Iran - Russia Historic Petrodollar - Busting Deal
An Analysis of the Iranian Anti - Russian Sentiments in an interview with Mr. Asadollah Asgaroladi, the Head of Iran - Russia Chamber of Commerce “Iran - Russia oil barter deal is not similar to Gulistan or Turkmenchay Treaty”, Asadollah Asgaroladi, the Head of Iran - Russia Chamber of Commerce said in response to criticism expressed by those who regard the $۲۰ billion oil - for - goods deal as another chance for Russia to trick Iran.
An Analysis of the Iranian Anti-Russian Sentiments in an interview with Mr. Asadollah Asgaroladi, the Head of Iran-Russia Chamber of Commerce
"Iran-Russia oil barter deal is not similar to Gulistan or Turkmenchay Treaty", Asadollah Asgaroladi, the Head of Iran-Russia Chamber of Commerce said in response to criticism expressed by those who regard the $20 billion oil-for-goods deal as another chance for Russia to trick Iran.
Confirming the Iranian anti-Russian sentiments rooted in history, Asgaroladi reaffirms that had it not been for the West's political tantrum, we would have never invested our hopes in Russia and China.
Could you analyze Iran-Russia trade relations and mention the reasons why the economic relation has lost pace?
Iran-Russia trade relations have not weakened; however, our export volume does not go hand in hand with the close political relationship enjoyed by the two countries. At the moment, Iranian foreign trade volume with Russia is around $9.6 billion of which $7.5 billion accounts for import and only the remaining $1.8 to $2.1 billion for export. Our economic relations with Russia has increased however, the increase concerns import and not export. There are some issues with regard to exports to Russia. Although Russia has not stayed away from sanctions against Iran, its banking system is not consistent with that of Iran resulting in some troubles. I believe that it is necessary for the central banks of the two countries to open accounts in each country in order to stop using dollar in mutual exchanges.
Does it mean a new foreign currency?
Russian Ruble and Iranian Rial against each other. Some amount must be deposited every six months in those accounts calculated based on a European currency for instance Euro. Surely, such measures are possible only when the central banks of the two countries settle differences. In addition, obtaining Russian entry visa should be facilitated for the Iranian merchants as currently, while the tourist entry visa is issued fast and easy, it takes almost one month for the Iranians to obtain business visa.
What are the goods on offer from Russia in the $20 billion oil-for-goods deal?
The deal is, in fact, a mutual agreement and encompasses all the goods and equipment we desire to import from Russia and other European countries in exchange for Iranian oil and some gas.
Does it mean a shift from Turkey to Russia in reaching Europe?
Yes. In the course of conflicts in Syria, Turkey flavored the economic relations politically in order to exert pressure on Iran. Therefore, we seek to undermine further efforts by Turkey that could influence our economic matters. It is evident that this will be realized only through utilizing the private sector's potential.
The West is critical of the Iran-Russia oil deal and believes Russia has bypassed them. What is your opinion?
That is true. I see no problem in doing so. Why can't we find other means to meet our needs when we cannot import directly from Europe? When our planes are denied fuel in European airports, we are left with no choice but to sign cooperation deals with other countries.
Apart from Russia, what other countries are ready to enter into similar cooperations with Iran?
Russia is the only country with which we can strike an oil barter deal.
What about the Chinese?
China may follow in Russia's footsteps. Mr. Rouhani is to pay a visit to Beijing at the end of this month during which it may be possible to hammer an agreement with China to act as a liaison between Iran and Far East countries including Korea, Japan, Indonesia and even Australia and New Zealand.
Could such cooperation run counter to nuclear talks?
Russia and China are already members to the P5+1 group. Apart from that, the matter does not fall under the jurisdiction of P5+1 and therefore, it will not impact the course of nuclear talks.
Russian Ambassador to Iran stated that despite the oil ministers' meeting, the $20-billion deal is yet to be finalized. He further attributed the delay to the Iranian side. What is your opinion?
Feasibility studies and careful consideration are required to ensure the success of an agreement. In my opinion, Oil Ministry of Iran is currently examining the content of the deal.
What aspects are under review? The goods and equipment to be imported from Russia?
Yes. One is defining the details of the goods to be imported and the other reaching an agreement with the Russian banks in order to obtain the permission to import goods from European countries. Since Russia is not the sole consumer of the exported oil from Iran and part of it is to be sold to the European countries, we would like to be allowed to import goods from the same countries that buy our oil through Russia.
What is the private sector's opinion on the type of goods to be on the list?
We believe the list should focus on merchandise.
Do you mean we should not concentrate on consumer goods similar to our relations with China?
No. In case of Russia, it would be better to import jewels like gold and silver or industrial equipment.
How do you see the prospect of the deal?
If finalized, I see a bright future for the deal in the next Five-Year Development Plan provided that the private sector's potential is also taken into account.
Which sectors of economy and industry could benefit most?
All sectors including investment, machinery, petrochemicals and minerals. In any case, we have to enlist and prioritise our desired goods.
Geneva Nuclear Deal has resulted in a modest easing in sanctions in petrochemicals. Can Iran-Russia oil barter deal help Geneva Deal be more productive?
Geneva Nuclear Deal and Iran-Russia oil barter deal are not complementary to each other. Geneva Deal concerns the release of oil, gas and petrochemical revenue frozen by the West while Iran-Russia oil barter deal deals with oil sales in the coming months.
Is the oil-for-goods deal designed as an alternative to cover for the fact that our access to petrodollar is currently blocked?
No. We earn money in return for oil with which we import our desired goods.
Still that does not mean we can get hold of any funds.
We receive the funds in Moscow where we do business afterwards.
But the whole funds must be spent on imported goods.
The funds are deposited in our account and we can import our desired goods immediately or within six months. There are two active bank accounts in central banks of Iran and Russia through which all transactions are conducted.
Is it true that we can import goods only as much as we sell oil?
Every six months, it may change. During the agreed six months, the balance will be maintained between the imported goods and the exported oil.
Is the said six months considered as a deadline?
Maximum 12 months. However, we can reduce both account balances to zero on a quarterly basis and then act anew.
Given the history of our cooperation with Russia and their constant delay in delivering their promises on projects such as Bushehr Nuclear Power Plant and S-300 anti-aircraft missile, what approach should be adopted by the Iranian side?
We should be careful not to be deceived and that is the reason I insist on private sector's involvement in the current deal. The private sector is well aware of the history of our cooperation with Russia.
With regard to the difficulties faced by the Iranian merchants to enter Russia, how are they going to play a role in the oil barter deal?
We have raised the issue in our meeting with the Russian Ambassador to Iran and requested him to convey our concerns to the Russian government. We also proposed that Russia allow the Iranian merchants and businessmen to enter their country without an entry visa for one week and then decide on visa waiver arrangements for them. Having witnessed the advantages of such a policy, I am confident that the Russian government will be convinced to adopt the policy permanently.
Do you think, the required goodwill exists within the Russian foreign policy system?
I have no idea; it may or may not exist. The same holds true for the Iranian foreign ministry. We share a long history of distrust towards Russia. Despite the fact that during the reign of Reza Shah Pahlavi, Iran was the first country to recognize Lenin's communist government, the relations suffered distrust. The Iranian nation has not forgotten the tyranny of the Russians during the past 300 years.
Therefore, the Iranian people have every right not to wish to enter a new agreement with Russia, don't they?
Those contracts were of political nature and this one is economic. It is true that we are still upset with the Russians but let us remember that had it not been for the West's animosity, we would have never turned towards the East. When you are at odds with someone and a third party extends the hand of friendship, you tend to accept it naturally. Our interest to work with the East is rooted in the West's animosity towards us.
Given the recent changes in the West's attitude to Iran, why do we still insist on cooperating with the East?
The Jewish lobby still rules in the western countries. The people of the West do not seek to maintain animosity against Iran but their politicians still hold grudge.
Given the recent positive developments in the relations between Iran and the West, isn't Russia concerned about its position in between?
We cannot really say the Europeans have come close to Iran. It is more the question of Tehran and Washington's relation which is more political and has not grown as expected.
How have the Russians responded to the US warnings regarding the $20-billion deal?
They have been silent while keeping up the work. They believe the West can do what they want.
Do you think the threats will eventually impose danger to Russia?
Just like the case of Ukraine, they will not as Russia is strong enough. The West threatened to impose sanctions and Russia threatened back that it would stop pumping gas. Therefore, the West chose to retreat.
As an experienced person in economic dealings with the Russians throughout the years, how do you evaluate the deal?
It is a good deal provided that it is finalized and implemented with thorough consideration and private sector's involvement. If executed properly, we will benefit from this contract within five years. In other words, it means we act solely based on our interests and we take note of the Supreme Leader's advice to enter the agreement strongly and conduct the negotiations on equal footing and reject any type of dominance.
What are your recommendations for Mr. Rouhani in dealing with Russia?
We fully support the new government's policies in all aspects as we still consider Mr. Rouhani's government as the promoter of prudence and hope. Although the policies have not yet produced our desired results, we find ourselves obliged to support them so that they finally bear fruit.
In the past 10 years, Iranian merchants and businessmen have borne serious losses and damages particularly in the final year of Mr. Khatami as President and during the 8-year Presidency of Mr. Ahmadinejad. With Mr. Rouhani already in office, we seek part of our losses and damages to be compensated for. Despite some minor shortcomings which are amendable, we believe the government is efficient enough to realize our wish. Even though I do not approve of the launch of the second phase of Subsidy Reform Act, I continue to render support so that we can put this tough period behind us.