Iran’s use of barter thwarts US pressure

Iran is increasingly using international barter, exporting hundreds of thousands of tons of petroleum derivatives to Brazil in exchange for animal feed.

Zabihollah Azami-Sardoui, a member of the parliament’s agriculture committee, told the Iranian Labor News Agency (ILNA) that Brazil was a suitable partner because it needed petrochemicals, especially fertilizers at nitrogen base, and could in return provide corn, soybean meal and meat.

Iran has expanded barter to circumvent U.S. “maximum pressure” sanctions, which threaten to take punitive action against any third party buying Iranian oil or dealing with Iran’s financial sector. Barter oil for imports of animal feed and agricultural products turned out to be particularly viable.

Barter can be effective where there is an approximate trade balance, but it is less practical where trade is unbalanced. Azami-Sardoui said barter challenges are being overcome.

Some have criticized the practicalities of such arrangements. “We hadn’t signed clear agreements with China for barter,” Masoud Daneshmand, a trade representative in Tehran, told ILNA in January. “We gave them oil and told them to pay in kind. In such circumstances, they give us all their quality products, including the pesticides that have caused so much damage to our agricultural exports.

Daneshmand also challenged a agreement to receive tea from Sri Lanka in “payment” for a nearly decade-old oil debt of $251 million. At least until the introduction of US “maximum pressure” sanctions in 2018, Iranians were among the top ten tea drinkers in Sri Lanka.