Iranian Exporters Can Open LC Accounts in Russian Bank 'Mil Business'

The Deputy Minister of Industry of Iran announced on Tuesday, December 2, that Iranian exporters can open Letters of Credit (LC) in the Russian bank 'Mil Business', which will respond to Iranian exporters' needs. According to Mehr News Agency, Mojtaba Khosrotaj stated that the 30 to 40 percent decrease in the value of the Russian ruble has made exports to this country difficult for Iranian exporters. He also mentioned that the Central Bank of Iran is in discussions with a Russian bank to facilitate imports from Russia to Iran. He identified the drop in oil prices as another threat to the Russian economy and emphasized that Iran should take advantage of the existing opportunities in this country. Khosrotaj stated, 'In this context, the government has the duty to create a conducive environment, with the primary focus on increasing trade relations with Russia and resolving banking issues.' He noted that all Iranian exporters who work 'officially' with Russia can open Letters of Credit through the Mil Business bank. The ruble has faced its largest drop since the 1998 economic crisis since December 1. The declining oil prices and the falling value of the ruble have intensified concerns about the economic situation in Russia. The Deputy Minister further mentioned that 'for imports from Russia, the Russian side has designated a bank, and discussions with the Central Bank are ongoing, and soon we will see that LCs from Iran for imports from Russia will be opened.' Previously, Asadollah Asgaroladi, head of the Export Commission of the Iran Chamber of Commerce, announced on October 24 that 'a Russian-Iranian bank' has been designated for transferring money from Iranian exporters from Russia to Iran. He stated, 'Exporters can refer to this bank in Russia, deposit their dollars, and receive the equivalent in rials at the free market exchange rate in Iran through designated reputable exchange offices.' According to Asgaroladi, Iran had $500 to $600 million in exports and $2 billion in imports from Russia last year. The head of the Export Commission of the Iran Chamber of Commerce reported on August 6 that the volume of trade between Iran and Russia ranks fifth among Iran's neighbors, which is considered a 'disaster.' The Shargh newspaper reported on April 27 that trade exchanges between Iran and Russia accounted for only one percent of Iran's total trade volume in 2013. The newspaper noted that the five main export items from Iran to Russia are 'cabbage, cucumber, vegetables, pistachios, and dried grapes,' while the main imported products from Russia include 'wheat, barley, animal corn, wood, and newsprint.' Following a trade delegation led by Alexander Novak, the Russian Minister of Energy, to Iran on September 9, Bijan Namdar Zangeneh, Iran's Minister of Oil, announced that the level of exchanges between the two countries could increase by more than ten times. In recent months, Iranian officials have also commented on bartering Iranian oil for Russian goods. However, Ali Majidi, former Deputy Minister of Commerce and International Affairs of Iran's Ministry of Oil, stated on September 9 that the oil cooperation agreement between Iran and Russia does not include oil barter. Meanwhile, following the news of an agreement between Iran and Russia to build at least two power plants, Jalil Jafari, a member of the Iranian Parliament's Energy Commission, stated on November 15 that the cost of building these two nuclear power plants in Bushehr will be covered through oil barter, and 'it will not put pressure on the government and the public budget.' Bartering Iranian oil for goods or services means that Iran provides its oil to a country and, in return, receives goods or services from that country.