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Iran, Turkmenistan Set to Boost Trade, Transit

Sunday 19 November 2023
Iran, Turkmenistan Set to Boost Trade, Transit

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Iran-Turkmenistan Partnership’s Bright Future

Iran, Turkmenistan Sign Agreements to Broaden Cooperation

Alwaght- At present, Iran’s neighborly policy concerning Central Asia is shaped on Iranian geographical potentials, and Turkmenistan is one of the countries of this region that is of increasing significance to the administration of President Sayyed Ibrahim Raisi as it has common borders with Iran. After several meetings of officials of the two countries over the past two years, the 17th Joint Economic Commission summit of the two nations, hosted by Ashgabat from November 17 to 19, provides a proper ground for them to boost their partnership at all levels. 

Iran’s Minister of Roads and Urban Construction Mehrdad Bazarpash who visited the Turkmen capital for the summit, said that the main aim of this meeting is to deepen the all-out relationship in trade, commerce, transportation, transit, energy, industry, technical and engineering services, customs, culture, science, health, and tourism. 

Simultaneous with this summit, the joint commercial conference of businessmen and private sectors of Iran and Turkmenistan and the 15th specialized exhibition, titled Iran Project, with the participation of a large number of Iranian companies active in various fields were held in Turkmenistan. The 16th summit of the Joint Economic Commission of the two countries was held in Tehran in November 2021. 

According to Fars News Agency (FNA), in addition to signing the summit’s document, the two sides will sign documents for cooperation in various areas. 

Economy top on agenda 

The border potentials and the economic, political, and cultural capacities of Iran provide a ground for convergence and cooperation of the two countries and this can help remove the economic bottlenecks of them. 

Although their bilateral trade has been at a low level in the past years, with the arrival of President Raisi’s administration in Iran, their trade grew significantly. In this regard, Bazrpash said that Iran’s trade with Turkmenistan has reached $500 million and will reach nearly $1 billion in the future. According to data presented at Iran-Turkmenistan meeting, Iran’s exports to Turkmenistan last year were 741,000 tons, worth $321 million, and its imports from Turkmenistan were 122,000 tons, worth $243 million. 

This comes as in 2021, their trade was $200 million which is a trivial amount for the two neighbours. But since President Raisi’s administration adopts “pivot to east” policy and prioritizes cooperation with neighbors in its foreign policy, Tehran’s relations with Central Asian countries are developing. 

In June of last year, during the meeting of the presidents of the two countries, several MoUs were signed in trade, transportation, transit, scientific, technical and cultural cooperation. Also a MoU on a joint investment task force and a gas swap agreement was signed. During this period, interaction between the two countries has been on the rise, and with the signing of cooperation documents, these relations will grow significantly, and the increase in the volume of their trade in the last two years bears witness to this fact. 

Also, the Iranian border provinces with Turkmenistan including North Khorasan, Razavi Khorasan, and Golestan that have many things to share with Turkmenistan in cultural and civilizational areas can play an important role in various export and import areas. Meetings of local authorities of the two countries specially focus on bolstering the trade between them. 

Bazarpash emphasized the need for cooperation to eliminate transit and transportation charges between Iran and Turkmenistan, adding: “We should increase technical and engineering services, especially in the field of transportation and energy, by establishing a mechanism between the two countries.” During the meeting, electricity grid connection and border markets were also discussed. 

Undoubtedly, the establishment of local markets on the common borders can play an important role in the export and import of goods between the two countries. In addition, these markets will help to create jobs and cut unemployment in the border regions, and with the arrangements that Tehran and Ashgabat have made, they will lead to economic prosperity in the border provinces. 

Electricity industry is one of the areas where Iran and Turkmenistan can enhance their cooperation. Arash Kurdi, CEO of Tavanir Company, the company responsible for production and distribution of power, who traveled to Turkmenistan with Bazrpash, announced on Saturday the implementation of a new power grid from Turkmenistan to Iran, adding: “Currently, between 350 and 400 megawatts of electricity are imported from Turkmenistan and with the operation of the new grid of 400 megawatt hours, the volume of Iran’s power imports from the neighboring country will double in the next 18 months.” 

With Iran suffering from summer-time power shortages, Turkmenistan can help fill the gap in the northern provinces. The Ministry of Energy of Turkmenistan has announced that it will increase its electricity production to 35.5 billion kilowatt hours by 2030, and this is a good opportunity for Iran to import electricity and also make revenues from being a transit route to Turkmenistan’s electricity transferred to other countries. 

Another matter that can play a vital role in the economic relations of the two countries is the transfer of knowledge and new technologies from Iran to Turkmenistan. This is already on the agenda of the authorities of the two countries. 

In the Iran Project exhibition that was held in Ashgabat with the presence of 94 Iranian companies and over 300 businessmen, Bazrpash said that 15 knowledge enterprises active in Turkmenistan market or willing to engage in this market have participated in the exhibition. 

“This is a good thing; the presence of Iranian companies in the technical and engineering services sector of Turkmenistan is a proof of the growth of Iranian companies that easily engage in the regional markets and take projects, and their products are becoming essential export products. Iranian companies both consider the quality eyed by the regional markets and try to be competitive in terms of pricing, and this is indicative of their talent,” he went on. 

In terms of transportation, he said, the two countries target 20 million tons per year. 

“To this end, we need infrastructure development. Iranian companies are set to construct a 260-kilometer road in Turkmenistan,” Bazrpash noted. 

Having in mind that Iran’s knowledge-based and technological products are more cost-effective than their foreign equivalents, Turkmenistan can use Iran’s capabilities and achievements in this field and meet some of its needs. The Islamic Republic can help its northern neighbor in the construction of ports, dams and power plants, and economically, Iranian companies are more economical to work with than foreign investors. 

Turkmens eyeing Iran’s railway corridors 

A landlocked country, Turkmenistan has for years been seeking railway routes for access to the high seas and trade with the world and to this end, it eyes Iran’s railway corridors. 

Due to location in a geopolitically sensitive region and access to the ground and maritime routes and also enjoying transit and transportation infrastructures, Iran is one of the most economical and safest routes for Turkmenistan exports both in energy and other products. 

Meanwhile, North-South Corridor that was inaugurated last year paved the way for Turkmenistan’s access to the Indian Ocean and the Persian Gulf. Turkmenistan authorities are seeking to use Iran’s capacities to expand their trade with the world, something Bazrpash mentioned in Ashgabat, adding that Iran welcomes Turkmenistan joining North-South Corridor and TRACECA (Transport Corridor Europe Caucasus Asia). 

In the past, Turkmenistan used to export a large part of its goods to European and African countries through Russia, but after the Russian attack on Ukraine and the closing of its borders with Europe, Ashgabat turned to Iran and in the past two years, it has enhanced the level of cooperation with Tehran. 

Using Iranian rail corridors, Turkmenistan can transfer its goods to the Indian Ocean and the Persian Gulf with the shortest time and cheapest price and so realize its old dream of access to the high seas. Therefore, Turkmenistan’s rail connection to Iran’s Sarakhs and then Bandar Abbas as well as partnership with Iran to boost North-South Corridor are the most important cooperation areas in transit and transportation. 

In his meeting with Turkmenistan President Serdar Berdimuhamedow, Bazrpash emphasized on the need for an essential step to realize synergistic partnership given the “spirit of the bilateral agreements.” He also explained ‘Iran Route’ initiative of President Raisi’s administration to the Turkmen president, adding that neighboring countries can use Iran as a route and a transportation solution in their trade. 

Bazrpash made it clear to Berdimuhamedow that Turkmenistan has a special place in this initiative and is regarded as a strategic partner. This country is the gate of Central Asia and access to the East-West and North-South corridors. 

Saying that Iran believes that Turkmenistan now has access to the high seas, Bazrpash said that the Islamic Republic has made special facilitation for neighbors’ access to the high seas and in this planning, Turkmenistan’s role in the trade corridors is realizable. 

On the other hand, Iran will play a key role in China’s Belt and Road Initiative (RBI) as a connecting link of the East-West Corridor, and Turkmenistan can take full advantage of Iran’s transit routes to transport its goods.

Gas swap deal continues as cold season arrives 

Over the past years, talks on the gas swap has always been top on political and economic dialogue of Tehran-Ashgabat officials. Now that winter arrives, one of the obsessions of the Iranian government is making sure that gas is provided to northern provinces by Turkmenistan. 

To transfer its gas to the Caucasus, Turkmenistan signed a gas swap agreement with Iran last year, through which this country transferred 5 to 6 million cubic meters of gas to Azerbaijan. Gas supplies from Turkmenistan to Azerbaijan were decided to be doubled, showing that the relations between the two countries are growing in the field of energy transit. 

Turkmenistan holds the world’s fourth richest gas reserves and a large part of its revenues are from gas exports. According to data, this country exports 62 billion cubic meters of gas to China and other countries per year and intends to double its gas extraction by 2027, and this means more exports and meanwhile Iranian routes can play an important transit role in this country’s energy sector. 

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Iran Turkmenistan’ Trade Transit Gas Swap North-South Corridor

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