Iran’s economy will be hit hard, say experts

RIYADH: A number of economic experts have said that severance of Saudi Arabia’s diplomatic and trade relations with Iran has made the latter the biggest loser.
The volume of Saudi exports to Iran stood at nearly SR383 million by the end of 2014 whereas Saudi imports from Iran reached SR682 million, local media has said.
Accordingly, the trade exchange between the two countries hit nearly SR1.065 billion by the end of 2014, the media said.
Economic experts said cutting of political and diplomatic relations with Iran will have a negative effect only on Tehran as Saudi exports to Iran represent a negligible amount compared to other countries.
On the other hand, the volume of trade exchange between the two countries is poor and does not have any effect on Saudi exports to Iran, they said.
Additionally, Iranian exports to the Kingdom are of low quality and that Iran’s sanctions-battered economy has resulted in the creation of companies that are not qualified enough to compete with foreign countries for lack of latest technologies and only depends on minor agro products such as pistachio and saffron and non-basic industries such as carpet, an expert said.
Ibrahim Al-Ghufaili, another expert, said Iran lacks developed and excelled industries, especially in power and oil sectors and lacks firms that are specialized in the construction of airports, railways and transport facilities.
He said Iran’s economy is experiencing a fragile and deteriorating condition due to the lack of infrastructure and, therefore, the Iranian market is not attractive to Saudi and other GCC companies, coupled with government bureaucracy and preoccupation of the Iranian government over the past decades with sowing discord and unrest outside its territories.
Iran has failed economically, politically and socially and, instead, succeeded in exporting hatred, aggression and discord and supported terrorist groups in Nigeria, Iraq, Syria, and Yemen, he said.
In this context, economic adviser Salim BaAjaja said the Kingdom’s vision in severing diplomatic and political relations with Iran was correct and wise.
Iran’s weak economy was a reflection of its troubled political relations with many countries that has also reflected on its local currency which has tremendously dropped to the lowest levels, he said.
Abdullah Al-Maghlouth, economic analyst and member of the committee of investment and securities at Riyadh chamber of commerce and industry, said the volume of trade exchange between the two countries does not represent anything compared to the volume of the Kingdom’s economic position.
Saudi businessmen and traders will not be affected by this decision because they have alternatives to import goods from other countries, he said.
Khalid Al-Abdullah, a businessman, said there were major obstacles on trade exchange between the Kingdom and Iran, notably the financial issue where payment guarantees do not exist on the Iranian side, lack of direct coordination between the businessmen of both countries, lack of direct cargo services and shortage of information on national products.