Overcoming challenges: Restoring trade ties with Riyadh
Recent developments indicate a primary shift in the relationship between two Middle Eastern powerhouses — Iran and Saudi Arabia — with both countries expressing a desire to reinforce political, trade, and tourism ties. This marks a major departure from the past seven years, in the course of which the two neighbors had been at loggerheads over a wide range of issues including the Saudi-led military campaign in Yemen and the foreign-backed conflict in Syria.
But a China-brokered deal in March paved the ground for Iran and Saudi Arabia to repair their diplomatic ties. While the focus of the accord was initially on political and security issues, both countries quickly commenced exploring the possibility of fostering economic cooperation.
The Trade Promotion Organization of Iran has now voiced its interest in restoring commercial ties with Saudi Arabia with a target of achieving a trading volume of $1 billion annually in the first phase and ultimately increasing it to $1 billion.
The initiative is expected to promote Iran’s trade activities with neighboring Arab states and the broader Muslim world. Furthermore, it’s predicted to push up the economic headway of both Iran and Saudi Arabia and create more job opportunities.
However, several hindrances have to be addressed for the objective to be attained. One of the primary challenges is the lack of commercial infrastructure. Documentation, logistics, and the establishment of a maritime shipping line are all major issues that should be taken care of. Moreover, there is a need for customs collaboration in setting trading standards. Financial transactions additionally require proper mechanisms to be put in place.
In order to overcome these challenges, the private sectors of both nations need to work together to bridge the gulf and get an understanding of the latest requisites, markets, characteristics, capabilities, and consumption patterns in the two countries. Such an understanding will help both countries attain their goals and contribute to the growth of their respective economies.
Saudi Arabia is a key player within the Arab and Muslim world, serving as an effective member of the Arab League and regional business accords between Arab and Islamic countries. The oil-rich kingdom also plays an important role in formulating product standards across the Arab world. By revitalizing trade relations with Saudi Arabia, Iran can significantly increase its trade and economic growth.
While the revival of trade ties between Iran and Saudi Arabia is a positive development, it is important to note that there are still political and ideological differences. However, the mutual desire to enhance economic relations is a step in the right direction and can contribute to regional peace and stability.