Subchapters:
- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Business relations
Trade relations with the EU
Mutual trade between Iran and the EU reached EUR 4.86 billion in 2021. In a year-on-year comparison, this is a growth of 14.6%. It mainly boosted Iranian exports to the EU, which rose by 29.32% compared to 2020. Imports from EU countries to Iran rose by only 5.24%. Germany, Italy and Spain remain Iran’s main European trading partners, but Belgium, the Netherlands and Romania are also coming to the fore. Iran mainly exports food, live animals, processed natural materials, chemical products and minerals to the EU. Iranian exports to the EU reached a total value of EUR 922.04 million in 2021. From the EU, Iran mainly imports chemical products, foodstuffs, various finished products, processed natural materials, beverages, tobacco, animal and vegetable oils, fats and waxes, engineering and electrical products, vehicles and raw materials. Imports from Europe to Iran reached 2021 total value of EUR 3.94 billion. Of Iran’s traditional European trade partners, only trade with Spain saw growth in 2021. Trade with Germany and Italy, on the other hand, fell slightly as in previous years (a persistent trend caused mainly by sanctions and partly also by the Covid-19 pandemic). On the other hand, trade with Belgium increased significantly and, somewhat surprisingly, with Romania, Malta and Estonia, with changes in the order of hundreds of percent for the last three named countries. In terms of volume, Romania is especially worth paying attention to, which has thus become one of Iran’s most important European trading partners.
- Allcountrylist: Overview of major industries in Iran, including mining, construction, transportation, tourism, and foreign trade.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the EU (million EUR) | 10,570.10 | 8,710.70 | 4,397.60 | 3,745.10 | 3,941.20 |
| Imports into the EU (million EUR) | 10,098.60 | 9,424.70 | 679.8 | 713 | 922 |
| Balance with the EU (million EUR) | -471.6 | 714 | -3,717.8 | -3,032.1 | -3,019.2 |
Source: European Commission
Trade relations with the Czech Republic
Bilateral trade between the Czech Republic and Iran recorded a relatively interesting increase in 2021 compared to the period of Trump’s maximum pressure campaign. Exports from the Czech Republic to Iran increased by 1thousand in the first ten months of 2021. USD, imports from Iran to the Czech Republic increased by 7.7 thousand in the same period. USD. The reason for this change is probably the fact that European companies in general have stopped being so concerned about doing business with Iran in areas not affected by the EU’s anti-Iranian sanctions, and they have also managed to find a way to avoid the extraterritorial impact of US banking sanctions in particular.
Commodity structure of exports from the Czech Republic to Iran: kaolin, kaolinitic and calcitic clays, heterocyclic compounds, precious metals, metal compounds, amalgams, electric industrial and laboratory furnaces, steam turbines, human and animal blood, mechanical machines with their own individual function, medicines, hoists, lifting equipment and elevators, food preparations.
Commodity structure of imports from Iran to the Czech Republic: polymers and ethylene in primary forms, grapes and raisins, nuts, ferroalloys, dates, figs, pineapples, video game consoles and machines, products for amusement parks, table and party games, iron bars and rods and steels, carpets, floor coverings, human and animal blood, vaccines, food preparations.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the Czech Republic (billion CZK) | 0.4 | 1.5 | 0.7 | 0.6 | ON |
| Imports to the Czech Republic (billion CZK) | 2 | 0.4 | 0.3 | 0.2 | ON |
| Balance with the Czech Republic (billion CZK) | 1.4 | -1.1 | -0.4 | -0.4 | ON |
Source: CZSO
Trade relations with countries outside the EU
Iran exports mainly energy raw materials (oil, gasoline, gas), as well as polyethylene, methanol, iron and steel, pistachios and other dried fruits. It mainly imports food (corn, rice, soy, barley, oil, sugar), electronics (mainly mobile phones) and charcoal.
Iran’s main trading partners remain China, Iraq, UAE, Turkey and Afghanistan. 70% of all Iranian exports go to these countries: 30% to China, 37% to Iraq, UAE and Turkey, 13% to Afghanistan. Iran imports goods mainly from the UAE and Turkey, from where 42.5% of all imports go to Iran.
There is also a commercial rapprochement between Iran and the Eurasian Union (EEU), for example, the plan is to remove tariffs for 80% of Iranian imports by the fall of 2022. In 2021, Iran exported goods to the EEU for 898.06 million euros and imported goods for 3.35 billion EUR. Year-on-year, Iranian exports to EEU countries increased by 17%, imports from EEU countries even increased by 67%. Iran’s most important partner within the EEU is Russia, to which Iran exported goods worth EUR 449.02 million and from which it imported goods worth EUR 3.02 billion. The “driver” of Iran’s trade with the EEU, Russia, is thus a larger partner in terms of goods value than Germany, which holds the most important position in Iran’s trade with the EU.
Iran is trying to improve transport links with its leading trading partners. In July 2021, a new oil terminal in the port of Džásk was put into operation. This opened the way for Iranian tankers directly to the Gulf of Oman without the need to pass through the Strait of Hormuz. During autumn 2021, a new trade route to Turkey also started operating. In the past, Iran was to some extent dependent on the waterway leading around Saudi Arabia and across the Red Sea to Mediterranean ports. Newly, Iran uses the connection between the ports of Shahid Reja’i and Sharjah (UAE).
On September 25, 2021, Iran joined the Shanghai Cooperation Organization (SCO). This opened the way for him, in particular, to further deepen cooperation with China and India within the framework of the connection to the New Silk Road. The specific benefit of membership in the SCO is not yet visible on the Iranian economy, so far no information has appeared even about possible new projects. However, the situation may change in the future, so developments in this area need to be closely monitored.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from countries outside the EU (million EUR) | 71,058.8 | 70,670.8 | 46,084.8 | 38,625.7 | 59,667.7 |
| Imports to countries outside the EU (million EUR) | 82,858.7 | 39 172.7 | 41 103.3 | 36,571.5 | 43,073.7 |
| Balance with non-EU countries (million EUR) | -11,799.9 | 31,498.1 | 4,981.4 | 2,054.2 | 16,594.0 |
Source: EIU, Eurostat
Foreign direct investment
Due to the sanctions, it is extremely difficult for Iran to get any foreign investment. Without them, the Iranian economy cannot continue to develop well. Iran would need investment mainly in the energy and mining sectors, as well as in the chemical industry. Thanks to the modernization and completion of the infrastructure, new machines and technologies, it could fully develop its mining potential (it is estimated that, apart from oil and gas, Iran extracts only 1% of known raw material resources) and the production of chemical products, which form, among other things, an important part of Iran’s exports. It is assumed that in the case of an agreement between Iran and the US and the subsequent renewal of the JCPOA, a short window will emerge until about 2025, when a significant part of the anti-Iranian sanctions will be lifted. During this period, Iran will try to get maximum investment to make up for the lost years and prepare for the possible renewal of sanctions.
In the past year 1400 (3/2021 – 3/2022), despite the sanctions, Iran managed to get almost 4 billion USD of foreign investment. Compared to the previous year, however, the volume of investments fell by 25%. The main investors in Iran are Iraq, UAE, Afghanistan, Ghana, Turkey, China, Serbia, Netherlands. Before the renewal and tightening of sanctions against Iran in 2018, Germany was the largest investor in Iran.
The current state of direct foreign investments of the Czech Republic in Iran is not known, however, if Czechs invest in Iran despite the sanctions, then these are negligible amounts of minor local significance. In the case of the renewal of the Iranian nuclear agreement (JCPOA) and the lifting of sanctions that block investments (especially US bank sanctions), opportunities are offered for Czech investors, especially in the mining industry, engineering and transport.
FTAs and treaties
Treaties with the EU
Iran has not yet concluded any bilateral trade agreements with the EU. As it is not a member of the World Trade Organization (WTO), EU countries’ trade with Iran is subject to the EU’s general import and export rules.
Contracts with the Czech Republic
Overview of valid contracts (sorted retrospectively):
- Agreement on the support and protection of investments (18/12/2017) – awaiting ratification by Iran, after which it will contribute to the necessary greater protection of Czech investments going to Iran
- Agreement on economic cooperation between the Czech Republic and Iran (January 18, 2016) – an important step in the framework of supporting bilateral economic cooperation activities, part of the agreement includes, among other things, the establishment of a Joint Commission for Economic Cooperation, which should meet regularly alternately in Iran and the Czech Republic and discuss the current challenges and opportunities of mutual bilateral trade
- Agreement between the Government of the Czech Republic and the Government of the Islamic Republic of Iran on the avoidance of double taxation and the prevention of tax evasion in the field of income tax (April 30, 2015)
- Air Transport Agreement (December 9, 2003, entered into force only at the end of 2015)
- Agreement between the Government of the Czech Republic and the Government of the Islamic Republic of Iran on International Road Transport (January 30, 2001)
- Memorandum of Understanding between the Government of the Czech Republic and the Government of the Islamic Republic of Iran on the status of treaties valid between the two states (March 11, 1997)
- Protocol between the Czech Republic and the Islamic Republic of Iran (March 12, 1995)
- Agreement between the Ministry of Industry and Trade of the Czech Republic and the Central Bank of the Islamic Republic of Iran (11/18/1994)
- Long-term Payment Agreement between the Government of the Czechoslovak Socialist Republic and the Imperial Government of Iran (26/05/1967)
- Cultural Agreement between the Government of the Czechoslovak Socialist Republic and the Imperial Government of Iran (May 26, 1967)
- Friendship Treaty between the Czechoslovak Republic and the Persian Empire (October 29, 1930)
Developmental cooperation
Iran is clearly a recipient of development aid, especially in connection with the presence of several million Afghan refugees (UNHCR estimates from the beginning of 2021 speak of 5 million Afghans, but this number may realistically be higher, additional Afghans are still coming to Iran) in its territory. In addition to Afghans, there are also about 150,000 people in Iran. Iraqi refugees. Data on other refugees is not known, but it cannot be ruled out that the refugee community is much wider. More than half of the refugees are not registered and stay in Iran illegally.
Since 2010, the Czech Republic has been a provider of development aid in Iran through so-called small local projects (MLP). In 2019 and 2020, the non-profit organization Rebirth Charity, which cares for drug addicts, was supported in this way. In 2021, a project to support disabled orphans is being implemented in cooperation with the non-profit organization Bachehaye Aseman. In the future, projects in the field of health care, water management, waste recycling and environmental protection are a priority. In addition to MLP projects, the goal is to implement transformational cooperation projects (TRANS) and projects aimed at fulfilling the 2030 Agenda and its sustainable development goals in Iran.
Prospective fields of study (MOP)
The fields listed below are the least affected by sanctions. However, even when cooperating in these fields, it is necessary to keep in mind that EU and UN anti-Iranian sanctions are binding on Czech entities. Before implementing cooperation with Iranian partners, it is therefore necessary to thoroughly study Council Decision (CFSP) No. 413/2010, Council Regulation (EU) No. 359/2011, Council Regulation (EU) No. 267/2012, Council Decision (CFSP ) No. 235/2011, Security Council Resolution No. 1737 (2006), Security Council Resolution No. 1803 (2008), Security Council Resolution No. 1747 (2007) and Security Council Resolution No. 1929 (2010). And this includes appendices that contain detailed lists of sanctioned fields as well as goods, persons and companies with which cooperation is prohibited.
Water management and waste industry
Waste treatment has long been an overlooked sector in Iran. According to analysts, the min. 25% of the common waste of Iranian households is recyclable. Opportunities for Czech companies are especially in the area of supplies of waste disposal and processing equipment incl. recycling – refers to municipal waste, construction waste, hospital waste and related technologies (e.g. for reducing the proportion of toxic substances in industrial waste). Iran also suffers from an acute water shortage. The year 2021 was the driest year in the last 50 years, the dams were at most 40% full, water supplies were interrupted several times a day during the summer. The drought has sparked 2 waves of large-scale demonstrations, with deep cracks appearing in the country in many places across Iran. The government wants to solve the situation mainly by (re)building dams and desalination of sea water. The need is therefore hl. machinery, components and technologies usable for the construction of dams and desalination plants. Also equipment and technology for monitoring water and air quality. In the winter months, for example, Tehran becomes the 2nd city with the worst air in the world due to smog.
Healthcare and pharmaceutical industry
As a result of US (especially banking) sanctions, Iran has had difficulties importing medicines and medical supplies since autumn 2018. Although Iran is largely self-sufficient in the pharmaceutical industry, it is forced to import some drugs, raw materials for the production of drugs, equipment and supplies. In particular, there is currently a lack of pharmaceuticals for organ transplants and the treatment of serious and rare diseases – especially cancer, which is the 3rd most common cause of death in Iran, leukemia, epilepsy, butterfly wing disease or damage to vision caused by chemicals (especially applies to veterans of the Iraq-Iran war). It is estimated that around 6 million patients are in acute danger of life as a result. Some raw materials and substances needed for Iran’s domestic pharmaceutical production are also difficult to obtain – for example, vitamins and their derivatives, blood plasma, antiserum, vaccines and contrast agents used in radiology.
Agricultural and food industry
Iran imports a variety of agricultural products and foodstuffs, such as maize, livestock feed, seeds, edible oils, grains, rice, soybeans. In 2021, it imported food worth USD 9.3 billion. The need to import food has become more acute in recent years due to, among other things, the worsening drought. In 2021, for example, there was a shortage of 8 million tons of wheat on the Iranian market, and in 2020, 1 million tons of rice. Cereal imports increased by 60% in 2021 alone, mainly wheat and rice. Since 2020, imports of corn, soybeans and barley have increased “only” by 16%. Iran is trying to cultivate edible oil seeds, but still imports 90% of the volume it consumes. Iran also imports veterinary preparations for farm animals. There is also interest in stable technology (stalls, drinkers), means for treating bee colonies, segments of food machinery, irrigation technology, machines for packaging food,
Electrotechnics
As a result of the anti-Iranian sanctions, it is difficult for Iran to import any electronics and appliances. Additionally, electronics imports from South Korea were banned in fall 2021 due to South Korea’s still-unresolved Iranian oil import debt. The offer consists mainly of Chinese products. Most models are up to several years old. Counterfeits and smuggled goods (e.g. Apple products) are also common. An estimated 40% of electronics and appliances are imported into Iran illegally. Electronics from the West appear in stores only rarely and are sold at very high prices. In general, domestic appliances (refrigerators, freezers, washing machines, dishwashers, mixers, mixers, grinders, ovens) are missing from the market, the import of which is currently prohibited in order to achieve self-sufficiency in the production of these devices. However, parts can be imported, spare parts and control and monitoring systems for household appliances. Furthermore, the market lacks small electronics and PC components such as high-quality routers, laptops, mobile phones, tablets, and the demand for smart home devices (e.g. robotic vacuum cleaners) is also growing.
Manufacturing industry
Paper in Iran is an expensive and scarce commodity. Its price has increased by 340% in the last three years. At the same time, Iran is forced to import 90% of the paper that can be used for printing documents, books, newspapers, etc. In addition, it is not always possible to import enough paper to satisfy the demand. Therefore, so-called paper crises occur. E.g. in August 2021, Iran’s Minister of Culture announced that the country’s current supply of printing paper was only available for the next two months. The collection of recyclable waste in Iran is not organized. Systematic recycling and further processing of used paper could partly solve its constant shortage. There are currently only three paper mills in the country.
The full text of the MOP is available on the website of the Ministry of Foreign Affairs of the Czech Republic in the Services for exporters section.
