Russia, Azerbaijan, Iran rearing economic nucleus

  02 November 2017    Read: 1425
Russia, Azerbaijan, Iran rearing economic nucleus

The heads of state of Russia, Azerbaijan, and Iran met in Tehran on Wednesday as the second leg of a tripartite meeting series, which addresses the international North-South Transport Corridor project aimed at facilitating trilateral trade, oil, transportation, banking, and agricultural cooperation, among others.

The first trilateral meeting was held in August 2016, in Azerbaijan’s capital Baku, where the trio discussed environmental issues and the fight against terrorism, as well as ways of enhancing inter-state commerce, energy production, communications and transportation.

It seems that this series of meetings is going to strengthen the trio as a newly emerging economic nucleus, of which new achievements must be expected in the future.

Iran and Russia

Last Iranian year (ended March 20, 2017), Iran exported $400 million worth of commodities to Russia while the value of imports exceeded $1.5 billion.

On the sidelines of the trilateral Tehran event, the head of Russia's state-controlled oil giant Rosneft said the company had signed a roadmap with the National Iranian Oil Company (NIOC) to implement “strategic” projects in Iran.

Igor Sechin said that the deal paved the way for legally-binding documents to be signed within a year.

The output from the joint projects, with total investments worth up to $30 billion, is seen plateauing at 55 million tons per year (1.1 million barrels per day).

In the meantime, Iran’s biggest trade center “Iranians' Trade House” in Astrakhan was inaugurated in the southern Russian city in the presence of Iranian Ambassador Mehdi Sanaei this week.

The Russian port of Astrakhan is a center for commercial activities of nearly 200 Iranian firms which has turned the port to the largest center of Iranians’ economic activities in the Eurasian country.

Also on Wednesday, Iranian Finance Minister Masoud Karbasian and Russian Energy Minister Alexander Novak, meeting as heads of a joint economic committee between Iran and Russia, announced that Iran-Russia trade grew 70 percent during the past year. They also reviewed cooperation on making investments, expansion of joint railway and marine transportation, agricultural projects, medicine, and oil and gas as favorable cooperation fields.

“Following the orders of the two countries’ presidents to enhance economic cooperation in various sectors, after a comprehensive and detailed discussion, we assessed different aspects of a roadmap to bolster economic ties between Iran and Russia,” Novak said in that meeting.

Iran and Azerbaijan

Speaking during a bilateral meeting with Azerbaijan’s President Ilham Aliyev, Iranian President Hassan Rouhani noted that the joint construction of the Rasht-Astara railway is an important part of the North-South Corridor, which will be used for transporting goods from the Sea of Oman and the Persian Gulf, to the Caucasus and Eastern Europe.

Azerbaijan will launch a pilot run of the Astara-Astara line in December. The railroad is part of the International North-South Transport Corridor, which runs a distance of 8.3 km (5.2 mi) up from its southern border with Iran, into which it extends 1.4 km (0.87 mi) to Iran’s port city of Astara. The initiative to build the line also includes the construction of a bridge on Astarachay River that stretches along the border.

President Rouhani also said the anticipated opening of a regional railway line, known as the Astara-Astara railway, will further expand linkages, literally and figuratively, between the two countries.

The Iranian president also hailed the growing ties between Tehran and Baku as "an example of relations for other countries in the region."

The leaders of Iran and Azerbaijan have held 10 meetings in recent years, which indicates their determination to deepen relations in all spheres, Rouhani said.

Trade between Iran and Azerbaijan has increased by 33 percent in the first nine months of 2017, compared to the same period in 2016, according to President Aliyev who was speaking during the meeting.

President Aliyev also called for closer relations with Iran, citing the common history, culture and religion of Iranians and Azerbaijanis as a great asset that links the two nations.

The International North-South Transport Corridor will connect India, Iran, Azerbaijan, Russia, Central Asia and Europe via 7,200 km (4,474 mi) of railway tracks. The new corridor is expected to increase the 600,000 tons per year of commodities currently being traded between Iran and Azerbaijan to five million at the corridor’s inception, and later to 10 million tons per year.

Rouhani for his part called for efforts to enhance economic ties between Iran and Azerbaijan, proposing to use their national currencies in the bilateral trade.

In 2016, trade turnover between Iran and Azerbaijan hit $210.8 million. Between January and July of this year, trade totaled $148.9 million, according to the Azerbaijani State Customs Committee.

Iranian corporate investments in Azerbaijan have been growing as well. Over 500 Iranian companies invested about $3 billion in Azerbaijan's $37.8 billion-economy since 1993.

In 2016, Azerbaijan’s AzEuroCar LLC and Iran Khodro signed an agreement to create an automobile manufacturing facility in Azerbaijan’s Neftchala Industrial District. The plant, costing around $15 million, is expected to churn out nearly 10,000 cars per year, including brands such as Runna, Samand, Soren, Dena, Peugeot 206, Peugeot 207, Renault’s Tondar and Renault Pickup.

In a recent interview with Trend in Baku, Karbasian expressed his country’s interest in agricultural cooperation with Azerbaijan, saying Iran is capable of transferring its experience to the neighboring country.

“Iran has obtained proper experience and technology in agriculture sector, therefore the Islamic Republic is interested in cooperation with other countries, including Azerbaijan, in this regard,” he said.

The Islamic Republic exported 5.8 million tons of agricultural products worth of $5.686 billion during the last fiscal year (ended March 20, 2017), indicating an increase of 21.7 percent in volume terms and 3.61 percent in value terms.

Saying the creation of a special economic zone would exempt Azerbaijan from some regulations, Karbasian added the special economic zone would provide Baku with opportunities to benefit from its investments in Iran’s Astara.

Azerbaijan’s Economy Minister Shahin Mustafayev, addressing a joint meeting Oct. 26, put forward the proposal on setting up the economic zone.

Iran and Azerbaijan also have plans to expand cooperation in other spheres, in particular maritime transportation, power generation and customs services.

The sides have also discussed the ways for increasing the working hours of customs services between the two countries with a view to ease transit of goods.

“The trade between Iran and Azerbaijan made up $400 million over the past eight months,” Iranian ambassador to Azerbaijan Javad Jahangirzadeh has recently said.

The ambassador underlined that the economic ties are rapidly developing thanks to the efforts of the Azerbaijan-Iran State Commission on Economy, Trade and Humanitarian Cooperation.

Russia and Azerbaijan

President Aliyev, speaking at a meeting with his Russian counterpart Vladimir Putin during the Tehran event, said the increase in trade turnover between Azerbaijan and Russia "indicates to the restoration of our economies."

“We have met several times this year and our meetings always lead to good results, because we give new momentum to the development of relations. We are very delighted that in the economic sphere, the trade turnover is increasing after certain complex processes,” said President Aliyev. “This indicates that there is great mutual interest between business entities, and the increase in trade turnover is an indication of the recovery of our economies, the mutual interest.”

President Aliyev said Azerbaijan’s relations with Russia are of strategic nature. He noted that Azerbaijan and Russia cooperate in all spheres – humanitarian, economic, energy, transportation, military and technical.

He expressed satisfaction that the meeting took place as part of the trilateral summit, which is a very important event of global scale.

Before the meeting with Ilham Aliyev, Vladimir Putin said there is a strategic partnership between the two countries.

He noted that bilateral efforts to develop relations are not in vain.

“An example of this is the growth in trade turnover: in the first nine months of 2017, this indicator grew by almost 62%,” Putin said.

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