According to a report by Russia’s TASS news agency on Monday, there is a potential for the establishment of a free trade zone agreement involving Iran, Russia, and several countries spanning the expansive Eurasian region, stretching from the Eastern borders of Europe to Western China. This agreement is expected to materialize by the end of the current year.
Russia-Iran Free Trade
In an interview with the state news agency TASS, Russian Deputy Prime Minister Alexei Overchuk disclosed that discussions between the Eurasian Economic Union (consisting of Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia) and Iran are nearing completion. The talks are currently in their final stages.
“We are moving forward,” Overchuk said. “We very much hope that such an agreement can be signed by the end of the year.”
Both the Eurasian region and Iran have gained increased significance for the Kremlin due to Western sanctions imposed on Russia following its invasion of Ukraine. These sanctions have restricted Russia’s foreign trade routes, compelling the country to seek alternative markets beyond Europe.
Despite the closer relationship between Moscow and Tehran since Russia’s intervention in Ukraine in February 2022 and the subsequent significant purchases of Iranian-made drones for military purposes, trade between the two markets has shown only moderate growth.
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According to government data, commodities turnover between Russia and Iran increased 20% in 2022, which is two-thirds higher than the overall growth rate Moscow observed with China, another important partner with whom Russia has strengthened its political and economic ties over the previous two years.
The regional arrangement with Iran would replace and broaden an interim agreement that already lowers customs taxes on hundreds of different product categories.
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Russia began trading oil products with Iran in November 2022, and Tehran stated in March that it anticipates “huge volumes” of oil and gas exchanges with Moscow.
Without going into much detail, Overchuk said to TASS that talks between the nations of the Eurasian Economic Union to establish a single petrol market are still ongoing.