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Iran's economy ready to breathe again

15 April 2015 13:10 (UTC+04:00)
Iran's economy ready to breathe again

By Laman Sadigova

While negotiations on Tehran's nuclear program between Iran and world powers continue to generate hopes, talks have been ongoing about the possibility of reviving the ancient Silk Road - ran from Central Asia to Europe via Iran.

The issue was mulled during Iran’s Foreign Minister, Mohammad Javad Zarif’s visit to Astana on April 12 -13.

Kazakh President Nursultan Nazarbayev stated that Astana sees Iran as a close political and economic partner despite various difficulties.

He also stressed that much work has been done in the framework of the Silk Road revival. The railway from Kazakhstan with access to the Persian Gulf will contribute to the strengthening of economic ties. Kazakhstan can act as a bridge in Central Asia and thus become a valuable partner.

Iran’s policy in Central Asia has remained stable for the past years. From a Central Asian perspective, the region is widely open to building economic ties with the Islamic Republic.

Much of the region’s infrastructures have been orientated toward the Chinese market since they gained independence. However, there is always a danger of over reliance on China.

Russia, on the other side, being the traditional route for Central Asian oil and natural gas exports, is experiencing deep political and economic challenges due to its tension with the West over the Ukrainian crisis and sanctions imposed on the country. Meanwhile, Russian energy imports from Central Asian producers are slated to be cut back in 2015.

An inherent element in Kazakhstan’s foreign policy is its “multi-vector” approach. As one of the five nations bordering the Caspian Sea, Kazakhstan places a high priority on entertaining good relations with its maritime neighbors, including Iran.

Silk Road’s opening can play a significant role for Central Asian countries. It can also change the trade’s dynamics for Central Asia and give these five countries more leverage during negotiations with their giant neighbors; especially in regards to the energy sector.

Talking about trade relations between the two, Iran and Kazakhstan - two oil-rich countries - both profit from subterranean and underwater oil and gas reserves. From 2005 until the 1st quarter of 2014 Iran’s direct investments in Kazakhstan stood at $123 million, while Kazakhstan’s direct investments to Iran totaled $10.4 million.

Iran’s role in Central Asia can dramatically increase and thus lead to the weakening of other major players’ influence.

Eventually, much depends on the outcome of the negotiations with the 5+1 countries with Iran on its nuclear program.

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Follow Laman Sadigova on Twitter: @s_laman93

Follow us on Twitter @AzerNewsAz

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