Isolated Iran takes business East

Written by George Mcleod

Friday, 27 March 2009 Phnom Penh Post

As Western countries ratchet up the pressure on the Islamic republic, Iranian officials say that trade and investment with Asia is growing steadily, despite the global economic crisis. Photo by: BLOOMBERG Iranian President Mahmoud Ahmadinejad addresses crowds at a recent rally. With Western political and economic pressure on Iran mounting, the Islamic republic's officials tell the Post that Asia is at the front line of the country's trade policy. Cambodia is likely to become an increasingly significant trade partner with Iran as it builds commerce ties with the non-Western world, analysts said. Even with the economic crisis cutting global trade and investment, Iran's trade with Asia continues to grow. Two major delegations have visited Southeast Asia in the past two years, with more high-level visits in the works. "Iran is working hard to increase bilateral relations with all countries in the region," said Iran's Ambassador to Thailand Majid Bizmark. He cited trade with China, which has skyrocketed from US$9 billion five years ago to more than $20 billion in 2008; and Thailand, which is expected to grow from $800 million currently to $1 billion next year. Trade with Cambodia remains small, but the ambassador says that officials hope that will change. Stronger Iran-Asia relations come as trade and financial ties with the West are hit by ever-tightening sanctions. "In the situation [Iran] is in, with hostile countries in the region, it needs to make as many friends as it can ... obviously Iran has to take a strong stance," said Reza Molavi, executive director of the Centre for Iranian Studies at Durham University in the United Kingdom. In the situation [iran] is in, with hostile countries in the region, it needs to make as many friends as it can. The United States has led an international effort to isolate the Iranian government, which it says is sponsoring terrorist groups and working to develop a nuclear weapons program. Iran cites reports by the International Atomic Energy Agency that say no evidence has been unearthed to indicate Iran's atomic program is weapons-related. US law bars investment of more than $20 million in Iran, and financial transactions are severely restricted. The US Treasury reported that more than 40 banks reduced their operations in Iran due to US pressure. One of Iran's responses, analysts said, has been the Look East policy, creating ties with Asian countries that stress noninterference. Iranian officials say the program is an ideal match between energy-rich Iran and energy-hungry Asia, where foreign policy is also driven by noninterference. "Look East is one of our top foreign policy priorities, and Cambodia is certainly one of the countries we are looking at," said Iran's ambassador. Stronger ties with ASEAN are high on the agenda, and Iran has applied for Sectoral Dialogue Partnership with the regional group, which would put it on par with India as a partner nation. Military and energy cooperation are also in the works through Iran's move to join the Shanghai Cooperation Organisation, a group that some analysts tout as a possible competitor to NATO. The global economic crisis has failed to dampen Teheran's drive to increase trade, political relations and major energy deals. For Cambodia, Middle Eastern countries may soon become important players in the agricultural and telecoms sector, led by Israel, Qatar and Kuwait. Iranian investment is being welcomed for a country being hit by the economic downturn. "We are in talks with a number of Iranian investors for property and agriculture ... Iran is not yet a big player, but that could change," said a local business leader who asked not to be named. "We are certainly keen to attract Iranian investors," said the source. The government could not provide data on Iranian investment in Cambodia for 2008. But some Iran experts downplayed Look East. "[The sanctions] are having a serious impact on the Iranian economy. They are doing a variety of things to get around this, most of it is muddling through. They need to address their policies with Western countries," said Steven Cook, a Middle East expert at the Council on Foreign Relations in Washington DC.