Iran's Free Trade Agreement with the Eurasian Economic Union from the Perspective of Geo-Economic Drivers and Barriers

Document Type : Original Article

Author

Associate Professor, Department of International Relations, Allameh Tabataba’i University, Tehran, Iran

10.22054/jrgr.2024.76989.1063

Abstract

Introduction
Geo-economy has become one of the emerging influential global factors at the strategic level. This factor is formed by the overlapping and complex political and economic trends in the interests of countries in a regional and international dynamism. In this regard, the signing of the Preferential Trade Agreement (PTA) between Iran and the Eurasian Economic Union (EEU) was the result of a political process of convergence between Iran and Russia in 2014, and also according to the new economic approaches of Iran and of course the Eurasian countries. However, despite offering economic and political opportunities, this agreement also faces significant political and structural challenges and obstacles. How to interact with these opportunities and challenges can influence bilateral, regional, and even international developments in the future. This situation will have wider dimensions, especially in the new conditions of the international system that emerged after the Russo-Ukrainian war. Accordingly, the sphere of influence of this agreement is considered to be beyond the economic field, but also in the geopolitical, also beyond the limited 3-year period mentioned in the text of the first PTA. At the same time, the mechanism of this effect and the factors influencing it are uncertain and there are still disagreements around it.
Literature review
So far, various papers have been published in Persian and English about the cooperation between Iran and the EEU. Moslem Ansarinasab and Najmeh Bidmal in their paper "Iran’s Trade Promotion Strategy and Eurasian Economic Union" which is published in the Central Asia and the Caucasus Quarterly (2022), have analyzed the opportunities in trade promotion of Iran and the EEU from the perspective of three geo-economic components including economy, geography and the power. Somayeh Talebpoor et al in their paper entitled "The Role of the Eurasian Economic Union in the development of Iran's foreign trade" which was published in the Research Political Geography Quarterly (2022), assess the effects of the EEU on the development of Iran's foreign trade in the context of globalization trends. Mirabdullah Hosseini et al in their paper entitled " Regional Convergence Between Iran and Eurasian Economic Union (EAEU)" which was published in the Journal of Commercial Survey (2023) by analyzing the strengths and weaknesses, as well as opportunities and challenges, concluded that the lack of inter-regional trade development mainly caused by the export structure of the member states, therefore, the possibility of developing intra-regional trade and economic convergence in this union seems challenging.  Amat Adarov and Mahdi Ghodsi in their paper " The impact of the Eurasian Economic Union–Iran preferential trade agreement on mutual trade at aggregate and sectoral levels" which was published in Eurasian Economic Review (Springer, 2021) assessed the achievements of this agreement in various levels. Elnur Mekhdiev et al in their paper entitled " Eurasian Economic Union – Iran Partnership on Bilateral and Multilateral Basis: Economic and Geopolitical Aspects" which was published in International Quarterly of Geopolitics (2023) examined the effectiveness of this agreement from an economic and geopolitical point of view. However, few papers have so far examined the drivers and barriers of this FTA especially after the war started in Ukraine.
Research Object
The current paper seeks to identify the most important geo-economic drivers and barriers of the FTA between Iran and the EEU, so that an analytical model can be obtained for the development of this agreement and how to revive the geo-economy of Iran in the light of the Eurasian approach.
Methodology
This paper by integration of the quantitative-qualitative method, based on the comparative strategy and content analysis, with the theoretical conceptualization of geo-economic theory, in a descriptive-analytical approach, tries to examine the most important geo-economic drivers and barriers of the FTA between Iran and the EEU. The time domain is from 2014 to 2024.
Results and discussion
The geopolitics of Iran and Eurasia are in proximity to each other. From this point of view, Iran is considered as the gateway of the geopolitical link between Eurasia and the Middle East, especially the southern seas. At the same time, with the outbreak of the war in Ukraine, the conditions of the region have changed in a way that has enhanced the role and geographical position of Iran for Russia and the Eurasian countries and of course their trading partners. On the other hand, there is a common "enemy" or in an optimistic view "competitor" (the United States of America) in both geopolitics, which has led to a greater connectivity. In the field of security, there are mutual interests for Iran and Eurasia in the three Eursian subsystems including Central Asia, the Caspian Sea, and the South Caucasus. These links have caused the neighboring relations between Iran and Eurasia to form a special structure that can be upgraded to a geo-economic connectivity. The EEU can be one of the catalysts for this connectivity.
The free trade agreement between Iran and the EEU was the result of a political convergence process. Therefore, it cannot be considered purely political or exclusively economic. At the same time, this issue is involved with several geopolitical factors in strategic interest regions of Iran and Russia, which gives it geo-economic dimensions. The Ukraine war has accelerated this process as a catalyst. Therefore, any deeper evaluation of this situation should be considered in the geo-economic context. Accordingly, like any other important international agreement, this is accompanied by drivers and barriers in economics and politics. In the field of geo-economic drivers, we can mention factors like Iran's presence in the Eurasian integration, relieving the geopolitical deadlock, achieving an anti-sanctions mechanism in Eurasia, and forming the Eurasian energy block. For barriers we can mention two structural and political levels, factors such as the need for changes in the structure of the micro and macro economy of Iran, providing the infrastructure, internal political-economic disagreements in the EEU, unilateral and in-comprehensive determination of preferential tariffs and the effect of sanctions can be considered as influential factors.
Conclusion
The final impact of the FTA between Iran and the EEU can be considered significant at a strategic level. The geographical sphere of influence should be considered not only among the 5 EEU member states but also in the entire Eurasian region. At the conceptual level, it can be evaluated that this event is a step in the conceptual evolution of Iran's trade development, which can provide trans-Eurasian advantages in the future. In time consideration, it should also be noted that in the case of structuring and creating economic interdependence between Iran and Eurasia, in the long term and far beyond this limited period of 3 years and its 6-year extension, its effects on trade turnover and economic ties between the two sides can be considered. Iran's strategic geo-economy is the main axis of this connectivity in the future. Therefore, it can be concluded that reaching this FTA with the EEU, if carefully planned and optimally used, can lead to the revival of Iran's geo-economic capacities in the long term.

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