Nuclear deal: Iranians detail the impact of economic sanctions
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Amid the invasion of Ukraine, Russia has expanded its energy ties with Iran, another country that has butted heads with the US in the past. Diplomats from the two countries discussed the second and third phases of the expansion of the Bushehr nuclear plant with Iran, which was built by Russia. Meanwhile, energy companies from Moscow are also set to play a larger role in Iran’s petrochemical industry, posing another hurdle for Western countries that are desperately trying to end their reliance on Russian fossil fuel exports.
The European Union is heavily dependent on Russian gas, having imported 40 percent of its supply from Moscow in 2021.
Last week, Russian Deputy Prime Minister, Alexander Novak, headed a high-level delegation to Iran to discuss their alliance.
According to Iran’s Petroleum Minister, Javad Owji, Russia has already allocated part of its $5billion (almost £4billion) funds promised for Iranian energy, agricultural, and transport projects.
Russia and Iran plan to expand their annual trade to at least $40billion within the next three years.
According to Mr Owji, Tehran and Moscow will significantly increase their cooperation in the financial and banking sector, oil, gas, petrochemicals, and nuclear energy.
He also noted that the two countries have agreed to conduct their bilateral trade in their own currency.
This deal could be a huge boost for rubles, which took a major hit after Western countries sanctioned nearly all aspects of the Russian economy following the invasion of Ukraine.
In retaliation, Vladimir Putin warned that unless European nations open up ruble accounts in Russian banks, Moscow will terminate its gas contracts.
While the bloc initially refused to pay for Russian gas in rubles, the EU Commission seems to have caved to Putin’s threat, as a sudden loss of Russian gas could lead to blackouts.
In a speech on March 31, the Russian leader said that “unfriendly” countries could no longer pay for energy in euros or dollars, but rather in rubles.
He added: “Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped.”
The latest meeting, following a visit by Iranian President, Ebrahim Raisi to Moscow in January, has laid the groundwork for a 20-year deal between the two oil-rich countries.
Since Mr Raisi’s visit, the countries have focussed their attention on cooperation in the petrochemicals sector in particular.
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Like Russia, the fossil fuel industry has been considered the cornerstone of Iran’s economic model, with the country poised to become the Middle East’s top producer and exporter in the sector by 2027
Since Russia’s invasion of Ukraine, Tehran has offered Moscow a helping hand.
Most recently, Morteza Shahmirzaei, the new head of Iran’s National Petrochemical Company (NPC) extended an invitation to Russian companies to work in Iran to exploit further opportunities in the petrochemical industry.
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