Grappling with US and EU sanctions that have become progressively tougher over the past 18 months, Iran is increasingly turning to Asia — in particular to China, now its top trading partner.
“Our exchanges with Europe, which used to account for 90 percent of our trade, now represent only 23 to 24 billion of our 200 billion [US] dollars in trade,” Iranian President Mahmoud Ahmadinejad said after the EU ratcheted up sanctions on Iran last month.
These sanctions, which aim to pressure Tehran to halt its nuclear activities, “have not shrunk the world for us,” he said.
Iran is expected to have exported US$100 billion in oil and US$45 billion in non-oil products over its calendar year, which ends in the middle of next month. Its total imports over the same period will touch about US$55 billion, official forecasts said.
“The sanctions, like those previously, will let us cut all economic links with the West,” the No. 2 officer in Iran’s elite Revolutionary Guards, General Hossein Salami, said last month.
The force is one of the primary targets of the sanctions.
The EU, which is imposing a boycott of Iranian oil, had been its second-biggest importer after China, accounting for about 20 percent of the crude the Islamic republic sells abroad.
Iran exports more than 70 percent of its oil to Asian markets, in particular China, India, Japan and South Korea.
China and India alone buy 40 percent of Iranian oil exports. They are resisting the Western sanctions, saying they will observe only UN measures, not unilateral ones.
Iran-China trade jumped more than 50 percent between 2010 and last year, to US$45 billion. The two countries plan for it to grow further, to US$100 billion by 2015.
Exchanges with South Korea grew 61 percent last year, to US$18.5 billion.
While the US and EU sanctions make it more difficult for Iran to pay for euro and US -dollar-denominated goods, and for it to receive petro-dollars, business with Asian customers has an advantage.
“Letters of credit are now being opened in Chinese yuan, Russian rubles, Emirati dirhams and Turkish lira, which are forcing importers to buy their products in those countries,” one Iranian businessman said on condition of anonymity. “Western financial sanctions are going to reinforce trade links with Asian countries, Russia and Turkey.”
A European diplomat in Tehran said late last year that “in 1995, when the Americans imposed their unilateral sanctions on Iran, they in fact boosted trade between Iran and Europe.”