EU advisor: increasing Iranian bank assets in Russia risky
Azerbaijan, Baku, April 23/ Trend, D.Khatinoglu/
Iran Melli bank's Russian subsidiary has boosted assets nearly 10-fold since the start of 2011. The economic advisor to the European Union Mehrdad Emadi told Trend that this can be a very risky decision for Iran, alongside its apparent advantages.
Russian Interfax earlier reported that Mir Business Bank, a Russian subsidiary of Bank Melli Iran, boosted its net assets by a factor of 2.5 to 36.4 billion roubles in the first quarter of 2012 and for the first time appeared on the Interfax-100 rankings of Russia's 100 biggest banks
by asset size. According to the report this Iranian bank branch has increased its assets by 10-fold since last year. Iran and Russia are set to remove dollar, trade in national currencies
Iranian President Mahmoud Ahmadinejad in a telephone conversation with his Russian counterpart Dmitry Medvedev on February 3 highlighted the need for removing the dollar from bilateral trade saying that using national currencies would greatly boost the volume of trade between the two countries, the Mehr news agency reported.
Foreign ministry director general for Commonwealth States and Caucuses Affairs Mohammad-Reza Morshedzadeh told the IRNA news agency that the value of trade between Iran and Russia stood at $4 billion last year, saying that the figure is not favourable and should be increased.
Economic Advisor to the European Union, Mehrdad Emadi, said the decision to increase Iran's assets in Russian banks and its potential outcome means the decision would facilitate Iranian-Russian trade to some extent, because boosting Iran's assets will be regarded as a guarantee to continue trading and shows that the country has enough liquidity for transactions.
In other words, if the existing sanctions against Iran are going to be even tougher, Iran will be confident to have sums in Russia in order to continue trading and this issue can be a factor to safeguarding Iran from financial limitations in the future.
According to Emadi, there are two sensitive points in Iran relying on its liquidity reserves in Russia. The first is the oilfields which are linked by the Caspian Sea states and the second is the differences between Iran and Russia over the legal status of the sea.
"The second factor which may be even strategically more dangerous, is Iran's decision to increase its assets in Russia. It will create a kind of dependence for the Iranian government. It means that whenever Russia wants to halt offering bank services or financial facilities based on Iran's assets, Iran will suffer huge losses," the expert added.
With an eye to other countries, such as Vietnam and China or South Korea and Japan which have relations similar to Iran and Russia, it is perceived that the dependent country attempts to reduce its dependence on the other country's banking system as much as possible.