An interim agreement with Iran could open the trade doors with members of the Eurasian Economic Union over the next four years, Russia's prime minister said.
Iran may be facing economic isolation in May when U.S. President Donald Trump is expected to break the terms of the Joint Comprehensive Plan of Action by not signing off on sanctions waivers. The U.S. president sees the deal that scales back Iran's nuclear ambitions as flawed and its collapse could have sweeping economic and national security consequences.
This week, the Central Bank of Iran said it was considering a currency swap mechanism with Turkey so there would be "no need" for currencies like the U.S. dollar or the euro to settle its accounts. On Tuesday, Russian Prime Minister Dmitry Medvedev signed an interim agreement to set up a free trade agreement between Iran and members of the Eurasian Economic Union, the EAEU.
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"The agreement provides for the formation of a free trade area on a limited range of goods between the EAEU and Iran," a statement from Medvedev read. "The EAEU will grant Iran tariff concessions on 502 harmonized commodity codes."
EAEU member states are Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.
Russia and Iran already cooperated in the energy sector. After U.S. sanctions pressures increased on Russia last year, Gazprom Neft signed a memorandum of understanding last year with Iran's Oil Industries' Engineering & Construction firm to investigate the geological potential of oil fields in Iran.
Last week, Iranian Oil Minister Bijan Zangeneh said a new relationship was forming with Russia's state-owned exploration and production company Zarubezhneft. Under the terms of a new petroleum contract, the minister said both sides would work to enhance the oil recovery from fields in the west of Iran.
On Monday, the U.S. government eased sanctions on Russian aluminum producer RUSAL, opening a relief valve for commodities boosted by substantial risk premium. Kremlin spokesman Dmitry Peskove said Tuesdayhe was hesitant to offer a position, adding that "so far it is difficult to say how consistent our American counterparts are in their approach."
By Daniel J. Graeber
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