Iran’s first neighbor policy boosts trade and brings peace

The busy streets of Tehran are seeing an increase in motorcades passing curious passers-by as the heat slowly and steadily sets in with the arrival of scorching summer in the Iranian capital.

Unlike the immediate aftermath of a nuclear deal in 2015, which sparked a flurry of diplomatic activity and a steady stream of delegates arriving from European capitals, new visitors come from neighborhoods close to Iran.

And they are not visiting because of another deal in sight between Iran and the West. They are here thanks to the regional diplomacy that President Ebrahim Raeisi’s administration has made a key part of its foreign policy since taking office in August.

On Tuesday, Pakistani Foreign Minister Bilawal Bhutto Zardari announced after talks with Iranian officials in Tehran that the two neighbors had come closer to resolving one of the main obstacles to the expansion of bilateral trade by operationalizing the barter mechanism.

“This will go a long way towards improving the livelihoods and well-being of people in the border areas,” he said at a joint press conference with Iranian Foreign Minister Hossein Amir-Abdollahian.

He said promoting trade through border markets was the measure of their joint commitment to providing opportunities for improved economic and trade activities.

The two sides also identified ways to enhance bilateral relations to match their true potential, particularly in the areas of trade, investment, connectivity, border management, pilgrim facilitation, cultural and educational cooperation and the strengthening of exchanges between peoples.

Another important step towards strengthening bilateral relations, Zardari said, is the commitment to strengthen energy cooperation.

President Raeisi told the top Pakistani diplomat that Iran is ready to meet Pakistan’s demand for oil, gas and electricity. Senior Iranian officials have also said the country is ready to barter its electricity for Pakistani rice.

For years, Iran has been supplying electricity to Pakistani towns near their common border.

During his meeting with Amir-Abdollahian on Tuesday, the Pakistani Foreign Minister reiterated his country’s commitment to strengthening bilateral relations with Iran in various fields.

“Iran is a very important neighbor of Pakistan, with whom we share enduring historical and fraternal ties,” he said. “I can say with great satisfaction that we continue to build on the extremely positive and constructive relationship enjoyed by our two countries,” he added.

On Wednesday, Iran officially welcomed the new President of Turkmenistan, Serdar Berdimuhamedow, who together with President Raeisi oversaw the signing of a series of cooperation documents in the fields of economy, trade, transport, investments, new technologies, environment, sports, energy, justice, education, research and tourism.

Among the drivers of this regional diplomacy is Iran’s trade route, which is extremely attractive to its neighbors.

Pakistan is taking advantage of a new Iranian land route to Turkey, which cuts travel times for goods between South Asia and Europe from more than forty days by sea to as little as a week.

Additionally, Central Asian countries worried about bottlenecks at Caspian Sea ports that have caused weeks of delays — as well as a raging war in Ukraine that has hampered Eurasian traffic — turn to Iran to move the goods back and forth.

Iran already transfers gas from Turkmenistan to Azerbaijan through a swap deal. Iranian Oil Minister Javad Owji said on Wednesday that the Turkmen side had requested to increase gas exchanges with Azerbaijan and other neighboring countries, which Tehran welcomed.

Commercially, using Iran as a land route also makes sense, wrote leading U.S. think tank The Atlantic Council, which operates more than a dozen regional centers and functional programs related to international security and global economic prosperity.

A global shortage of containers, he said, has driven up the cost of ocean freight and the threat of piracy or terrorism at sea has driven up insurance rates.

An overland option roughly coinciding with the ancient Silk Road linking Asia to Europe cuts transit times, cuts insurance and refrigeration costs, alleviates other transportation bottlenecks, and could alleviate supply chain shortages, benefiting businesses and consumers everywhere, he said.

The Atlantic Council has told how just over six months ago a pair of trucks from the UAE’s northernmost principality, Ras al Khaimah, crossed the Persian Gulf to the Iranian port of Bandar Abbas on a specialized “roll-on, roll-off” ferry. before heading to the multi-lane highways of Iran.

Then they headed northwest across the expanse of Iran to the mountainous border with Turkey where they crossed the Bazargan-Gürbulak border heading southwest towards the Turkish port of the Mediterranean Sea from Mersin.

“Thus, a new trade route has been established, one that regional players are jumping on and could build the kind of trade ties that encourage peaceful relations,” the think tank wrote.

According to the World Road Transport Organization (IRU), the international truck and transport lobby, the trip from the Arabian Peninsula to the Mediterranean took just six days.

That’s a fraction of the roughly twenty-one days it would take to move a cargo from the Persian Gulf to the Red Sea through the Suez Canal bottleneck and out to the Mediterranean Sea.

Still, it took until October 2021 for the corridor to open, suggesting how fragmented the Middle East is and how much healthier it could be economically.

As in North Africa, neighboring nations act more like islands than partners, the Atlantic Council said.

“The biggest historical anomaly is Iran’s absence from the global trading system,” said Atlantic Council partner Matt Oresman of Pillsbury, an international law firm specializing in international sanctions and trade law. .

“It makes historically and geographically imminent sense that Iran would play that role.”

Shortly after the creation of the transport corridor, the leader of the United Arab Emirates Mohammed bin Zayed visited Turkey in November 2021 to meet President Recep Tayyip Erdogan.

The two leaders set aside years of differences over Libya and Syria, as well as their conflicting ideological visions for the Middle East, to discuss trade and investment deals.

It was one of the factors that encouraged Erdogan to set aside past grievances and embrace Saudi leaders, including Crown Prince Mohammad bin Salman, at a meeting in Jeddah in April, the economist said. Selim Koru.

Several sources said this was among the factors pushing the recent talks held in Baghdad between Saudi Arabia and Iran.

According to The Atlantic Council, trade routes and economic interdependencies can at the very least establish a measure of rationality and efficiency, and perhaps create incentives for peace between long-time adversaries, just as the integration of French and German steel industries after World War II made another armed conflict between the two nations almost literally impossible.

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