Iranian Diplomat Insists Barter Trade Best Option Amid Sanctions

A senior Iranian diplomat, Mehdi Safari says there is a conflict of interest between Iran and Russia in the energy sector, but there can be also cooperation.

In an interview with Etemad Onlinein Tehran Safari, Deputy Foreign Minister for Economic Affairs explained that Iran relies on Russia for importing essential commodities and in return exports cement to Russia. "We lend our export capability to Russia," he said, adding that "Our trade volume with Russia is $5 billon and we want to increase it to $10 billion."

Safari said Russia is a powerful country in oil and gas and can invest in Iran in the same areas while also transferring technology to Iran. He added that "Iran can also swap Russia's gas and oil with other countries. We get gas from one country and sell it to another country and make some profit. This is our economic and geopolitical potential."

Lately, Iranian officials have spoken about gas swap with Russia. Receiving natural gas and selling it to neighboring countries. But in reality, only Iraq is need of gas, but it is not a customer of Russia.

Safari, who has studied electronic engineering and telecommunications at George Washington University is introduced by Iranian media as a Russia expert. The Etemad Online reporter characterized him as a man with a conservative character who refused to remove his face mask during the interview.

Meanwhile, Safari, a former Iranian ambassador to Russia and China, told Etemad Online that Iran has signed barter trade contracts with up to ten countries despite US sanctions, however, he declined to name those countries. Safari added that barter trade is Iran's solution to circumvent the sanctions.

He has been a member of Iran's nuclear negotiators team since the 2010s when ultraconservative politician Saeed Jalili was in charge of the negotiations. During the interview, says the reporter, he declined to share many information points, fearing that "the other side might take advantage."

Safari told Etemad Online that "sanctions do not mean death and there are many ways to nullify them." However, his only solution was barter trade. He said that despite the sanctions there are many ways to further international trade although sanctions mainly affect international banking. Asked what those ways were, Safari once again referred to barter.

He disagreed with Etemad Online that barter trade will inevitably increase the cost of transactions. While this can be true in normal circumstances, Iran faces sanctions and countries that agree to barter trade with Tehran would use it as leverage to enhance their profits. Barter also deprives the country of foreign currency it can invest for economic growth.

Prominent economic journalist Maryam Shokrani wrote in a series of tweets on Sunday, August 14, that "Russia has quoted a price ten times higher than usual for work on projects in Iran." She quoted the Transportation and Logistics Confederation as saying that "Iran is about to conclude a contract with Russia for constructing a railway between Garmsar and Inceborun.”

The reporter also quoted Meysam Lajevardi, a rail transport expert, as saying that a German company has offered a contract at one tenth of that amount for the same project."

Shjokrani added that Russia had offered no bank guarantee to Iran for that contract and wanted to bring 80 percent of the personnel needed for the project from Russia. She added that the government of President Hassan Rouhani had accepted those unlawful conditions and it appears that the Raisi administration has also submitted to the same conditions.