Russian hopes for Iran trade boom run aground at Caspian port Investment
Russian hopes for Iran trade boom run aground at Caspian port
Trade to Iran down at Russian port after end of sanctions. The value of goods shipped from the Astrakhan region to Iran in the first four months of 2016 was down 16 percent from the same period last year
When sanctions on Iran were lifted in January, Russia might have expected to be near the front of the queue for business opportunities. Moscow, after all, was one of Tehran's oldest allies and is now its partner on the battlefield in Syria. On the evidence of the commerce passing through the Caspian Sea port of Astrakhan, the main jumping-off point for Russian sea-borne trade with Iran, it's not playing out like that. The value of goods shipped from the Astrakhan region to Iran in the first four months of this year was down 16 percent on the same period last year, according to the regional government.
"There's a pause with grain, timber products are being loaded, metal gets shipped very rarely and then only in very small consignments," said Artyom Ulyanov, commercial director of
Astrakhan's central cargo port. "Overall, we're loading less that we did in previous periods."
That, according to traders and shipping industry sources, is partly because Russian red tape is choking trade at a time when Iranians can do deals with Western countries that were effectively closed off to them before because of sanctions. To be sure, the port at Astrakhan is only a snapshot of the state of Russian-Iranian ties. But it could point to the limitations of a relationship that is forged from a convergence of interests in areas like Syria rather than a shared world view.
The mood around the wharfs and dockyards at Astrakhan, Russia's biggest Caspian Sea port, is sour. On a visit late last month, a Reuters correspondent found that cranes in several sections of the port were standing still because there was no cargo to move.
"Before, we had to search for ships" to carry cargo to Iran because the volume of the trade was so high, said the owner of a grain-exporting company that supplies Iran, speaking of trade before the international sanctions were lifted. Now, said the businessman, who asked not to be identified so he could speak candidly, ship operators came knocking on his door looking for business.
Last month, Russia's ministry for economic development organised a Russian-Iranian business forum meant to take place in Astrakhan. Russian Energy Minister Alexander Novak was scheduled to attend. It was called off, with the local government citing "circumstances that have arisen". Some participants only found out the event was off when they were already on the way there.
Russia's government said last year it had agreed joint projects with Iran worth $40 billion. A Russian shipbuilder won a contract in May worth nearly $1 billion to build five offshore drilling rigs for Iran. Moscow is also selling sophisticated weapons to Tehran, including S-300 air defence missiles. But the mood at the port chimes with a more general atmosphere of tension in ties between Iran and Russia.
Some Iranian officials are wary of getting too close to Russia, which occupied Iran twice in the 20th century. Russia for its part is wary of Iran becoming too powerful and of alienating Iran's rivals in the Middle East. Interactions between the Kremlin and Iranian officials can, at times, be fraught.
When Russian President Vladimir Putin visited Tehran in November last year for a gas exporters' forum, Iranian security officials barred reporters travelling with Putin from entering the venue.
That sparked an argument between Iranian security and Kremlin press service officials, and in the scrum that resulted, Russian Foreign Minister Sergei Lavrov and Novak, the energy minister, were jostled, according to a Reuters reporter who was there.
In an interview with Reuters, Alexander Zhilkin, the Astrakhan region governor, said grain exports this year would be lower than in 2015 because Iran was enforcing temporary grain import restrictions.
Traders who move goods through Astrakhan to Iran talk of layers of red tape that can hold up cargoes for months, of corrupt officials withholding permissions, and of import and export regulations changing without warning. With sanctions gone, business people in Astrakhan predict that big global grain traders will now move into the Iran market, squeezing out Russian players.