Iran Aims To Expand Trade With Russia Amid Sanctions

According to Rouydad24, Iranian officials have started to think of Russia as a $100 billion market for Iranian goods. This, however, is an outlandish expectation given Iran’s own isolation due to sanctions, its crippled economy, and the need for technology and raw materials hard for Iran to acquire.

The volume of trade between Moscow and Tehran reached $4 billion between January and October 2022, a far cry from the $100 billion figure. Russian officials have said that the volume of trade will reach $7.5 billion by 2025.

However, the main area of cooperation between Moscow and Tehran is political and military. The two have been allies in the Syrian civil war and their military ties have been expanding since Russia’s invasion of Ukraine. Iran supplied hundreds of kamikaze drones to Russia that have been extensively used against Ukrainian civilian and infrastructure targets.

Western countries have imposed new sanctions on Iranian individuals and entities for aiding Russia in the war, but a recent move by the United States to release billions of dollars in frozen Iranian funds in exchange for 5 American hostages means Tehran will remain undeterred to expand military ties with Moscow.

Rouydad24 quoted Iranian exporter Ali Hosseinian as saying that the figure will be initially increased to $8 billion, but the final target for trade between Iran and Russia is $40 billion per year.

In the meantime, Russia's export to Iran has grown by 27 percent while Iran's export to Russia also grew by 10 percent in 2022. Iran and the Eurasia Economic Union consisting of Russia, Kazakhstan, Belorussia, Armenia and Kirgizstan signed an agreement in early 2023 to boost exchange of goods, services and labor. Meanwhile, Iran and Russia agreed to cooperate in the areas of technology and logistics, while also signing several other agreements for cooperation in the areas of aircraft manufacturing, oil and gas pipelines and natural gas field development.

Iran is Rusia's second biggest trade partner among the Caspian Sea littoral countries, Rouiydad24 wrote, adding that some 90 percent of Russia's export to Iran are food and agricultural products. At the same time, some 60 percent of Iran's exports to Russia also consist of agricultural products. The rest of its exports to Russia include minerals, construction material, and plastics.

Meanwhile, Iran has called for a boost in Russia's exports to Iran particularly for wheat, grains, maze and cooking oil ingredients. According to the Rouydad24 Russia is capable of providing these items. Iran imports around $10 billion of wheat, maze, various edible oils and animal feed annually and potentially Russia can provide all these as a single-source exporter.

According to Reuters, one controversial item among Iran's imports from Russia is gasoline which Russia sells to Iran at a price $12 per ton higher than market prices.

Earlier this year Russia's VTB Bank opened a branch in Tehran and Iranian experts said that the branch will facilitate Iran's safe and low-cost access to the banking systems of Europe, Africa and Asia. It is not clear how this can be done while the Western and other international sanctions are in place against both Tehran and Moscow. International access for Russia’s own banking system has been severely restricted.