Great Expectations, Greater Trepidation: Iran-Saudi Arabia Trade Relations

Iran’s $14 million in steel exports to Saudi Arabia over the past three months might not sound particularly impressive, but the Iranian business community sees it as a sign of better times to come. The restoration of diplomatic relations between Tehran and Riyadh has had a spillover effect on trade relations, helping Iranian exporters access Saudi and other Arab markets. The great expectations of Iran’s business community, however, are coupled with even greater fears that Iranian-Saudi ties could once again be severed.

• April 14: In an interview with the Iranian Students’ News Agency, Rouhollah Latifi, a spokesperson for the House of Industry, Mine and Trade, a suborganization of Iran’s Ministry of Industry, Mine and Trade, said: “As opposed to Iran’s trade relations with countries like the United Arab Emirates, Turkey, and Afghanistan, which continued despite political and territorial conflicts, trade relations with Saudi Arabia are very different. Political relations prepare the ground for economic relations … When diplomatic relations were severed, the two countries had, in practice, no direct economic relations, but as diplomatic negotiations resumed a few months ago, we have also witnessed economic activities … Over the past three months, more than $14 million worth of steel was exported, which indicates continued demand, which may expand to other fields … With Saudi Arabia’s weather conditions taken into consideration, food and agricultural products can be major factors, along with steel, in the expansion of trade relations between the two states. Transit routes and Saudi Arabia’s access to West Asia through Iran are also of importance.”
• April 16: In an interview with Faraz Daily, Mehdi Alipour, a member of the Shiraz Chamber of Commerce, warned the regime against “easily losing the opportunity” of maintaining relations with Saudi Arabia: “I must emphasize this: Expanding relations with Saudi Arabia, under any circumstances, is in our interest, and we must take maximum advantage of this opportunity to grow and blossom” Iran’s economy. “When diplomatic ties were severed, our yearslong efforts to find a market in Arab states suddenly evaporated. This is 20 to 30 years of hard work to find a place in the markets of these countries, attract customers, and establish sales channels. What remained was a heap of ashes, as all Arab states in the Saudi camp suddenly severed their trade ties with Iran, dealing a heavy blow to our merchants. After the incidents, our merchants were forced to redirect their products to the Emirates and repackage and change the commercial names of the products so they could export their products to destination markets. But these were hard and trying times, since not all products could be repacked and rebranded … We export luxury items to the Qatari market and regular products to Oman … In Kuwait, we are facing difficulties due to further restrictions on Iranian citizens entering the country, which makes marketing harder … In Iraq, Turkey is our competitor, but Iraqi consumers prefer Iranian products. But let me emphasize this: If we don’t have friendly relations with our neighbors, we can’t expect to improve the economic conditions here in Iran.”
• April 17: Iran is aiming for $1 billion in trade with Saudi Arabia, Farzad Piltan, the West Asia director at Iran’s Trade Promotion Organization, said, as quoted by Mehr News: “As diplomatic relations were severed between” Iran and Saudi Arabia, “trade was significantly reduced, although certain Iranian products entered the Saudi market through other countries … The resumption of diplomatic ties, along with a strategy for promoting exports, can help trade relations between the two countries reach earlier levels and, in the next phase, further expand … Based on our analysis of existing capacities, in the short term, the resumption of political and diplomatic ties will help the two countries reach $1 billion in trade, which can be further expanded to $2 billion in the medium term … Based on previous exports, steel products, dried fruit … saffron, carpets, cement, and the like can be exported … As for imports, motorized vehicles, mineral and chemical fertilizers, polyethylene, and textiles can be imported from Saudi Arabia … But apart from the importation and exportation of products, the two countries can also cooperate regarding investments, joint industrial, technical, and engineering projects, reexports, and the like.” Piltan also said Iranian companies may find opportunities to help Saudi Arabia realize its Vision 2030 goals.

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