Iran-EU must form a robust mechanism for economic ties - the Expert | Eurasia Diary -

22 July, Monday

Iran-EU must form a robust mechanism for economic ties - the Expert

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Lately, the tarnishing US-Iran relations have seriously affected the economic system of Iran. Experts say this is the biggest damage that Iran is internally suffering and the most vulnerable side is the population who worry more about rising arrears of wages and unemployment rate.

Besides that, Iran is at the risk of losing economic partnership with the EU. The political expert Igor Pankratenko, Deputy General Director, Russian Centre for Strategic Estimates and Forecasts brought clarity to the questions during his interview to the Eurasia Diary.   


As is known, the anti-Iran sanctions have caused the country's inflation rate to soar by 35%. As a result of it, the rate of the local currency significantly dropped as well... Is everything so serious or is the media exaggerating?

In fact, the crisis in Iran is not limited to inflation and the devaluation of the Iranian rial, everything, unfortunately, is much worse, first of all for the country's population.

In the past two years, the number of people living below the poverty threshold has almost doubled. The trickiest part is that the official statistic shows less than three million populations living in poverty while in fact, this number is close to six million.

The reduction of wages in the public sector has become a steady trend, so in Nishapur the salary of municipal employees is reduced by one and a half to two times, and this happens throughout the country. But this is not all yet - wage arrears are also steadily swelling. Somewhere it is not paid for two months, in ten cities of Iran - already three, and in some regions (the same province Sistan-Baluchistan) - the delays are up to 8 months.

Another fact is that, over the past year, the Ministry of Internal Affairs of the Islamic Republic recorded about 9,500 (in nine thousand five hundred) protests - quite eloquently characterizes the level of socio-economic tension in Iran.


Hopefully, the EU would not support the US anti-Iran sanctions and would do its best to maintain the economic relations with Iran. However, is it possible Iran and the European Union to continue economic relations by circumventing the policies of Washington?

As soon as talks on the European Union and Iran relations come on table, it will act against the US position — even if they create a special trade mechanism for this — I strongly stressed that it would not be worth as this is totally far beyond the reality.

I was criticized, and event rebuked for all of these – as the facts started to realize over the time my ideas were proved to be true. At first, Europeans rushed about the idea of a special calculation mechanism. When this idea failed they changed the name - Paris, Berlin and London three together gave birth to INSTEX (instrument for supporting trade exchanges). Frankly saying, the newborn turned out to be rather ugly and obviously unviable.

In addition to the very limited functionality, the use of this tool is subject to purely political conditions that Tehran considers unacceptable for itself, and even offensive. It was in a spirit that the mechanism was appreciated by influential Iranian politicians - and the head of the judiciary of the Islamic Republic, Sadek Amoli Larijani, and Alaeddin Boroujerdi, whom I respect a lot.

Most importantly, even if INSTEX get rid of the birth trauma by chance - it will not be able to seriously support the Iran-EU trade relations. INSTEX is not about maintaining economic ties and protecting European businesses in Iran from US sanctions. This is a baloney, which Europe is trying to cover up its lack of independence in relations with Iran, as well as hiding fear for the policy of Washington. At the same time, setting up this mechanism revealed its unrealistic promises to Teheran, through which the European Union is trying to convince the Iranians to remain within the framework of the JCPOA, the agreement on the nuclear program, which today, in fact, has become a worthless piece of paper.

Actually, the vagueness and delusions of all this fuss around all sorts of "tools" and "mechanisms" is very good for European politicians and diplomats themselves. However, not all of them have the courage to say what Francois Nicoullaud, the former French ambassador said recently to Tehran: “No magic solution, no mechanisms and tools will return “Total” or “Siemens” to Iran today.”

Well, if so, then seriously, the prospects for preserving trade and economic relations between the EU and the Iranians are worthless to discuss. The fate of this relationship is not decided in Europe, but on the banks of the Potomac River.


Apparently, after the first unsuccessful attempt, Iran recently launched a second rocket into the sky. Given that, how much Iran can be competitive in the space race?

Iran has no such purpose to participate in a nuclear or rocket race. And the matter is not even in the declarations of the Iranian side - who believes the words in politics?

It could be costly for Iran to launch the mass production of nuclear weapons. Furthermore, Tehran is well aware that the consequence of joining this race is a clear demise of the economy. Iran is doing things that the US and the members of the international anti-Iran coalition have been achieving for 40 years.


For some reasons it is always difficult to change the minds of those who are used to speculate about the "Iranian nuclear threat." What about the sworn opponents of Iran in the region with nuclear weapons and a missile program?

Okay, let's not talk about Israel’s nuclear arsenal. However, the most interesting information on this subject comes from Saudi Arabia concerning a very curious field of scientific research and the success achieved by the Saudis and their friends from UAE in rocket production.

The world media still blink to facts, and for them, this topic does not exist at all. If asked why, exactly? After all, it is enough just to dig in - and things revealed will shock the audience. However, yet all are deaf and silent. What they do is to only cry about the Iranian nuclear threat...


Can the Venezuelan crisis affect the fate of Iranian oil?

In my opinion, there is no direct connection. Even if there are problems with deliveries from Venezuela - no one will rush to buy oil in Iran.

The problems for Tehran could be a change of power in Caracas, to be more specific, the gold mines in Venezuela.

In order to strengthen the gold and currency reserves of Iran, the gold comes in the country through the Republic of Turkey by circumventing the US sanctions.

For Iran, Venezuela is a strategic base for penetration into Latin America, of course, Tehran does not want to lose it.


In a recent speech, Iranian President Hassan Rouhani emphasized that negotiations between Washington and Tehran are impossible until America take a step forward by abandoning its anti-Iranian position. What do you think he wants to say with this warning? Is Iran hinting America to begin a new war?

In my opinion, this is another attempt of Rouhani to send Trump a signal that, under certain conditions, Tehran is ready to resume dialogue with the United States. Actually, this statement pretends to show that the president not to be suspected of being prepared for compromise, and especially after the instructions given by the Supreme Leader, Ali Khamenei stating that dialogue with the United States is currently inadequate.

But Rouhani and his associates do not lose hope that the dialogue can still be resumed. At least he uses it in the mode of information exchange through those secret channels that have been operating since 2011 and at the time of the treaty of JCPOA.

In general, this is quite a reasonable decision. Dialogue is important not for only Tehran but for Washington as well. It is true that Trump is tightly surrounded by anti-Iran lobbies in the United States, and in this situation, it is hard for America to formulate an agenda that would be acceptable for Tehran.


In general, how can increased tension between Iran and America influence the Caucasus region?

To be honest, I would not too exaggerate the influence of American-Iranian tensions on the South Caucasus. Yes, there are economic recessions because of the sanctions against Iran. It seems like the damage and what we once talked with our Azerbaijani colleagues was not the value of losses but the lack of experience and limitations in economic cooperation between Tehran and the states of the region.     

Here, rather, a little more different. Imagine that someone is breaking into neighbour's apartment. You are just a witness and it does not directly threaten you much - but the feeling of anxiety, fears of serious damage do not leave you alone, do it?


Interviewed by Elnur Mammadli

Eurasia Diary

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