EghtesadOnline: The head of Iran-Iraq Chamber of Commerce believes that the establishment of a joint bank could considerably facilitate bilateral trade between the two allies, in view of the significant volume of exports from Iran to its neighboring country.
“The establishment of an Iran-Iraq joint bank is both necessary and feasible, but lack of determination from both sides has been the most important obstacle to the formation of this bank,” Yahya Al-e Es’haq was also quoted as saying by IBENA.
According to the senior member of Iran Chamber of Commerce, Industries, Mines and Agriculture, the resolution of banking issues should be a top priority for Iran’s economy since the volume of Iranian exports to Iraq is at least $8 billion a year.
“Central banks of Iran and Iraq have held several joint meetings with each other and I have been present at many of them. In these meetings, we reached a few agreements but unfortunately there is no real momentum for their implementation,” Financial Tribune quoted him as saying.
Statistics also indicate that Iran’s exports to Iraq are on the decline. Iran exported 4.13 million tons of non-oil commodities worth over $2 billion to Iraq during the four months to July 22, indicating a 13.7% drop in volume and a 6.5% decline in value compared with the previous year’s corresponding period, the Islamic Republic of Iran Customs Administration announced.
Al-e Es’haq noted that after China, Iraq is the main destination for Iranian commodities.
However, exports to Iraq are different from China since petrochemical products account for the biggest portion of Iran’s exports to China while Iranian traders export various products ranging from food products to construction materials to Iraq, which can create many employment opportunities.
Iran’s rivals in the Iraqi market are mainly China, Turkey and Syria whose governments subsidize their exporters, effectively weakening the competitiveness of Iranian exporters.
According to Ebrahim Rezazadeh, secretary of Iraq’s Desk at Trade Promotion Organization of Iran, the country’s share of Iraqi market stood at 19.7% in March 2016-17 while Turkey’s share reached 21% last year.
“Iran exported a total of 14.2 million tons of commodities worth $6.1 billion to Iran last year, registering a 1.84% and 1.59% decline year-on-year,” he said.
The head of Iran-Iraq Chamber of Commerce also noted that President Hassan Rouhani, his First Vice President Es’haq Jahangiri and his economic deputy, Mohammad Nahavandian, emphasize on resolving banking issues between the two countries but the matter is awaiting action.
“We should benefit from our previous experiences of establishing joint banks with Afghanistan and Venezuela to prevent any of the previous failures,” Al-e Es’haq said.