Iran prepares escape hatch if Europe backs down

Politics Materials 19 December 2017 15:06 (UTC +04:00)
Despite the fact that the EU has recently become Iran’s third biggest trade partner since signing the nuclear agreement in 2015, the latter is not fully convinced that Europe will refuse to join the US possible fresh sanctions imposed under another pretext – to curb its missile development program in the first place.
Iran prepares escape hatch if Europe backs down

Baku, Azerbaijan, Dec. 19

By Azer Ahmadbayli – Trend:

Despite the fact that the EU has recently become Iran’s third biggest trade partner since signing the nuclear agreement in 2015, the latter is not fully convinced that Europe will refuse to join the possible fresh US sanctions imposed under another pretext – to curb its missile development program, in the first place.

In this regard Paris has already expressed its position, which is close to that of the White House.

Also, Iran doesn’t see full-fledged effect of economic interaction with the EU, particularly what concerns the banking ties. Move of the EU to the third spot among Iran's trade partners is explained mainly by purchases of oil from Iran.

Iran used to trade traditionally with Europe (excluding its south-eastern Asia partners), but the country’s national interests and current political risks making Iran beware of being driven into the international isolation once again oblige it, temporary or for a long time, to get closer with countries, which earlier haven’t been considered its good trade partners.

It seems that Iranian “Neighbors are priority” policy declared not so long ago by top Iranian officials has been aimed specifically for this purpose.

Iran’s closest neighbors – Iraq, the United Arab Emirates, Turkey and Afghanistan are among top trade partners of the Islamic Republic.

Reinforcing economic relations with Russia, Azerbaijan and Central Asia states also could help protect the country’s economy from heavy blows of sanctions if imposed.

There are many examples of Iran’s turn to “new” (if we can call it that) trade and cooperation destinations. Let's have a deeper look.


Trade between Iran and Azerbaijan has increased by 33 percent in the first nine months of 2017, compared to the same period in 2016, President of Azerbaijan Ilham Aliyev stressed during the trilateral summit in Tehran in November. About 450 companies with Iranian capital operate in Azerbaijan.

Proposals to set up the Azerbaijani-Iranian Chamber of Commerce, setting up special economic zone in Iranian border city of Astara, power generation (Khudaferin-Giz Galasi agreement on joint hydropower plant), acceleration in construction of a joint pharmaceutical plant near Baku, establishing a joint venture for the production of agricultural machinery and other issues will be discussed in a few days at the 12th meeting of the Azerbaijan-Iran intergovernmental commission for economic, trade and humanitarian cooperation.

A joint car plant with participation of Azerbaijan’s AzEuroCar LLC and Iran Khodro is planned to be inaugurated in Azerbaijan’s Neftchala Industrial District in the coming weeks.

In December, Iran’s startup Asanbar and the Baku-based Avirtel inked the MoU on the sidelines of Bakutel-2017, Azerbaijan International Exhibition and Conference on Telecommunications and IT. The MoU aims to facilitate trade ties between the two counties particularly in the field of transportation.

Central Asia

Iran has a growing part to play in meeting the landlocked Central Asian countries’ needs to access the ocean. Newly inaugurated Iranian port of Chabahar could serve as a transit hub for Central Asian goods going for export.

Two years after Iran connected its railroad with Central Asia, the Central Asian countries have dominated the rail transit through Iran with a share of over 90 percent.

Over 960,000 tons of goods were transited through Iranian railways during the first eight months of the current fiscal year (started March 20). Over 770,000 tons of the goods transited by Iranian railroads belong to the Central Asian countries, 80 percent more year-on-year.

Some 580,000 tons of transited goods in the period were loaded from Turkmenistan, which is equal to 60 percent of the total cargo transited via Iranian railroads. Uzbekistan with a 33 percent share stood at second place, followed by Tajikistan.

Uzbekistan and Kazakhstan have recently signed several documents with Iran in several areas, including supplies of oil, transportation, food processing, joint production of agricultural products etc.


During the recent visit of Alexey Miller, Chairman of Gazprom Management Committee to Tehran, Iran’s National Iranian Oil Company and Russia’s Gazprom have signed cooperation agreement. Pursuant to the document, Gazprom will conduct a proof-of-concept study with regard to implementing integrated projects for hydrocarbon production, transmission and processing, including petrochemistry, in Iran's territory.

The sides also signed a Memorandum of Understanding to explore the opportunities for joint efforts within the Iran LNG project.

Iran Railways signed a contract with OJSC Export Insurance Agency of Russia for financing a joint project for manufacturing rail transportation related equipment. The deal is worth 3 billion euros. Under the contract, the two sides agreed to make joint investment within a five-year period for manufacturing passenger and freight rail cars as well as locomotives and other equipment by Iranian and Russian firms in Iran.

The first phase of the contract covers joint manufacture of 6,000 freight cars through funding from the Russian side.

In November, Iran’s biggest trade center “Iranian Trade House” was inaugurated in the Russian Caspian port of Astrakhan. The city is a center for commercial activities of nearly 200 Iranian companies which has turned it to the largest center of Iranians’ economic activities in Russia.

Last week representatives of Altai region – one of the federal subjects of Russian Federation – and Iran signed a memorandum of understanding to strengthen mutual cooperation in economic ties, research and technology.

Regional triangles

In addition to bilateral ties, two regional triangles have been formed in recent times to enhance economic and security cooperation – Iran, Azerbaijan, Turkey and Iran, Azerbaijan, Russia.

The first will have its 5th trilateral meeting held on Dec. 20 in Baku.

The second is even more noticeable, core of which is based on the North-South joint project aiming at building a transportation route to deliver goods from India to Northern Europe.

On December 25, commissioning of the (Azerbaijan’s) Astara - (Iran’s) Astara railway as part of the International North-South Transport Corridor project is expected.

All the events, facts and figures described above refer to only last month or two. Iran demonstrates remarkable energy in establishment of new economic ties. Therefore, it looks quite real that Iran will be ready to promptly re-format priorities of its economic partnership if Europe backs down under the US pressure.