Head of joint chamber of commerce in exclusive interview
Tehran, Ashgabat moving from mistrust to cooperation
Pezeshkian should take privatization seriously
In recent years, relations between Iran and Turkmenistan, especially in the economic sector, have gone through their fair share of ups and downs. After things turned cold due to the gas dispute, it’s encouraging to see relations expanding once more, with an increase in the level of trade exchanges promising a bright future. The two countries share over a thousand kilometers of common border. Following Turkmenistan’s independence from the Soviet Union in 1991, Iran was quick to recognize its sovereignty, and from there, the two nations built strong economic ties in areas such as transportation and energy. Turkmenistan has long been Iran’s most important export destination in Central Asia, and the trade volume between the two has been the largest in the region. In 2009, approximately 100 industrial projects were either built or under construction in Turkmenistan with Iran’s assistance, showcasing their commitment to economic cooperation. However, a long-standing dispute over gas transfers cast a shadow over this relationship. The gas trade between the two countries began in 1997 with a 25-year contract. Things took a turn in 2007 when Turkmenistan demanded a steep price increase, which was eventually moderated due to pushback from Iranian officials. Despite this hiccup, relations remained stable until 2013. In 2017, Turkmenistan halted its gas exports to Iran due to accumulated debts. That same year, it was revealed that Turkmenistan owed $1.8 billion for gas delivered to Tehran. Iran’s delay in payment was due to a change in the settlement method with the Turkmen side, shifting from bartering to cash, which proved challenging due to US-imposed sanctions. The fallout from the Turkmen gas cutoff affected other commercial fields as well. However, since the inauguration of Iran’s late president Ebrahim Raisi in 2021, there has been a flurry of diplomatic activity and cooperation across various sectors, leading to improved relations. The current volume of exchanges stands at approximately $500 million. Experts believe that the exchange capacity between the two nations is much higher and that the new government’s focus on empowering the private sector and reducing the impact of Western sanctions could significantly boost trade. Iran Daily conducted an exclusive interview with Ramezan Bahrami, the head of the Iran-Turkmenistan Joint Chamber of Commerce, to discuss the current state and future prospects of trade exchanges between the two countries.
By Sadeq Dehqan &
Amir Mollaee Mozaffari
Staff writers
IRAN DAILY: First, could you outline the current trade situation between Iran and Turkmenistan?
BAHRAMI: In the last two to three years, the government of president Raisi really picked up the pace and fostered good cooperation with Turkmenistan, taking things forward in a way that outshines the previous Iranian government. During the Rouhani government, relations hit a low point when the Turkmen government filed a complaint with the International Court of Justice in The Hague over a gas dispute. Dialogue and negotiations broke down, and the situation escalated when the other side resorted to using force. In fact, the level of relations between the two countries was at its lowest point in 30 years before the Raisi government stepped in.
However, since the late president took office, things have taken a turn for the better. The then-president’s visit to Turkmenistan and the reciprocal visits by Turkmen officials helped reset the relationship. Discussions on gas swaps resumed, and trades across the borders flourished once more. The appointment of an active and knowledgeable ambassador to Turkmenistan signaled a shift, and it’s clear that the president’s government has a particular focus on fostering good relations with neighboring countries. Given these positive steps, the previous government certainly deserves credit for its efforts in developing trade with Turkmenistan.
Were there no weak points in the previous government when it came to commercial and economic cooperation?
I want to emphasize that despite the strides made by the Raisi government in fostering better relations with neighboring countries, the existing laws and regulations pertaining to trade and the business environment hindered the success of these efforts. Customs regulations, currency obligations, and banking requirements, for example, significantly hampered the operational and executive power of merchants. It’s important to recognize that the current trade volume between Iran and Turkmenistan largely stems from the initiatives of the private sector, with border residents and businesspersons in border provinces playing a pivotal role. Our trade is not structured optimally, and the private sector’s resilience is largely responsible for maintaining the current exchange levels. Government directives, regulations, and incentives fall short when it comes to adequately supporting the private sector.
Let me provide an illustration. Even when our agricultural products are at risk of perishing in fields, there aren’t any regulations in place that allow businessmen to sell them in foreign markets without the burden of foreign currency obligations. Even when a product is surplus to the farmer’s needs, he is told that the foreign currency he gets for selling it in foreign markets must be returned to the country immediately. This is true even when exchanges occur amicably between businessmen from both countries, and it may take time to recoup the currency.
In light of this, I believe that while Raisi made commendable efforts to develop foreign relations, particularly with Turkmenistan, the actions of government agencies involved in this work, from the banking system to the Agricultural Organization, undermined these initiatives. For instance, delays of five to 10 days in issuing export licenses by the Ministry of Agriculture, which does happen, can lead to a decline in product quality and ultimately, its destruction.
What steps can the new government take to facilitate trade?
One area that wasn’t given sufficient attention in the previous government was the private sector. It wasn’t taken seriously at all when it came to business equations. This issue was evident in the relationship with chambers of commerce, and during this period, communication between the government and the private sector was severed. The appointment of inefficient and non-specialist officials further strained the relationship between the public and private sectors.
The new government, led by President Pezeshkian, should avoid making the same mistake. The government ought to focus on policymaking in the realm of commercial and economic cooperation with other countries, leaving the implementation to the private sector and chambers of commerce. If the new government wants to veer away from the mistakes of the past, it should actively involve the private sector and limit its own role in policymaking.
In recent years, some executive bodies have demonstrated a reluctance to relinquish any of their powers to the private sector, even though the private sector is more than capable of handling these responsibilities. There has been a lot of talk about downsizing and streamlining the government, but in practice, it has become more bloated, exhausted, and numb. By letting the private sector taking the lead in implementation, the government should always be the one to ask questions and communicate its expectations to the private sector, not the other way around.
Initially, it might be challenging for the government to relinquish some of its powers in commercial matters, especially concerning neighboring countries, to the private sector. However, the reality is that certain economic issues, including the appointment of our economic consultants abroad, should be handled by the private sector. By handing over these responsibilities, the government should focus on bigger-picture issues and not get bogged down in the day-to-day execution of foreign trade.
One of the promises made by Pezeshkian in the field of economics is to solve the FATF problem and foster Iran’s membership in this financial group. In your opinion, how important is this issue?
Iran joining FATF holds no drawbacks for me as a businessman, and I believe most businessmen and those with economic knowledge consider it a necessary step for the country. FATF has created an economic order and has made the banking system accountable. Therefore, the private sector doesn’t view our potential membership as an obstacle because financial transparency is a fundamental principle in economics. Even currently, businessmen in our country are subject to audits. However, those seeking rent-seeking opportunities may oppose joining FATF as it would put an end to their exploitative practices.
How would you assess the future of economic exchanges between Iran and Turkmenistan during the new presidential term?
The trend of economic exchanges and cooperation between the two countries has been positive thanks to the policies of the previous government. If this momentum is maintained and improved, we could see a significant leap forward because Turkmenistan has also consistently demonstrated a willingness to cooperate with us. Enhancing communication and resolving differences through joint commissions, with the involvement of the private sector, will be crucial in fostering stronger ties. The private sector must play a central role in planning and shaping a suitable economic groundwork. Given the slogans advocated by Pezeshkian, I anticipate a growing trend in economic exchanges with regional countries, including Turkmenistan.
Over the last five years, the financial turnover in trade between Iran and Turkmenistan has exhibited strong growth, increasing from $130 million to $480 million. With the initiatives and policies implemented in the current Iranian calendar (started March 20, 2024), if the Iranian government successfully addresses existing obstacles, a tenfold increase in the volume of exchanges within the next five years is within reach.
What steps must be taken to achieve this goal of enhancing the level of exchanges?
First, it’s imperative to fully address and repair the damage inflicted on the level of economic cooperation between the two countries due to past issues and differences. Implementing sufficient oversight of the trade with Turkmenistan is also crucial. Previously, there was a lack of structurally and systematically sound methods, resulting in instances where low-quality goods were sent by Turkmen-Iranian traders as well as Iranian traders to the other side, undermining the credibility of our exports. Moving forward, we should focus on mitigating the negative impact of sanctions on the country’s trade and economy and issue fewer sudden directives. For example, we witnessed times when the trade of one product becomes suddenly allowed in Iran, only to be suddenly forbidden later. These kinds of things disrupted the markets we painstakingly created for our products, losing them to our competitors.
As a businessman in the private sector, what message would you like to convey?
For businessmen like myself, political ideologies, whether fundamentalist or reformist, don’t factor into our work. We remain committed to fostering economic cooperation with the government, regardless of its political leanings. The only exception we make is in our refusal to engage in business with the Israeli regime. Our sole consideration is advancing the economic interests of our country. We don’t concern ourselves with the political affiliations or ideologies of officials or fellow businessmen. Our perspective is that we should fulfill our duties as soldiers on the economic front, striving to improve the lives of our people and enhance the country’s exports and production. In my opinion, if we as businessmen become entangled in partisan politics, we risk losing focus, which is the biggest harm to the private sector.