Russia, Iran, and several other Eurasian countries could be signing a new free-trade pact by the end of the year, TASS reports. With both countries under severe Western financial and economic sanctions, they have now turned to each other for mutual support.
Both the region and Iran have taken on additional significance for the Kremlin after Western sanctions over Moscow’s invasion in Ukraine limited Russia’s foreign trade routes and forced it to look for markets outside Europe.
The Caucasus, a mountainous region between Russia and Iran, is critical to this free trade agreement. Georgia is fully aligned with NATO countries, though Russia controls two breakaway provinces, South Ossetia and Abkhazia. Azerbaijan, aligned with Israel and Turkey, defeated Armenia in 2020 in part thanks to Turkish drones now used by Ukraine. Azerbaijan reclaimed contested land, while a narrow corridor is now patrolled by Russian peacekeepers.
In this complex web of alliances involving many great powers, Russia and Iran are separated by Azerbaijan but still connected via the Caspian Sea. While both countries have closer political and military ties, a major increase in trade has not followed so far:
However, despite tighter ties between Moscow and Tehran since Russia invaded Ukraine in February 2022 and began big purchases of Iranian-made drones to attack the country, trade between the two markets have grown only moderately.
Both Russia and Iran have large reserves of oil and gas. Russia has traditionally supplied Iran with weaponry, though Russia’s increasing demands for arms and munitions due to the war has made Iranian drones sought after.
Russian-Iranian commodity turnover rose 20% in 2022, according to government data, two-thirds the overall growth rate Moscow saw with China, another key partner with whom Russia has expanded political and economic alliance in the past two years.
While China’s commercial weight is the major factor to decide whether Russia’s economy can persist, a renewal of Eurasian ties would do much to continue funding Putin’s War.
“We are moving forward,” Overchuk said. “We very much hope that such an agreement can be signed by the end of the year.”
