ID :
364342
Tue, 04/21/2015 - 08:45
Auther :

Ruble/rial trade would isolate Iran’s economy

Baku, Azerbaijan, Apr. 20 By Umid Niayesh - Trend: The issue of replacing the US dollar with national currencies in bilateral trade between Tehran and Moscow is a long-term postponed proposal. Initially, the switch to rubles and rials was raised, in Astana, Kazakhstan, on the sidelines of the 11th meeting of the Shanghai Cooperation Organization (SCO) in 2011 by Russian former President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad. But the sides failed to come to an agreement and the issue was handed over to successors, Hassan Rouhani and Vladimir Putin. The EU, the US and the United Nations are applying sanctions against Iran’s banking system over its nuclear program and the Islamic Republic is forced to barter its oil with goods in trade with China and India. Russia-Iran trade is currently worth $5 billion a year. A so-called oil-for-goods contract also has long been discussed, by which Moscow would buy oil from Tehran and export products and expertise in machinery, rail, trucks, metals and grain. It is not clear why the long-heralded ruble/rial trade has not yet materialized. It is likely that Iranian side’s concerns have effected the postponement. The Islamic Republic traders have not welcomed the proposal so far. In a recent statement Mohammad Hossein Barkhordar, a member of Iran Chamber of Commerce, Industries and Mines said on April 20 that the proposal could be implemented in the current year if the value of ruble is stabilized. On the other hand Iran and the P5+1 (the US, UK, France, Russia, China, and Germany) reached a nuclear framework agreement on April 2 that raised hopes for achieving a comprehensive nuclear deal by June 30 and lifting of economic sanctions on Iran, including the restrictive measures against the country’s banking system. Emphasis on ruble/rial trade in the post-sanctions period will be meaningless, and the issue may be closed then if political interests were to have no affect on economic realities. Jamshid Pajouyan, a senior expert at Iran's Center for Strategic Research within Expediency Discernment Council believes that ruble/rial trade would isolate Iran’s economy more. In this trade the sides have had to limit their trade to each other while the national currencies do not have the powerful capability of the US dollar or Euro that can be used in trade with third countries, the expert told Trend April 20. However he added that the trade can help the Islamic Republic’s economy if sanctions are not lifted or if concerns remain about their re-imposition. Pajouyan also touched upon the oil-for-goods contract between Tehran and Moscow, saying it will limit Iran’s trade. If the contract comes into force, Iran would be forced to import goods only from Russia instead of using its oil money to import from third countries, he said, adding the quality of the imported goods as well as importing based on the goods priority will be a problem as well. Edited by CN Umid Niayesh is Trend Agency’s staff journalist, follow him on Twitter: @UmidNiayesh Follow us on Twitter @TRENDNewsAgency

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