Iran’s trade policy of Asianization and de-Europeanization

under sanctions

Before the imposition of recent United Nations Security Council (UNSC)

sanctions on Iran, The European Union (EU) was Iran’s premier trading partner,
receiving almost a third of its exports, some 18 billion Euros in 2009. However,
due to increasing controversy around Iran’s nuclear programme and, more
recently, the June 2009 Presidential elections, the EU has further moved toward
adopting a peculiarly hard line American-style foreign policy vis-à-vis the
Islamic Republic. In the area of bilateral trade, for example, Iran’s traditional top
partners in the EU, namely Germany and Italy which have long been the two
most important destinations of its manufactured exports amongst developed
countries, have dramatically reduced their involvement in the Iranian econo my.

The sanctions in turn have changed the previous way in which Iran was carrying
out its international financial trade. In response to economic isolation, it has
increasingly tried to fill in the gap by providing considerable incentives to
Chinese, Indian and Central Asian companies to attract their investment,
especially in the domestic construction industry, manufacturing and energy
sector. In fact, a chief strategy of the Iranian government to minimize the grave
economic effects of sanctions has been to shift its international trade direction
from the West to the East and resort to further regional ties. In other words, the
government has moved to adapt itself to the pressing circumstances by adopting
a trade policy of Asianization and economic regionalism.
This paper reveals that the imposition of various sanctions related to the Iran's
nuclear program has pushed the Iran's trade policy toward Asianization and away
from Europeanization during the period of 2006-2013.

The purpose of this paper is to find out whether under sanctions,

Iran’s trade direction has shifted from Europe (trade policy of de-
Europeanization) toward Asia (trade policy of Asianization).

The paper conducts three panel data estimations (FE, RE, and FMOLS) based on
the gravity model approach for bilateral trade patterns between Iran-25 EU
members and Iran-25 Asian countries over the period 2006-2013.

The empirical evidence indicates a significant negative effect of sanctions on

Iran-EU bilateral trade, while it has a positive impact on trade between Iran and
the Asian countries. These findings empirically confirmed that the imposition of
various sanctions related to the Iran’s nuclear program has pushed the
foreign trade policy of this country toward Asianization and away from
Europeanization.

To the best of the authors’ knowledge, this paper is the first attempt to examine
the Iran’s trade policy changing under the imposition of sanctions related to its
nuclear program.
 SWOT Analysis

Strength

- The paper provide an analysis to the shift in the Iranian trade policy from
Europe to Asia
- The paper draw a relationship between sanctions and trading policy which
can be summarized in when a country is subjected to international
sanctions it change its trading policy by lowering its exports to the
countries that agreed on the sanction as a punishment and alternative way

Weakness

- The study didn’t talk about the impact of the shift in trade policy on the
European countries in other word it didn’t answer the following questions
A- how the countries like Germany and Italy lose after implementing this
policy
B- Did the shift in Iran trade policy make a pressure on those two countries
for example to change their decision or it doesn’t matter to them this
shift as there is other alternatives

Opportunity

- The paper show a strategy a country can adopt to make a pressure on other
countries especially if that country have resources or industry that is
demanded in other countries
Threat

- Politically there should be a united decision when deciding to isolate a

certain country due to its suspicious activities that might affect the
international peace and security

Conclusion

The paper show how economy is a weapon that countries can use rather than the
traditional weapon or armies in the traditional wars in the paper we are talking about
shifting the trade policy was the tool that the Islamic republic of Iran used against
Europe and united states and from this paper I learned many lessons that can be
summarized in the following

1- Every country should not limits its connection and communication with a
group of countries the country should have different connection east and west
, north and south this what can guarantee its survival and its strength
2- Shifting policy from one side to another is a powerful weapon to make a
pressure on the countries regarding to international decisions like sanctions
and other decisions
3- There should be an agreement or treaty that unite all the countries of the world
to adopt one strategy when dealing with a country or organization that follow
a strategy against the international peace and security