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From Trade to Swapping: How Russia and Iran Boost Cooperation in Face of Sanctions

© Sputnik / POOL / Go to the mediabankPresidents Vladimir Putin and Ebrahim Raisi
Presidents Vladimir Putin and Ebrahim Raisi - Sputnik International, 1920, 24.01.2023
Moscow has repeatedly underscored that western hostile acts and its packages of sanctions against Iran and Russia will not prevent the two countries from bolstering mutually beneficial cooperation in all areas.
Russia and Iran continued to bolster bilateral economic collaboration in the face of western sanctions last year. Russian State Duma Speaker Vyacheslav Volodin said that in 2022, trade turnover between Moscow and Tehran increased by 15% to a whopping $4.6 billion on Monday.
How is the Russian-Iranian economic partnership developing and what spheres does it cover? Sputnik answers these and other questions.

New Level of Relations

Speaking at a session of the Inter-Parliamentary Commission on Cooperation between the Russian State Duma and the Iranian Parliament in Tehran, Volodin stressed that the two sides successfully develop relations in a whole array of areas.

“The current Russian-Iranian relations are reaching a new level, which features strengthening mutual trust and deepening practical interaction,” he pointed out.

The State Duma speaker pointed to both sides’ final efforts to hammer out “a new basic interstate agreement and a number of specific deals”, which stipulate partnership in such areas as trade, transport, energy, agriculture, logistics, as well as investment and customs regulation.
"This is actually unprecedented in our relations, because the agreements cover almost all areas," Volodin said.
Piping systems and shut-off valves are pictured at the gas receiving station of the Nord Stream Baltic Sea pipeline, in Lubmin, Germany.  - Sputnik International, 1920, 13.10.2022
Russia Can Export Gas to Persian Gulf Via Iran, Iranian Official Says
He added that Russia sees great potential "in the implementation of joint large-scale infrastructure projects, and the expansion of cooperation between the Eurasian Economic Union and Iran."
"We are talking about the planned conclusion of a platform agreement on a free trade zone instead of a temporary agreement. This is especially relevant in the context of our countries' implementation of the project to create the North-South International Transport Corridor (NSTC)," Volodin emphasized. The 7,200-km corridor aims to attract the transit of cargo flows from India, Iran, and the Persian Gulf nations through Russian territory to Europe.

Boosting Energy Cooperation

Last year saw an intensification of energy contacts between Russia and Iran, which is based on common interests in the Caspian region and resolve to counter the West’s policy of sanctions.
At the beginning of 2022, Russia opened a loan for $1.4 billion for the construction of the Sirik thermal power plant in Iran. In July 2022, the Russian energy giant Gazprom and the Iranian National Oil Corporation signed a memorandum of understanding.
The projects are estimated to be worth about $40 billion and they include the development of the Kish and North Pars gas fields, as well as Russian participation in the exploitation of the South Pars gas field. Under the projects, Russia is expected to invest several tens of billions of dollars in the development of the deposits.
Separately, Gazprom and the Iranian National Oil Corporation discussed the development of six oil fields and the construction of export gas pipelines.

Swap Business

Iranian officials were quoted by media outlets as saying last year that Tehran plans to acquite around 6-9 million cubic meters per day of Russian gas in swap deliveries.
Moscow, in turn, is reportedly interested in the scheme, which envisages Russian hydrocarbon resources being supplied to Iran through Azerbaijan, and the relevant volume then going to the markets of the Asia-Pacific region.

Alexander Frolov, director general of the National Energy Institute think tank, told Sputnik last year that an agreement between Gazprom and its Iranian partners may add to opening up a new route to help deliver Russian energy supplies to Asia.

According to him, the very beginning of cooperation between Iran and Gazprom is fundamentally important, something that stabilizes Russia’s economic position and opens up more opportunities for Moscow in the Asian market by means of supplies via Iran.

Trade Relationship

Trade between the two countries grew by 81% in 2021, and increased another 30% over the first five months of 2022. More than 80% of trade consists of agricultural goods, with Russia exporting grains and oil seeds and importing Iran's GMO-free fruits and vegetables, as well as dried fruits and nuts, among other natural and high-quality goods.
 President of Russia Vladimir Putin, right, and President of the Islamic Republic of Iran Hassan Rouhani - Sputnik International, 1920, 25.10.2022
Russia, Iran Discuss Oil, Petroleum Product Supplies - Energy Ministry
In addition to trade, the two also increased political, geostrategic and military-technical cooperation in recent years, with sanctions forcing both sides to search for alternatives to western-dominated institutions and systems.
Russia and Iran are working to de-dollarize trade, seek to implement a SWIFT-style system for bank transfers and are negotiating the means to ensure interoperability of one another's payment systems. They signed a $40 billion energy cooperation agreement in July, and agreed to expand cooperation in automotive manufacturing in August.

Russian Lawmaker: No Chance for US to Hamper Moscow-Tehran Cooperation

During the Monday speech, Russian State Duma Speaker Volodin underscored that Russia and Iran are successfully resisting the international expansion of the US and NATO bloc, which is “confirmed by the unprecedented sanctions pressure” on the two countries.
He added that Washington and its allies are seeking to hamper the economic development of Russia and Iran, "interfere in internal affairs, [and] spread misinformation."
According to Volodin, "these attempts are doomed to failure because our countries will never submit to outside diktat.”
The Russian lawmaker also underlined that the development of dialogue between Russia and Iran is of importance to ensuring international security.

"Russia and Iran together uphold the principles of sovereign equality and non-interference in the internal affairs of other states. They stand for multipolarity and a fair world order in the interests” of both Russians and Iranians, Volodin said.

Moscow was hit by several rounds of unprecedented western sanctions shortly after it launched its special military operation to demilitarize and de-Nazify Ukraine on February 24, 2022. As for Iran, then-US President Donald Trump reinstated a set of harsh economic sanctions against the Islamic Republic in May 2018 after he announced Washington’s unilateral withdrawal from the 2015 Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA).
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