Free Web Hosting Provider - Web Hosting - E-commerce - High Speed Internet - Free Web Page
Search the Web

Iran's Customs, Society and Economy, Gholamhosain Mastali, Spring 1995,
Nos. 15 & Summary:

Due to its proximity, Turkmenistan is of importance to Iran's economic interests. Despite this, Iran has not as yet fully explored and exploited the possibilities and potentials for economic co-operation with Turkmenistan. This is in marked contrast with other, more distant countries which have been more successful in their trade relations with Turkmenistan.

In order to examine the economic relations between the Islamic Republic of Iran and the Republic of Turkmenistan, one first needs to study economic transactions between the two countries (using commodity exchange as an indicator). Tables 1-1 and 1-2 show the types and volume of the export and import goods exchanged between the two countries.

In 1991, when trade relations started between the two countries, Iran's exports consisted of goods such as motor vehicles, grains, tree saplings, and detergents while imports were comprised of construction materials such as cement and ironware. Within the same year, Iran's exports to Turkmenistan were nearly twice as much as its imports from that country. During 1992, trade relations experienced an upward trend as Iranian exports grew three times greater than imports and included goods such as household items, fresh and dried fruits, and foodstuffs while imports were composed of cement, asbestos, ironware, agricultural machinery, motor bikes and motor bike spare parts.

In 1993, the amount of Iranian exports were significant in terms of weight and value which followed a growing trend and included such items as fresh fruits and vegetables, tomato paste, shoes, and the like while imports consisted of items such as ironware, asbestos, cotton, and motor bikes. During the first nine months of 1994, diverse goods also were exported, although statistics reveal a decline in terms of weight and value as compared to 1992. However, this decline should not be regarded as a decrease in exports to Turkmenistan but rather due to statistical precision and the separation of the destinations of goods. Unlike previous years, Iranian exports to other Central Asian republics were excluded from those to Turkmenistan.

A close look at the tables and their fiqures shows the trade relations between the two countries and provides a sound criteria for studying economic relations between the Islamic Republic of Iran and the Republic of Turkmenistan. Proximity to Turkmenistan, and the strategic importance of that country's entry and exit routes has a special value in terms of geographic, economic and political aspects and can provide favorable opportunities for the promotion of trade relations, if all the existing potential is evaluated, planned, programmed, and implemented.

It is worth mentioning that Iran's transactions with Turkmenistan are not satisfactory in comparison to those of other countries, considering the special situation of our country. Turkmenistan, which recently has gained its independence and enjoys vast economic potential, faced an investment void in its different economic sectors because its independence isolated it from its previous financial. The first merchants and investors who entered the country were Iranians, yet the implications of the commercial transactions and investments in Turkmenistan during the past four year are indicative of the improper use of facilities and opportunities.

If more consideration were given to the infrastructural investments such as construction of roads and highways, major construction projects, housing development, and development of different industries, and if the investors were promoted by financial and banking systems, we might see a more effective presence of merchants, investors and entrepreneurs of our country in Turkmenistan today and we would have enjoyed the same benefits that other countries have gained in different fields.

The activities of Iranian tradesmen in Turkmenistan are concerned mainly with limited commodity export by middlemen and brokers, who are not very interested in the so-called infrastructural investments. Except for a few small industries such as brick making, small metal industries and the like, no remarkable industries have been set up by Iranians in Turkmenistan. Of course, the road construction project, which is being undertaken by Iranian companies to connect Badjgiran and Eshkhabad is a project worth mentioning. However, because of our situation as a neighbouring country, we should have a more dynamic and effective presence in Turkmenistan so as to become recognised as its number one partner in its economic development.

Following this analysis we will study the activities in Turkmenistan of some other countries, which are located far away from this country and neither have the cultural similarities nor share our common historical, tribal and religious backgrounds with Turkmenistan. We then will make a comparison between such activities and those of our country.

The closest country to Turkmenistan, in view of language, is Turkey, which at present seems to be the first commercial partner of the Turkmens. Turkey largely has developed and promoted its presence all around Turkmenistan, even at its borders. Turkey participates in every major project through financial agreements since the Turkmens are short of cash. Furthermore, Turkey provides Turkmenistan with most of the commodities it requires, through barter or an credit terms, and exports them through a third country by transit. These commodities in most cases are produced and manufactured in Turkey, allowing Turkey to benefit greatly from Turkmenistan's market.

Cotton which is a strategic product of the Turkmens and is sold through government, channels, benefits the Turks more than others. Considering the fact that cotton produces, value added products and activates different economic sectors, Turkey has fairly succeeded in boosting her domestic economy by this and has thus promoted her service industry, transportation, textile as well as other industries.

The newly independent countries of Central Asia, and mainly Turkmenistan, have never been sophisticated in terms of structure; and because Turkmanistan was regarded as an agricultural district, in the land division of the former Union of the Soviet Socialist Republics, this country has always had a closed administrative and economic system. Even after her dependence, Turkmenistan long faced the void of proper workforce to run its affairs; her administrative and economic affairs were still managed by the same old officials.

Other countries such as the United States of America, Japan, Saudi Arabia and Britain have started economic activities in Turkmenistan and are trying to promote their activities. Some other countries like Argentina and Italy are even engaged in construction and development activities over its border areas , like Sarakhs. Briefly, most of the countries are interested in setting up industries in Turkmenistan as an important device to promote their mutual relationship and are now engaged in the construction of different industries such as steel mills, fur, leather, foods, construction materials and etc.

Turkmenistan is potentially a rich country with a population of nearly four million which produces about 1.5 million tons of cotton. This country has petroleum and gas reserves and yields considerable amounts of livestock products, mainly wool and agricultural ones.

The government of Iran as it effectively handled Turkmanistan gas and petroleum transmission project in the past, should provide the required incentives and guarantees within the framework of an applicable mechanism to induce joint ventures by Iranian investors without the crippling red tapes.

By setting up a comprehensive and effective economic data system economic the government could lure Iranian merchants and investors to make investments mainly in Turkmenistan, by protecting them and providing them with the required guarantees.

In order to establish industries and participate in the development and construction projects in Turkmenistan, and to expand trade relations with that country, great funds and financial supports are required. To this effect, private financing institutions should be set up, like those established by other countries. Organisations such as the great.

Iran has not made much progress in commodity transit or the transport sector whereas today this sector assumes special importance in the world and not only prepares the grounds for the expansion of commercial relations but is also considered to be particularly significant for political and security reasons, specially in providing regional security belts. Statistical data concerning the transit activities indicate that Iran has not been engaged in any remarkable projects in the central Asia region.

The massive Mashad-Sarakhs rail way project which would play a significant role in restoration of the silk road could prepare the grounds for Iran to achieve progressive economic relations. However, before utilisation off the project, the envisaged institutions and facilities should be established. The special region of Sarakhs can play a significant role in expansion and reinforcement of the economic ties with Turkmenistan and the Central Asian countries. Hence considering the scope of the special Region Project and the responsibility assumed by the Rezavi Foundation to this effect, more immediate actions must be taken towards the construction activities and utilisation of the region.