Russia, Iran team up in new
trade, investment deals

TEHRAN - Russia and Iran, both targeted by international sanctions squeezing their economies, set the stage Wednesday for a strategic partnership aimed at vastly expanding trade and investment.


The two countries signed a number of protocols intended to increase bilateral trade tenfold in the next two years from the current figure of $1.5 billion (1.2 billion euros).


At the same time, Russian Energy Minister Alexander Novak said the two countries would also pursue investment projects worth 70 billion euros.


Iranian Oil Minister Bijan Zanganeh, who had welcomed on Tuesday a sizeable Russian delegation, said "there is no restriction on developing trade relations" between the two sides.


Iran has long been under an array of EU, US and UN sanctions over its disputed nuclear energy program.


Western powers suspect Tehran has sought to develop nuclear weapons, a claim it strongly denies, and negotiations are now underway to reach a deal acceptable to both sides.


Russia, meanwhile, has recently been slapped with EU and US sanctions over its perceived support for separatists in Ukraine.


Consequently, both countries are looking for new economic partnerships.


One example is food.


"Before the sanctions, we imported certain products from the European Union, and now we can import them from Iran," Novak said.


Under one deal, Iran will buy 10 million tons of wheat, while exporting dairy products, fruit and vegetables to Russia.


Tehran also aims to triple from $600 million its sales to Russia of chicken, meat and eggs, as well as shrimp.


But the two sides denied they had agreed to barter oil for food, after Russian media reported that talks were underway for Moscow to import 70,000 barrels per day of Iranian crude at a preferential price in exchange for agricultural products.


Iran is rich in oil, but has long sought to diversify its energy sources, and its drive for nuclear power has complicated relations with the West.


Tehran is now negotiating with Germany and the five permanent UN Security Council members, among which is Russia, to reach a final deal on its nuclear program.


In exchange for accepting curbs on its nuclear activities, Iran wants the slew of crippling US, EU and UN sanctions to be lifted.


According to a Western diplomat in Tehran, the new partnership with Russia, with whom there is a history of complicated relations and mutual mistrust, would be "an insurance policy against a pessimistic scenario on the outcome of [nuclear] negotiations."


Ramin Rabbi, director of investment fund Turquoise Partners, said "this is Plan B for Iran if the negotiations fail."


Not surprisingly, the most important investment projects involve energy, which would include the creation of a power network linking the two countries, for which Iran is desperate for investment.


Russia would build 10 new conventional electrical power plants, as well as four more nuclear power plants to add to an existing one. Eventually, Iran aims to have 20 such installations, each producing 1,000 megawatts.


On other fronts, the two countries want to develop a strategic partnership in petrochemicals, according to Ahmad Mahdavi, a key figure in the Iranian sector.


There are also plans for Russian investment in Iran's railroad network, as well as the sale to Iran of Tupolev TU-204 airplanes and spare parts.