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Russia, the EAEU and Iran form a fundamentally new world economic system

Russia, the EAEU and Iran form a fundamentally new world economic system

The Iranian-Russian trade forum that took place recently in Tehran   and the talks between the head of the Russian delegation, Deputy Prime Minister of the Russian Federation Alexander Novak and the heads of key financial and economic departments of Iran marked, it seems, a fundamentally new stage not only in bilateral relations, but also in the formation of international economic relations. a system that does not depend on the exchange, currency and commodity monopoly of the West in the global economy.

Perhaps the main result of the mentioned events, including the meeting of the Russian-Iranian intergovernmental commission that took place at the same time, is as follows: Russia and Iran, as A. Novak noted after the completion of the mentioned rounds, will continue to increase the share of national currencies in mutual settlements. According to expert forecasts, this indicator is planned to be increased to 70-80% over the next two to three years, for which the financial, including banking, structures of both countries will finalize the system of appropriate mutual settlements. Including, among other things, mutually agreed prices for goods and services in mutual trade transactions.

“One of the key topics of discussion is the financial and banking sector: creating conditions for mutual settlements in national currencies and making payments between legal entities,” said the Deputy Prime Minister of the Russian Federation. On the agenda, he noted, “Iran's connection to the financial messaging system (SPFS) of the Bank of Russia, the use of the capabilities of the payment systems of both countries - Mir and Shetab. In order to finally resolve these issues, Moscow is expecting the arrival of a delegation of the Central Bank and the Ministry of Finance of Iran in the near future.

A similar opinion  was expressed  by Oil Minister Javad Ouji, co-chair of the bilateral intergovernmental commission: “The most important area of ​​cooperation is banking: we are talking about the use of national currencies. Good decisions have been made on these issues.”

It is characteristic that on the eve of the mentioned events - in mid-April this year. The  first  consultations of the exchange structures of both countries on the aforementioned issues took place. The parties agreed on the formation of financial and commodity distribution schemes to bypass Western sanctions and simultaneously accelerate mutual payments for mutual deliveries.

In a word, Moscow and Tehran begin the creation of a sovereign inter-economic system from its foundation - an inter-ethnic monetary and financial system. Moreover, it will be most effective if both parties jointly regulate the exchange rates of their currencies - at least in the area of ​​mutual settlements. This has been practiced for a long time, for example, by China, South Africa, many countries of Latin America, countries of Southeast Asia.

Settlements in American currency - all the more because of the discriminatory policy of the US Federal Reserve System regarding the Iranian rial and its foreign currency conversion - lead to overpricing of goods and services in Iranian-Russian trade. And also to the rise in the cost of mutual settlements for the transit of Russian and Iranian cargo through the territories of Iran and the Russian Federation. Therefore, the direct mutual conversion of the ruble and the rial will, according to preliminary expert estimates, firstly, increase the volume of mutual trade by at least a third. This is also strategically important because Iran and the Russian Federation-EAEU will soon complete negotiations on the basic rules for the functioning of a mutual free trade zone, in which, again, mutual settlements in national currencies will prevail (if not dominate).

And secondly, the volume of "cross" transit of goods will increase by at least half. The latter is especially important, since the route of Russian foreign trade cargo to the countries of the Indian Ocean basin through Iran (as well as in the opposite direction) is almost twice as short as the route of the Bosporus-Dardanelles-Suez Canal.

This, in turn, is all the more important since Iran and the Russian Federation participate, as is known, in the new Eurasian North-South corridor (Scandinavia-Baltic-RF-Azerbaijan-Iran-South Asia). Moreover, the Iranian side periodically  reduces  tariffs for bilateral and international cargo transit. Recall in this regard that Russian experts until the end of June this year. will visit the Iranian ports of Chabahar and Bandar Abbas in the Indian Ocean to assess their capacity and possible joint measures to increase it.

Given all these factors, Canadian analyst Robert Sibley of Ottawa Citizen Corporation is quite objective: back in 2012, he noted that other countries' need for dollars as a reserve currency "strengthens the dollar and allows the United States to have a deficit budget." And if, following Iran and Russia, "for example, China, India will also abandon the dollar, the American economy may suffer greatly and for a long time."

We also note that mutual settlements in stable national currencies will certainly accelerate the creation of a "dollar-free" free trade zone in the Caspian region, for which Iran has long advocated. He also proposes to create an organization for economic cooperation of the Caspian countries.

By the way, the project of direct mutual conversion of the Soviet ruble and the Iranian rial was previously discussed during the visit of Shahinshah M.R. Pahlavi in ​​the USSR in 1974. But subsequent political events prevented this project.

The Russian-Iranian round in Tehran outlined the specifics in expanding the range of mutual trade. The Iranian side announced the demand for supplies from the Russian Federation of a number of types of industrial equipment, grain and products of their processing, poultry products. A. Novak replied that, in his opinion, the decision of the Russian side would be positive.

In this regard, we recall that the Russian Federation, Iran and Azerbaijan have already  organized  tripartite high-speed rail agroexpress trains in both directions. According to available information, the volumes of these mutual deliveries will increase taking into account the mentioned requests from the Iranian side. It is possible that Belarus will join this route due to the growing volumes of mutual deliveries, including food supplies, between Belarus, on the one hand, and Azerbaijan, Iran, on the other.

In addition, both sides decided to develop  barter trade , that is, within the framework of direct exchange of goods at an equivalent price value. In particular, Iran plans to import from Russia, as specified by Iranian Minister of Trade and Industry Reza Fatemi Amin, rolled steel, alumina (aluminum raw material), zinc, and lead. And in return, gas turbines and various auto parts will be supplied to the Russian Federation. The minister explained that "everything is ready for the supply of auto parts to Russia." In the gas turbine industry, Iran "has achieved modern technologies, which led to the signing of contracts with Russian power plants."

In addition, a number of Iranian departments received Russian proposals for barter exports to the Russian Federation of products needed for Russian shipbuilding and pharmaceuticals. It was also decided to hold talks with Tehran on the joint construction of new units at the nuclear power plant in Bushehr (built earlier with the help of the Russian Federation) - so far the only and largest one in the Middle East.

It should also be noted that, according to A. Novak, the forthcoming allocation to Tehran of the remaining part of the credit line previously opened by Russia to Iran ($5 billion) was discussed. It is possible that this part of the loan will be used for the new nuclear power plants of Bushehr.

The details of these contracts and projects have not yet been officially disclosed. But the very fact of such shows that both countries are aimed at the comprehensive reindustrialization of their national economies. And most importantly, Russia / the Eurasian Union and Iran are becoming a significant pole in the formation of a fundamentally new, sovereign world economic system.

Alexey Baliev , political scientist