We are United - and Not Only by Oil!
Dr Morteza Saffari Natamzi, the Ambassador Extraordinary and Plenipotentiary of the Islamic Republic of Iran, answers questions from our magazine
What is your evaluation of the trade and economic relationship between Iran and Kazakhstan?
Currently, the official trade turnover between our countries is about $400-500 million. However, the actual indices are much greater. This is because the figures cited above are related to the official trade between Iran and Kazakhstan. On the other hand, there are goods that are not taken into account by the two countries’ foreign trade statistics. For example, a range of Iranian goods are supplied to the Kazakhstani market through Dubai, Ashgabat and Bishkek, but under Arab Emirates trademarks.
Such unaccounted goods include many items carried by shopping tourists. In addition, there is also some exchange of goods in the sphere of research and technical services. Oil exchange over the SWAP line is another item in Iranian-Kazakhstani trade. This shows that trade turnover between our countries is greater than appears officially, and also is the evidence of excellent opportunities for trade co-operation between Iran and Kazakhstan.
Do you believe that these opportunities could be made use of?
There are many ways of widening our trade co-operation. Formerly, a lot of commercial transactions were executed by small firms and there were no banks to monitor them. Today, the Export Development Bank of Iran has founded a branch in Kazakhstan. This will deal with various trade issues. In order to create favourable export conditions in Kazakhstan, the Bank will grant credit facilities to businesspeople. This is sure to facilitate trade turnover between the countries.
Another point is connected with current transport opportunities. These were not used to the full in the past, but it is expected to increase trade turnover through the development of road, air and sea transport.
There is a railway connecting Iran with Kazakhstan. Yet our businesspeople complain that there is sometimes a lack of wagons. In spite of the fact that Iranian rail shipment companies are prepared to increase their activity over this route, there are many difficulties connected with getting permits from the Kazakh customs. Getting rid of such non-trade encumbrances will naturally promote an increase in Iranian-Kazakh trade.
We are also offering to boost the shipping exchange between our countries in order to increase marine freight traffic. The Islamic Republic of Iran Shipping Lines (IRISL) is playing a significant role in this process. The importance of this proposal is growing, in view of the fact that rail transport has to cross the Turkmenistan and Uzbekistan frontiers, and these countries have the rates and terms of their own.
Ferry traffic has now been introduced between Aktau sea port and Iranian ports, bringing substantial benefits. Co-operation will develop along with increases in the capacity of these ports and the construction of new ferries.
Can you tell us briefly about the Iranian transport infrastructure on the Caspian?
First of all, I would like to emphasize that it is highly developed. The Kazakh Minister of Transport and Communications and other officials saw this during their visit to Iran. For example, the port of Amirabad has recently been built on the Caspian. It is very convenient for sea ferries and is connected with the railway terminal and a highway, which gives it an advantage over the other ports. In addition, there are all the facilities necessary for the intake of crude oil. Besides Amirabad, Iran has ports on the Caspian at Neka, Now Shahr and Anzali.
On the subject of co-operation between our countries over transport, what are the prospects for Iran-Kazakh co-operation on the new Trans-Asian railway project?
There are factors in favour of implementing this project. Firstly, it is worthwhile from the economic viewpoint. Secondly, we will be able to enter the rich Chinese market with its great potential. On the other hand, differences in railway standards are a serious problem for our countries. Chinese and Iranian railways are similar, but the Kazakhstani rail gauge is the same as in Russia. This is why we need a standard gauge railway along the China-Caspian Sea-Iran-Turkey-Europe route.
Of course, Kazakhstan would have to invest billions in this project, while Iran will only need to make a small investment in order to take part in the route mentioned above (our country is willing to participate). The Kazakh government may be the sponsor for its part of the project, or, if that is impossible, the project may be assigned to private investors.
Are Iranian businessmen prepared to invest in Kazakhstan?
Currently, 137 Iranian companies are actively operating in Kazakhstan, gaining considerable experience. In this regard it should be noted that some of the companies which entered the country 10 years ago faced a number of problems that cooled their interest in the Kazakh market. Of course, current conditions are much different to those that existed then, and disappointed companies have to understand that times have changed in Kazakhstan, and that it is now worth investing. This is why the mission of our embassy is to provide all necessary information to investors. I am optimistic about the expansion of investment in the area of small and medium-sized business in Iran. Some positive changes have occurred in this sector lately. I have discussed this issue many times with representatives of Iranian companies, and they seem to be eager to operate in the Kazakh market.
I believe that the government of Kazakhstan will assist in creating favourable conditions for us to co-operate in the area of small and medium-sized business, because they are paying considerable attention to the development of this sphere.
I also had a meeting with the Minister of Economy of Iran a while ago, and provided him with information about Kazakhstan. He was very pleased with what he saw, because Iranian economy is well enough developed to meet the requirements of Kazakhstan.
Data from the Export Development Bank shows that Iranian companies invested $50 million in Kazakhstan. Can you tell which sectors of Kazakhstan’s economy are the most attractive?
These private Iranian companies invested in industry and construction, mostly in Almaty and Atyrau. Currently they are planning to invest in Kazakh agribusiness. For instance, two companies have begun to invest in agricultural projects in South Kazakhstan. A motor oil and antifreeze solutions plant has been commissioned in Shymkent recently. Iranian investment in the construction of this plant came to $4 million. Investment by another Iranian company was $30 million and is aimed at launching the production of ceramic and glazed tiles, and bathroom and lavatory equipment. These are facilities that have been or are being built; it is only a beginning. The fact that Iranian companies are interested in the South Kazakhstan region makes me hopeful that we will witness more active work in the future.
We know that the major factor providing stability for petrol and other hydrocarbon fuel prices is the high level of Iranian oil processing and petrochemicals development. How can Kazakhstan use this experience?
It is true that the development of the national oil industry and the construction of modern oil processing facilities have become very important in Iran since the Islamic Revolution. We consider crude oil to be a strategic product, which is why it is essential to cut down exports. This means that Iran does not want to be just an oil exporter, but aims to process oil into finished products. For instance, the countries which process crude oil independently earn about $300 per barrel, on a current basket price of $30 per barrel. This is why we export just 2.5 million bpd presently, although the figure was 6 million bpd before the Revolution. At the same time, Iranian oil processing plants produce about 1.5 million bpd of gasoline. Abundant investment in petrochemicals development has allowed our country to produce about 22 million tonnes of these products annually. In future the index is expected to reach 70 million tonnes.
As you see, this policy is much more efficient.
I think that Kazakhstan has some good opportunities. Iran, with its great prospects in the sphere of petrochemicals technologies and equipment, can provide assistance for your country. In addition, our prices are much lower than prices in other countries. For example, as a result of co-operation between Iran and Turkmenistan we have built two oil processing plants in that country.
What about the joint development of Caspian resources?
First of all I would like to say that we consider the Caspian Sea to be a unique basin, and thus very valuable. It should remain a sea of mutual understanding, peace and friendship for all states in the region, notwithstanding the existing problems. This is our key viewpoint and this is why we are participating in the negotiations on the legal status of the Caspian.
I would like to add that in spite of the fact that Iran speaks in favour of joint use of the sea by all the Caspian states, we do not object to those who want to divide it, because we understand that each party to this problem has its own opinion. Unfortunately the Kazakh mass media has distorted our position. Iran was said to be eager to divide the Caspian into five equal parts, with each country possessing 20%.
Based on modern geometrical methods, international standards and expertise, as well as other criteria, Iranian experts have determined that Iran’s share should be about 19.7%-20.03%. However this 20% is not the result of dividing the sea into five parts, but comes from precise engineering calculations. We have explained this to everyone, and any international authority would accept such a model. This is why we will persist in asserting this in the future.
During the last meeting in Astana, the Russian representative Viktor Kalyuzhny announced that many Caspian states have definitely changed their opinions. We also want this to happen.
What is your point regarding the fact that intensifying economic activity on the Caspian shelf can result in the threat of depletion of natural resources?
This is one of the major issues in relations between Iran and the other Caspian states. Sooner or later the oil will run out, so we must not sacrifice this unique sea for the sake of oil. This issue is also of primary concern to the government of Kazakhstan. We are discussing this problem very actively with all interested parties. Five Caspian states have already signed the Tehran Convention for the Protection of the Marine Environment of the Caspian Sea.
Protection of the sturgeon population has become a topical issue for the Caspian and will require a joint effort for its solution. Although Iran has been breeding sturgeon for many years, the biological balance that existed in the times of the USSR has been disrupted. During the last Astana meeting, it was suggested that the current situation could be improved. However, I think that there is still much to be done in this regard.
What does unite Iran and Kazakhstan beside economic interests?
First of all, the historic kinship of our nations. The main sources of the early history of Kazakhstan are written in Farsi. Our languages share many common words. Some 30% of Kazakh words are borrowed from Farsi directly or via other languages. This close relationship does not need to be commented. I believe that cultural contacts will be instrumental in broadening economic co-operation between our countries.
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