Russian Companies Shun Iran, Prefer UAE, Tehran Official Says

A member of Russia-Iran chamber of commerce in Tehran has said that Russian investors prefer the United Arab Emirates and other countries to Iran for investments.

Jalil Jalaifar, who is a member of the board at Russia-Iran chamber of commerce told ILNA in Tehran that Iran has not been able “to attract even one investor.” He explained that Russian investors study the internal conditions in Iran and conclude that it is not a hospitable environment. He added that “investors realize…they will face a wall” in Iran.

Instead, Jalalifar argued that 50-60 Russian companies register in the UAE daily, while in Iran bureaucratic impediments dissuade foreigners from opening any office or subsidiary. A large bureaucracy is in charge of approving names that owners select for their companies, and this in itself is enough to drive away any foreign investor.

Iranian media, former politicians and pundits in recent days have been highlighting the fact that Russia is taking oil and steel export market share from Iran, while the hardliner government in Tehran has been advertising the benefits of expanded ties with Moscow and Beijing.

Ironically, China is said to have shifted its oil imports from Iran to purchases of heavily discounted Russian crude. This is an alarming turn of events for Tehran, which amid US oil export sanctions heavily depends on China as a buyer.

Reuters reported on Friday that Iran's crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favored heavily discounted Russian oil, leaving almost 40 million barrels of Iranian oil stored on tankers at sea in Asia and seeking buyers.

Some tankers have been anchored since February but the number storing Iranian oil climbed swiftly since April, trading and shipping sources told Reuters, as more Russian oil headed east.

Jalalifar also said that since the invasion of Ukraine trade between Russia and Iran has probably doubled, but he emphasized that the volume is negligible compared to Russia’s overall trade.

The latest figures released a few months ago showed 3-4 billion dollars in annual bilateral trade between the two counties with an upward trajectory.

Jalalifar explained that Iranian ports and bureaucracy are not ready to assist an expansion in trade with Russia. “Red-tape takes up to a week to clear” at the northern Caspian Sea ports, he argued.

In land transport he argued that the border crossing point to the Republic of Azerbaijan at Astara 400 trucks can clear custom, but daily interruption in Internet access shuts down Iranian customs and exports must wait for days.

He explained that companies expediting exports are few and weak and the government ha to allow the private sector to compete in this sector.

The chamber of commerce member said that the Iranian government demands a host of documents for transiting goods from one free economic zone to another in the country. This red tape is completely unnecessary since the goods are not destined for Iran’s domestic market. It hinders the country’s proclaimed goal of becoming a transit hub in the region, especially for Russia amid the war in Ukraine.

“We need a revolutionary action and judicial authorities have to intervene” to stop red tape that stops Iran’s economic development, Jalalifar argued.