval of the plan before holding the 15th joint economic commission meet is a positive message saying that the Iranian side is eager to develop economic relations with Russia and the neighboring countries. In this regard, Iran’s Minister of Energy Reza Ardakanian addressing the Iran-Russia Economic Cooperation Forum, referring to the approval of the free trade agreement between Iran and the five EAEU countries, said that the final stages of the implementation of the agreement have been completed and it awaits its endorsement by the Guardian Council. According to the contract, 800 items will be subject to tariff cuts.

Ardakanian noted that Iran is expected to join Russia, Kazakhstan, Kyrgyzstan, Armenia and Belarus, and at the same time benefit from a 180-million-population market for the development of economic relations through commodity supply, especially in cases where Iran and Russia are under unlawful sanctions.

Stressing that Eurasian states will work together in a free trade zone, he noted that its impact on creating employment and expediting Iranian products in consumer markets and in the North Caucasus provinces will provide the necessary conditions.

According to Ardakanian, his ministry aims to facilitate the private sector cooperation between Iran and Russia. He said Russia last year imported more than $250 billion, and talks with Russia, especially on Iran’s intention to join EAEU could increase Iran’s share in that market.

Holding “intensive negotiations between central banks of Iran and Russia” was another issue that was heard from the Iranian and Russian authorities. Ardakanian said banking was one of the most important issues in the negotiations between Iran and Russia. He reiterated that intensive negotiations between the two central banks are underway and a joint working group will soon be convened in Tehran. “By resolving the banking issues and taking into account all the aspects we are trying to play an important role in accelerating economic relations.”

The announcement of readiness of the Caucasus for the export of red meat and cereals to Iran was another focus of the lectures. Announcing this, the minister of the North Caucasus Federal District said: “We are also interested in importing agricultural products and fruits from Iran. Sergei Chebotarev added: “60 representatives from Russia, all of whom are first class experts, are present at this conference. In addition to economy and development of relations in this field, attention to human science, history and culture is also important for the two countries. This conference will produce good results in this regard.” He added: “We are also interested in developing tourism through the Caspian Sea, and the tourism industry has a good prospect in this field and its driving force is shipping industry.”

Development of the transportation industry in the North, East and West corridor is another program; Moreover, creating a corridor for energy is one of our interests.” According to the minister, a leading person from Moscow has come to Iran to create the energy corridor. Chebotarev continued by emphasizing that the topics of human science in the North Caucasus are very important. “For the two countries, it is important to know how to understand each other and how we can share things. The development of economic and commercial relations also depends on this issue, since the North Caucasus has close ties with Iran and is a nation that is considered a cohort with Iran.”

He emphasized that the two countries’ most important tool is the political will of the two sides. “The will of the presidents of Iran and Russia has been to develop cooperation, and all necessary structures have been created with the Russian government agencies aiming to develop these relations.” He said: “This conference is one of the means by which all private institutions and producers can meet and carry out projects in the fields of economy, transportation, energy, manufacturing and industry.”

Facilitating the issuance of visa for Iranian businessmen was another issue announced by the ambassador of the Russian Federation to Tehran. According to Dzhgavarian Levan Simonovich, the provision of visa to Iranian businessmen will be facilitated in the framework of existing contracts. He stressed that the relations between the two countries have become easier, adding: “Iranian businessmen may ask their questions from our commercial representative.”

Simonovich, referring to unilateral US sanctions against Iran, said the conference was held while both Tehran and Moscow were under cruel sanctions. “We are opposed to unilateral measures against Iran’s nuclear program. The countries that have remained in the Joint Comprehensive Plan of Action (JCPOA) must cooperate with Iran in various fields, especially on economy. The Russian side cooperates in this regard and other partners are expected to follow suit,” he said.

Meantime, the IRI ambassador to Russia also addressed the joint economic commission meeting and discussed some of the current bilateral issues. Mehdi Sanaei announced in his initial statement that all government-level documents required for interaction between Iran and Russia have been signed. He stated that the North Caucasus has played a significant role in Tehran-Moscow relations over the centuries, saying that the region is culturally and historically very similar to Iran, and there is solidarity between Iran and the North Caucasus.

Iran-Russia ties have had a lot of mobility in various dimensions in recent years, he said, adding: “In the economic and trade sectors between the two countries there are capacities and documents have been signed, but there is big gap between the output of signed documents and their actual implementation.” He stressed that no important economic document required at the state level has remained unsigned, including customs cooperation documents.

Sanaei emphasized that there is a good relationship between exports and imports in Tehran-Moscow relations, adding that export of aquaculture as well as dairy and livestock products have received license, which provides the necessary facilities for the development of bilateral relations. “We hope that these capacities will come into play and the volume of exchanges between the two countries will witness a jump.”

The ambassador, referring to Iran’s joining the EAEU, said: “We hope that a state secretariat will be formed and private sector businesses will be in contact with one another.”         

 

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