In another sign that ties between Russia and Iran remain strong and growing at a time when Western countries have frozen relations with Russia over its war on Ukraine, the two countries signed a memorandum of understanding (MOU) for the establishment of mutual trade centers on Friday, Al-Monitor reported.
The centers will be placed in Tehran and St. Petersburg, respectively, and their purpose will be to enable and generate trade between the two countries in the energy, transportation, electronics, agriculture, food, pharmaceuticals and construction sectors. One of the ways that will be accomplished is by helping Iranian and Russian businesspeople establish contact and conduct financial transactions. The head of Iran’s Trade Promotion Organization (TPO) Alireza Peyman-pak and Deputy Governor of Saint Petersburg Kirill Polyakov signed the MOU.
Already in May, Russian Deputy Prime Minister Alexander Novak announced that the two countries would be expanding their trade relations.
“We’re on track to raise trade, economic, logistics, investment, financial, banking cooperation, despite the unprecedented pressure that Russia is experiencing,” Novak said, while visiting Tehran.
During the visit, Russia and Iran signed three MOUs and agreed to settle their trade and energy payments in national currencies, instead of the U.S. dollar. They also agreed to continue talks to connect their electronic payment systems, as well as their financial messaging systems.
In addition, the two countries signed MOUs on joint oil and gas projects that will, among other things, enable Iran to export petrochemicals and technical and engineering services to Russia.
Trade between Russia and Iran has been growing in recent years. In 2021, according to Middle East Monitor, trade between the two countries increased by 81% from the previous year, increasing the value of $3.3 billion. In January, after a two-day visit to Moscow, Iranian President Ibrahim Raisi said that the two countries had agreed to increase trade even further.
“We agreed to remove trade barriers and boost the economic exchanges between the two countries,” Raisi said after a two-day visit to Moscow. “Currently, the level of mutual trade is not acceptable, so the two countries agreed to increase trade to $10 billion a year. The two countries can take steps to break the dominance of the dollar over monetary and banking relations and trade with the national currency.”
Also in January, Russia and Iran signed MOUs on energy cooperation. “During the visit to Russia, numerous meetings were held with Russia’s deputy prime minister, minister of energy, and senior private sector executives in the field of oil and gas in order to expand joint cooperation,” said Iranian Oil Minister Javad Owji who accompanied Raisi during his visit to Russia.
In addition to trade, oil and gas, and banking relations, Russia and Iran also recently agreed to work toward “accelerating the north-south corridor project.” Both countries want an alternative to the Suez Canal, especially after a large container ship was stuck sideways on a narrow section of the canal in late March 2021, blocking and delaying traffic – and disrupting world trade – for almost a week before it was enabled to sail again.
The north-south corridor, better known as the International North-South Transport Corridor, is a 7,200-kilometer transportation network consisting of seaways, railroads, and roads that link the Indian Ocean to the Caspian Sea via the Persian Gulf into Russia and Northern Europe. According to Modern Diplomacy, India, Iran, and Russia jointly proposed the corridor in 2000 and ratified the agreement about it in 2002.
The corridor has been expanded to include Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Syria, Belarus and Oman, but despite being proposed more than two decades ago, the project is still in its early stages.