Russia says regional free trade pact with Iran possible by year-end

A free trade zone agreement between Iran, Russia and several countries that cover the vast Eurasian region spreading from the borders of Eastern Europe to Western China is possible by the end of the year, Russia’s TASS news agency reported on Monday.

Russian Deputy Prime Minister Alexei Overchuk told the state TASS agency in an interview that talks between the Eurasian Economic Union – which comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia – and Iran are in their final stages.

“We are moving forward,” Overchuk said. “We very much hope that such an agreement can be signed by the end of the year.”

Both the region and Iran have taken on additional significance for the Kremlin after Western sanctions over Moscow’s invasion in Ukraine limited Russia’s foreign trade routes and forced it to look for markets outside Europe.

However, despite tighter ties between Moscow and Tehran since Russia invaded Ukraine in February 2022 and began big purchases of Iranian-made drones to attack the country, trade between the two markets have grown only moderately.

Russian-Iranian commodity turnover rose 20% in 2022, according to government data, two-thirds the overall growth rate Moscow saw with China, another key partner with whom Russia has expanded political and economic alliance in the past two years.

The regional agreement with Iran would replace and expand an interim pact that already provides a reduction in customs duties on hundreds of categories of goods.

In November 2022, Russia started swapping oil products with Iran and in March, Tehran said it counts on “huge volumes” of both oil and gas swaps with Moscow.

Overchuk also told TASS, without providing much detail, that negotiations among the Eurasian Economic Union countries on creating a common gas market continue.

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