Iran, Uzbekistan Eager To Boost Economic Ties Despite Warnings By FATF Watchdog

Uzbekistani officials have said they are looking to increase trade turnover with Iran by over 50 percent by the end of the year.

“The amount of trade turnover between the two countries amounted to $325 million in 2017. Cooperation in the sphere of transport can pave the ground for an increase in the volume of trade turnover, this number can reach $500 [million] dollars till the end of current year,” Uzbekistan’s First Deputy Prime Minister Ochilboy Ramatov said at the 12th Iran-Uzbekistan’s joint Economic, Commercial, Scientific and Technical cooperation commission’s meeting in Tehran on Monday.

During the visit, the Uzbekistani delegation expressed interest in exporting 5,000 tons of oil and 100,000 tons of wheat to Iran. At the same time, the country is interested in buying up to 3 million tons of crude oil from Iran annually.

“In 2017, we reached an agreement with Iranian banks within the framework of the Financial Action Task Force (FATF),” Ramatov said according to Iran’s Mehr news agency, adding that, “If there is no issue with FATF, we too will have no issues in our banking dealings with Iran.”

The FATF, a multinational watchdog established by the G7 that monitors money laundering and terrorist financing, has declared Iran as a country with “high risk and non-cooperative jurisdictions.” It advises countries to tell their banks to impose extra due diligence on transactions with Iranians. As a result, most European banks are still weary of doing business with what is the Caspian region’s second largest economy.

“We are interested in establishing banking ties in the highest levels because this issue is among the main obstacles to widening trade ties with Uzbekistan,” said Iran’s Minister of Industry, Mine and Trade, Mohammad Shariatmadari, during the meeting.

Last October a delegation led by Uzbekistan’s Foreign Minister Abdulaziz Kamilov visited Tehran, at which time agreements worth $25 million were signed for the supply of agricultural and textile products.

Uzbekistan is also willing to buy crude oil from Iran, but due to Uzbekistan's lack of access to the Caspian Sea or a direct pipeline to Iran, the fuel must be exported by land or via railroad.

In 2011, the Uzbek state railway company built a short link between Hairatan, a town on the Uzbek-Afghan border. Uzbekistan subsequently expressed interest in extending that line to the northwestern Afghan city of Herat as another link, which is under construction and will directly connect Herat to Iran.

Uzbekistan is also pursuing access routes via Iran to the Persian Gulf.