Russia to expand its economic presence in Iran despite US sanctions

Tabnak – Denouncing unilateral US sanctions against the Islamic Republic, Russia has declared that it will continue doing economic interactions with Iran despite pressures. After the creation of a European especial mechanism to help Iran circumvent the sanctions, Moscow shows willingness toward using the measure, while taking steps toward expanding its economic presence in Iran.

In this vein, Russian Deputy Foreign Minister Sergei Ryabkov says the creation of a new trading system called the Instrument in Support of Trade Exchanges (INSTEX) between the EU and Tehran will also open up “opportunities for trade between Iran and third countries, including China and Russia.”

The upcoming launch of INSTEX is going to open up more opportunities for Russia as well, Ryabkov told TASS on Wednesday.

Eventually, "the full-fledged functioning" of the mechanism will also "open up opportunities for trade between Iran and third countries, including China and Russia," he noted. In this respect, the countries that founded INSTEX, should "stick to their word," the senior Russian official emphasized.

After months of foot-dragging, Britain, France and Germany in early February issued a joint statement on the creation of INSTEX that will allow trade between the EU and Iran without relying on direct financial transactions.

INSTEX will be based in Paris and be managed by a German banking expert. Britain will head the supervisory board. The European countries are reportedly going to use the channel initially only to sell food, medicine and medical devices in Iran.

Meanwhile, another senior Russian official says the country’s largest carmaker AvtoVaz is negotiating the assembly and sale of its cars in Iran where there is massive pent-up demand for new automobiles.

"Negotiations are underway with a number of countries, such as Iran," Viktor Kladov, director for international cooperation and regional policy of Russian state conglomerate Rostec, was quoted as saying on Wednesday. "I mean both the sales and the assembling," Russian TASS news agency quoted him as saying on the sidelines of the AERO INDIA 2019 exhibition.

AvtoVaz, majority-owned by France’s Renault and its alliance partner Nissan, produces Russia’s best-selling Lada brand.

Russian automakers are struggling to meet their government's desire for domestic brands to challenge the dominance of Western cars. AvtoVaz has fought hard in recent years to dispel the poor Soviet-era reputation of its top-selling Lada brand.

In 2017, Russian car sales totaled 1.75 million units, up 10 percent from the previous year, but still only around half of the nearly 3 million units sold in 2012 when the market was booming.

For AvtoVaz and its likes, Iran’s massive auto market offers a fertile ground for development and expansion in the absence of Western rivals. Chinese carmakers are already making their presence felt, with a new dealership for automaker Chery recently setting up shop in Tehran.