Russia and Iran: Strategic Partners, Strong Economic Ties

Over the past year, Russia and Iran have also grown closer economically. In May 2025, the free trade agreement signed in late 2023 between Iran and the Eurasian Economic Union (EAEU)—of which Russia is a member—entered into force. This eliminated tariffs on nearly 90% of goods traded between the two sides. As expected, this gave Russian-Iranian trade a boost, though it was short-lived, as the limited official data on trade trends suggest. Russian Deputy Prime Minister Alexei Overtchuk initially reported that trade volume from mid-May to the end of July 2025 likely rose by 35% compared to the same period the previous year. Later, he put the growth between mid-May and the end of September at just 18%.

President Vladimir Putin provided data on trade trends since early 2025 during two meetings with Iranian President Massoud Peseschkian. For the first half of 2025, Putin cited an increase of 11.4%, and later, for the first three quarters, only 8%. The brief surge starting in May suggests a catch-up effect, as companies likely postponed deliveries until after the customs exemption period.

Over the entire year of 2025, the growth rate slowed compared to the previous year. According to Putin, bilateral trade volume increased by 13% in 2024. The Russian government had previously projected growth of 16–17% in 2024, reaching approximately $4.8 billion. This represented a share of just 0.7% of Russia’s total foreign trade. For 2025 as a whole, trade volume is expected to be only slightly above the 2022 level, when it reached its highest point to date at $4.9 billion.

Iran: Economy and Trade Shrinking

One reason for the disappointing growth despite the free trade agreement is likely to have been the weak economic situation in both countries. In Russia, growth slowed from 4.1% in 2024 to an estimated maximum of 1% last year. According to the World Bank, the Iranian economy had still grown by 3.2% in 2024; for 2025, analysts expect a decline of 1.7%, which is projected to deepen to minus 2.8% in 2026. The Central Bank of Iran reports a 0.6% decline in economic output for the period from March to September 2025. Iran’s total foreign trade fell by as much as 11.4% year-over-year from March 2025 to January 2026, to $94 billion. These figures from Iranian customs do not include oil exports. Imports plummeted by 15.6% to $49 billion. High inflation, which stood at 60% year-over-year at the end of January according to the Iranian Statistical Office, is also indicative of an economic crisis.

Payment Cards and Tourism Slump

In addition to free trade, the integration of the two national payment systems, Mir and Shetab, is also expected to lead to closer economic ties between the two countries. According to the schedule, payments using Iranian Shetab cards in Russian stores are set to be introduced by the end of 2025. Russian Mir cards have been accepted for payment in Iran since May 2025. Until now, tourism between the two countries has remained at a low level. According to the Russian Border Guard Service, 38,057 Russians visited Iran in 2024. In the first quarter of 2025, the number of visitors fell by 46% to 6,336 people. More recent data was not available as of early 2026. Conversely, the Russian Association of Tour Operators (ATOR) estimates that around 26,000 Iranian tourists visited Russia last year. That would represent a 50% decline compared to 2024. Despite their strategic partnership, a visa requirement still exists between the two countries. Since 2021, only groups of travelers have been exempt from this requirement.

More Iranian Students

While instability in Iran is hampering the development of tourism, more and more young Iranians are choosing to study in Russia. The number of Iranian students at Russian universities rose from 6,500 in 2023 to 9,210 last year, the Russian Ministry of Education announced last May. According to Elena Dunayeva, a Middle East expert at the Russian Academy of Sciences, roughly one in two Iranian students in Russia is enrolled in a medical school. The reason for this is the shortage of doctors in Iran and the fact that Western countries rarely accept students from Iran, the scholar explains. It is not known how many Russians are studying in Iran, the Iranian news agency WANA reported last June.

Further nuclear energy projects planned

Energy is the focal point of Russian-Iranian economic relations. The Russian state-owned corporation Rosatom is currently expanding the Bushehr nuclear power plant, which it completed itself, by two units, thereby increasing the capacity of Iran’s only nuclear power plant from one to three gigawatts. The Iranian Atomic Energy Organization (AEOI) regularly reported progress on work at the second unit last year. Iran currently expects the plant to go online in 2029. In addition, both countries agreed last September to build small nuclear reactors of Russian design in Iran. Overall, Iran aims to increase its nuclear power capacity to 20 gigawatts by 2041.

No Russian Gas Deliveries Yet

There has been little movement over the past twelve months regarding Russian gas supplies to Iran. Although both countries agreed in April 2025 to begin deliveries, which were originally scheduled to start by the end of 2025. As previously announced by President Putin, Russia will initially supply 1.8 billion cubic meters per year to Iran, which has been experiencing an energy shortage for years. However, the two sides have not yet been able to agree on the price of the Russian gas, as Iran’s ambassador to Moscow, Kazem Jalali, acknowledged last fall. In mid-January 2026, Jalali said that negotiations were in the “final phase” and nearing completion. Almost exactly a year earlier, Russian Energy Minister Sergei Zivilyov had also spoken of a “final stage” of the negotiations.

Progress on the transport corridor

Another ongoing project is the completion of the North-South Transport Corridor, which is intended to connect Russia with the massive Indian market via Iran. The 7,200-kilometer route is not yet fully navigable by rail because it is interrupted over a 162-kilometer stretch between the cities of Rasht and Astara on the coast of the Caspian Sea. The acquisition of the expensive construction land is making progress, Ambassador Jalali said this January. He promised that 100 kilometers had already been designated as construction land, with the remainder to follow by the end of March. Russia expects the completion of the Rasht–Astara railway line to cut transport time to Iran in half and reduce logistics costs by up to 30%, as Russia’s acting trade representative in Iran, Alexei Yefimov, explained in early January.

Should the U.S. attack Iran in the coming days and weeks, Russia has a duty to its major partner in the Middle East. A year ago, the two most sanctioned countries in the world entered into a “strategic partnership,” which took effect on October 2, 2025. In addition to declarations of intent regarding diplomatic and economic cooperation, it also contains concrete obligations in the event of aggression against the respective partner, whether military or economic, such as through sanctions. However, this is not an obligation to provide assistance, but rather an obligation to refrain from certain actions—one that Moscow should have no trouble fulfilling. According to the agreement, it is not permitted to join attacks on Iran nor to support sanctions against its partner.

This article first appeared in the exclusive newsletter of the German-Russian Chamber of Foreign Trade