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All news / Halal trade cooperation between Iran and Russia

  • 27 Jan 2022, 10:47

On Jan. 19, 2022, Iranian President Ebrahim Raisi met with his Russian counterpart, Vladimir Putin, for the first time in Moscow to discuss reviving the Joint Comprehensive Plan of Action (JCPOA), strengthening strategic ties in Syria and Afghanistan, and boosting military and economic cooperation in the face of U.S. hostility and sanctions. During Iran’s first presidential meeting with Russia since 2017, Raisi also explored reextending a multiyear agreement on bilateral cooperation that former Iranian President Mohammad Khatami (1997-2005) had signed with Putin in 2001. Since the fall of the Soviet Union and the rise of Putin in the 1990s, military and economic relations between Iran and Russia have improved, as their tensions with the West have intensified.Halal trade cooperation between Iran and Russia

One aspect of these relations that has received little attention is their growing economic and trade cooperation involving the production, export, and import of halal meat and other products since 2015. On Nov. 18, 2020, Iran and Russia held a virtual conference that was hosted by the Iranian Embassy in Moscow on the subject and led to the approval by Russia of a strategic document on strengthening bilateral halal trade cooperation. The Iranian ambassador to Russia, Kazem Jalali (2019-present), stated that the goal was to “strengthen and develop the private sectors of Iran and Russia” by increasing halal and other trade between them. Similarly, Marat Vazykhovich Kabayev, the president of Russia’s International Association of Islamic Business (IAIB) — which seeks to strengthen Moscow’s ties to the Muslim world — expressed a readiness to cooperate with Iran in the trade of halal meat and other economic activities.

The efforts of Iran and Russia to pursue halal trade cooperation demonstrate the importance they have placed on positioning themselves in a global market with an estimated value of $129 billion in 2019 that was expected to reach $140 billion in 2024, and with over 1.9 billion Muslims who comprise nearly 25% of the world’s population. While Iran is a Muslim-majority country and Russia is a Christian-majority one, both contain sizeable markets for the production and trade of halal meat and other products. In 2019, Iran and Russia ranked sixth and seventh in halal tourism (e.g., gender-segregated and family-friendly restaurants, hotels, and resorts that serve halal food and contain prayer rooms), with the two countries grossing revenues of $8 billion and $7 billion, respectively, in this subsector of the travel industry.

The prospect of greater halal trade cooperation between Iran and Russia is significant for two reasons. First, it highlights the opportunities and capacities that Iran and Russia could leverage to bolster halal and other trade between themselves and other countries, particularly neighboring ones in Central Asia and the Middle East with sizeable Muslim populations. At the same time, this cooperation is rife with obstacles, the most prominent of which are U.S. and international sanctions that have incentivized Iran and Russia to strengthen economic and trade relations as a means of circumventing these sanctions. Second, a closer examination of the Iranian and Russian organizations and individuals involved in the agreement and trade in halal products and other goods sheds light on key differences in the forms and styles of governance between the two countries, even if the political outcomes are similar.                     

Opportunities and obstacles

For Iran and Russia, increased cooperation in the halal trade serves to counteract U.S. and international sanctions — a goal of the virtual conference that was explicitly stated by Jalali. It is not a coincidence the conference was held after the United States withdrew from the JCPOA and reimposed economic sanctions against Iran in 2018, which pushed it to rely more on Russia for military and economic assistance. Between 2019 and 2020, Iranian exports to Russia nearly doubled from approximately $400 million to $800 million and Russian exports to Iran increased from almost $1.2 billion to over $1.4 billion. Between 2018 and 2019, the United States, European Union, and other countries and multilateral organizations intensified sanctions against Russia for its role in the Russo-Ukrainian War (which began in February 2014) and other malign activities. Since 2015, the sanctions have prompted Europe to halt its food trade with Russia, making the latter’s efforts to export halal meat and other agricultural products to other regions even more important.   

Greater halal trade cooperation between Iran and Russia could help them alleviate economic pressure by opening more export markets. Russia is a sizeable market for halal exports from Iran, which reportedly produced 1,500 varieties of such food products, as of November 2020. That year, around 20% of the Russian population, or 25 million out of over 144 million, were Muslim and many of them presumably consumed halal meat and other products. It should be noted that a study published in 2015 showed that halal meat had become increasingly popular with non-Muslims in Russia and Europe as well, in response to food scandals surrounding mainstream products and public perceptions that halal products were healthier and more humane. As such, the consumption of Iran’s halal exports to Russia would not be limited to Muslim consumers. To facilitate exports, Russia approved Iran’s request at the virtual conference to establish an IAIB representative office or agency inside its territory at the Anzali port. The IAIB has representative offices in at least 20 countries around the world in South America (Brazil), North America (the United States), Western Europe (Germany), Scandinavia, Eastern Europe (Bosnia-Herzegovina and Serbia), the Middle East (Saudi Arabia, Turkey, and the UAE), Asia (India, Singapore, and South Korea), and former Soviet Republics (Azerbaijan, Kazakhstan, Kyrgyzstan, Lithuania, and Uzbekistan). However, some countries in these regions would likely be reticent to import or trade halal and other products with Iran given the risk of being subjected to secondary sanctions by the United States.

On the flip side, Iran constitutes a sizeable market for the halal exports of Russia, even if the latter reportedly only produced 1.3 million tons of halal meat, as of November 2020. With a population of nearly 84 million that is over 99% Muslim, Iran is home to a large market of consumers of halal meat and other products. While one survey conducted in 2020 showed that the number of Iranians who identified with Islam was declining and applied to just over 40% of respondents, halal food and other products are presumably popular with and conceivably consumed by Iranians who do not affiliate with Islam as well. Domestic consumption and religious demographics aside, Iran could serve as a conduit for the export of Russia’s halal products and other goods to markets in Central Asia and the Middle East. Since sanctions were imposed against Russia in 2015, it has prioritized the Middle East, alongside India and China, as an alternative market to Europe for halal and other agricultural exports. In addition to signing more trade and barter deals in these sectors with Iran and other Middle Eastern countries, Russia could leverage Iran’s Anzali Port and Free Zone, which are located on its Caspian coast and north-south corridor with Russia. As of 2015, Iran has imported halal meat from Russia’s two largest producers and sent their livestock products to countries in the region and beyond. For the public, parastatal, and private sectors of Iran and Russia, expanding halal trade could pave the way for greater bilateral economic and trade cooperation and foreign direct investment in other areas, such as agriculture, industry, and hydrocarbons.

Organizations and individuals

At the November 2020 virtual conference, three Iranian organizations and individuals participated alongside only one Russian one. From the Iranian side, negotiating and signing strategic documents, memoranda of understanding, and other agreements in this area requires the participation of the Ministry of Foreign Affairs, Iran’s embassy and trade counselors in Moscow, and its ambassador to Russia, Jalali, a longtime parliamentarian and official. Like a growing number of Iran’s ruling elite, Jalali earned a PhD from Imam Sadiq University, which integrates Islamic education and tradition with the modern humanities and sciences. He served as a member of parliament (2000-16), the president of its research center (2012-19), and the vice president of the Inter-Parliamentary Union (2017-19), a multilateral organization of national parliaments. Though a conservative politician, Jalali became a senior member of the pragmatic-centrist Moderation and Development Party headed by Hassan Rouhani in 1999 before resigning in 2007. Afterward, he became the president of the conservative parliamentary group, Followers of the Wilayat [al-Faqih] (2012-16), and a close associate of the conservative Speaker of Parliament Ali Larijani (2008-20). During his second term as president in 2019, Rouhani appointed Jalali the Iranian ambassador to Russia and he has remained in this post under the current conservative president, Raisi (2021-present).   

The Anzali Port and Free Zone would feature the infrastructure that facilitates this trade by land, sea, and air between Iran, Russia, and other markets. In the process, the Anzali Free Zone Organization could offer Russia favorable terms of trade, including no double taxation, reduced customs duties and other trade barriers, and cooperation on shipping and transportation. For this reason, during the virtual conference, the Organization’s managing director, Dr. Mohammadoli Roozbehan, invited the Russian representative, Kabayev, to visit Anzali to better understand what it can offer. During the conference, Roozbehan also projected that increased economic cooperation involving halal and other products between Iran and Russia could quadruple their trade volume between 2020 and 2022. In reality, Iran’s total trade with Russia between 2020 and 2021 increased by just over 19%, with its imports from Russia increasing by almost 43% while its exports to Russia decreased by nearly 23%.  

During Rouhani’s presidency between 2015 and 2020, the Iranian government, Anzali Free Zone Organization, and other entities reached agreements and held conferences to expand Iran’s economic cooperation with Russia, Kazakhstan, and other members of the Eurasian Economic Union (EEU). For Iran, these efforts have been aimed at increasing mutual trade, reducing import tariffs, and trading in national currencies rather than U.S. dollars to bypass sanctions. The Iranian government and Anzali Free Zone Organization could further these objectives by boosting Iran’s bilateral trade of halal products with Russia.              

While the Iranian Ministry of Foreign Affairs and the Anzali Free Zone Organization respectively sign agreements and provide the infrastructure to bolster the bilateral trade, the Iran-Russia Joint Chamber of Commerce (IRJCC) and its vice president, Jalil Jalalifar (who reports to its president, Dr. Hadi Tizhoush Taban), would bring together public, parastatal, and private companies and businesspeople on both sides to participate in the venture. Based in Tehran, the IRJCC develops relations, organizes events, and furthers the interests of Iranian and Russian companies that operate in Iran. Like the Iranian government and Anzali Free Zone Organization, the IRJCC has sought to improve infrastructure and planning (e.g., enhanced shipping and aviation programs and reduced trade regulations) to increase Iran’s trade, barter, and exchange of oil and non-oil products with Russia and other neighboring countries in Central Asia and the Middle East.  

Unlike Iran, Russia had only one organization, the IAIB, participate in the November 2020 virtual conference. The IAIB is a trade union that brings together businesspeople and entrepreneurs from different countries to expand Russia’s share of Islamic trade, including the export and import of halal meat and other products, and to create jobs inside the country through this trade — even if political and economic elites stand to reap the most benefits. Based in Kazan, Tatarstan and later Moscow (where Iran respectively has a consulate and its embassy), the IAIB operates a logistics and distribution center of halal food and other products in the Muslim-majority Russian republic of Dagestan. The IAIB also opened a spiritual and educational center and mosque that promotes interfaith dialogue and a moderate and tolerant form of Islam that is conducive to Russia’s national security and sociopolitical stability. Members of the IAIB come from different regions of Russia and from other countries, and representative offices around the world work to advance Russia’s commercial interests domestically and globally. To this end, the IAIB collaborates with the Organization of Islamic Cooperation and convenes economic forums, business missions, and cultural events locally and internationally.

To the outside observer, it may seem strange that the IAIB’s president, Kabayev, rather than a government official or diplomat had the authority to approve a strategic document on halal trade cooperation with Iran’s ambassador to Russia, and that the document would carry any weight. On the surface, Kabayev could have been considered Jalalifar’s more senior counterpart.  However, Kabayev is also a close associate of Russian President Putin and a member of his inner circle. Kabayev is a retired professional soccer coach and former player. He is also the father of the Olympic gymnast, former politician, and media mogul, Alina Kabayeva, reportedly Putin’s longtime, secret partner. As the IAIB’s president, Kabayev is reportedly the leader of the business community of Tatarstan, a Muslim-majority republic inside Russia’s Volga region, and Putin’s unofficial envoy in Central Asia. For this reason, during the 2019 Volga Investment Summit and World Halal Day in Samara, business leaders identified Kabayev as the one person with the power and authority to establish Islamic banking and finance in Russia by promoting cooperation between the Bank of Russia and the Islamic Development Bank in Saudi Arabia.

Looking ahead

The eventual extent of bilateral halal and other trade between Iran and Russia remains to be seen. Though Iran may produce more halal products than Russia, both countries boast the domestic demand and consumption to constitute major export markets for these products, even if the demographic and religious trends within Iran present some issues in the long term. Moreover, through Iran’s Anzali Port and Free Zone and Russia’s IAIB, both countries possess the infrastructure to facilitate this trade both on a bilateral level as well as with other countries in the region and beyond. The organizations and individuals involved in the November 2020 virtual conference on halal trade also reveal important differences between Iran, an electoral authoritarian state with a factionalized elite (even if the conservatives currently hold the upper hand), and Russia, an autocratic presidential republic with a sultanistic system in which personalistic politics may be more prevalent and pronounced. Despite these systemic differences, the prospects for greater economic cooperation in the halal trade and other areas between Iran and Russia appear to be promising, particularly if their tensions with the West persist.