Introduction: Iran is one of the countries that, in addition to enjoying a geopolitical position on transit routes, also has numerous neighbors. However, international sanctions and dependence on crude oil exports have created difficulties for Iranian trade. For this reason, in addition to reducing dependence on crude oil exports, Iran also aims to expand regional trade, and it has worked to mitigate the impact of these restrictions through regional trade governance.
Accordingly, the Central Eurasian region appears to be a suitable environment for achieving Iran's goals for two reasons: first, most of its countries are energy exporters, and crude oil exports cannot make a significant contribution to Iran's exports; second, the current sanctions situation for Russia has created a suitable environment for barter or dollar-free transactions. For this reason, this study examines the level of Iran's trade with Eurasian countries and the feasibility of assessing the impact of trade governance on that trade.
Research question: What are the characteristics of Iran's trade with Eurasia, and how can trade governance tools facilitate the implementation of trade agreements?
Research hypothesis: Membership, as measured by trade governance, has improved Iran's trade relations.
Methodology and theoretical framework: This study uses a time-series approach to assess the feasibility of facilitating regional trade between Iran and Eurasian countries. A time series consists of data that record the progress of an issue and allow it to be examined over time. In other words, a time series is a set of observations arranged in time and obtained by observing the phenomenon over a specific period.
Regional trade governance encompasses two types of agreements: regional trade agreements and preferential trade agreements, both of which aim to facilitate regional trade. Regional trade facilitation through trade governance is a broad and multifaceted initiative. Trade governance through regional trade facilitation proposes a highly flexible, demand-driven approach that enables the target region to expand trade opportunities among countries by identifying the region's productive capabilities.
Results and discussion: In examining the time series of Iranian exports to Eurasian countries, several points can be noted:
- Apart from Tajikistan and Turkmenistan, where Iran's best export performance occurs in the middle of the time series, in other countries, Iran's exports are best at the end of the time series, indicating an improvement in exports over the period under review.
- The growth coefficient also shows, by comparing the beginning and end of the period under review, that increases in Iranian exports to target countries in Central Eurasia are present in all countries and are very significant in some cases: exports to Georgia increased by more than 25 times, to Russia by more than 10 times, to Armenia and Kazakhstan by more than 5 times, to Tajikistan, Turkmenistan and Uzbekistan by about 4 times, to Azerbaijan by about 2 times, and to Kyrgyzstan recorded a 100% increase, indicating the existence of a continuous market for Iranian exports in the countries under study.
Also, the trend in Iran's imports from target countries in Eurasia shows that:
- Unlike the export trend, in which more countries were in the best position at the end of the time series, only imports from three countries (Armenia, Kyrgyzstan, and Tajikistan) were in a better position at the end of the time series, confirming the cyclical pattern in Iran's import trend.
- Contrary to the export trend, which was positive in all countries, the growth coefficient has negative values, confirming that in some countries the value of imports has even decreased compared to the beginning of the time series; this situation has been recorded in the three countries of Azerbaijan, Kazakhstan, and Turkmenistan.
Conclusion: Sanctions, oil dependence, and a dollar-based economy are eroding Iran’s economic resilience. Strengthening resilience requires focusing on production and export capabilities, diversifying trade to reduce political risk, and adopting a regional approach to create synergies. Removing regional infrastructure and regulatory bottlenecks has proven effective globally. Given these trends, regional trade agreements with Eurasia (expanding from the current four countries to all Central Eurasian states) are strategically crucial. Empirical evidence shows that, despite sanctions, banking restrictions, and trade barriers, Iran’s exports to the region have increased, and imports have partially replaced Iran’s grain supply. Such agreements (bilateral or collective) would help Iran escape global isolation by gaining access to a regional market.