Oman to be Iran’s regional hub

Iran

Published on Sunday, 25 March 2018 Back to articles

Dubai had been the primary regional hub for Iran’s international trade and financial transactions for decades, but deteriorating relations with Saudi Arabia and the United Arab Emirates have compelled Tehran to develop new trade and financial routes.

Many companies have already started shifting their operations, especially re-export hubs, away from Dubai and are focusing on Azerbaijan and Georgia. Now, the government is following suit and attempting to pave the way for greater economic interaction with Iran’s Caucasian neighbours. Two steps have recently been taken towards this goal.

Transit corridors

On 15 March, the foreign ministers of Turkey, Azerbaijan, Georgia, and Iran gathered in Baku to sign an agreement on creating a transportation and transit corridor between the Indian Ocean and Europe.

Within this undertaking, the Rasht–Astara railroad, which is being built by Iran and Azerbaijan, will be connected with the Baku–Tbilisi–Kars railroad. The latter became operational on 30 October 2017. A transit land corridor will also be built, starting from the Iranian ports of Chabahar and Bandar Abbas and extending to European countries.

Links with Oman

Second, on 16 March during an official visit to Iran by Omani Foreign Minister Yusuf Bin Alawi, Iran and Oman forged a number of significant agreements relating to banking cooperation. It was agreed that Omani banks would accept Iranian bank guarantees, and the possibility of transactions in local currencies has been expanded. They will also promote joint investments between their respective companies, especially those with a focus on petroleum and petrochemical projects.

Oman has been a reliable regional partner for decades. During the toughest phase of external sanctions against Tehran, Oman always facilitated Iranian relations with international banks and organisations. Oman is also the only Gulf Cooperation Council member other than Qatar that won’t bow to Saudi pressure over its relations with Iran.

Now, Tehran and Muscat have agreed to promote Oman as the re-export hub for Iranian exports to international markets. Iran is thus distancing itself from the regional sphere under Saudi influence and deepening trade and economic ties with other neighbours. As part of this regional strategy, Tehran will also look for opportunities to increase energy and economic interconnectivity with select countries in the region.

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