Russia becomes Iran’s largest foreign investor: Iranian finance minister

Russia has become Iran’s largest foreign investor, Tehran’s finance minister said in an interview published on Thursday.

Russia invested $2.76 billion in the Islamic Republic during the current financial year, which ended this week, Ehsan Khandouzi told the Financial Times. These investments were made in various sectors such as the industrial, mining and transport sectors, according to the minister.

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“We define our relations with Russia as strategic and we are working together in many aspects, especially economic relations,” said Khandouzi.

He emphasized that China and Russia are Iran’s two main economic partners and that Tehran plans to expand its relations with them by implementing “strategic agreements.”

Regarding accusations by Ukraine and its Western allies that Iran has supplied Russia with armed drones for use in its war against Ukraine, Khandouzi said that the conflict was “unfortunate” for Iran. However, he did not respond when asked if Tehran received revenues from arms sales to Russia.

On Tuesday, Iran’s Supreme Leader Ali Khamenei rejected these accusations and instead accused the United States of starting the conflict in Ukraine and profiting from it.

Deputy Governor of Iran’s Central Bank, Mohsen Karimi, said in January that Iran and Russia had connected their interbank communication and transfer systems to help boost trade and financial transactions.

Since the US reimposed sanctions on Iran in 2018, the country has been disconnected from the Belgium-based SWIFT financial messaging service, a key international banking access point.

Some Russian banks have also faced similar limitations since Moscow’s invasion of Ukraine last year.

The sanctions have limited Iran’s ability to attract foreign investment, with Afghanistan being the second-largest foreign investor after Russia, investing £256mn, according to data from Iran’s finance ministry cited by the Financial Times.

Chinese investment was just $131mn, behind Iraq and the United Arab Emirates, suggesting that it is not only Western businesses that are hesitant to do business in Iran.

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