With the U.S. Treasury Department recently imposing new sanctions on
Iran’s oil and shipping sectors, the need to bolster economic resilience and
mitigate the impact of these sanctions is more urgent than ever. However, the
petrochemical industry has already demonstrated its ability to minimize the
effects of sanctions over the years.
These sanctions, aimed at reducing Iran’s foreign exchange revenues,
primarily affect the export chain and financial transactions in the energy
sector. However, as Supreme Leader Ayatollah Khamenei has stated, negotiations
with the U.S. are not the solution to the country’s challenges. The path to
overcoming these pressures lies in "the dedication of committed officials
and the support of a united nation."
The petrochemical sector is a cornerstone of Iran’s economy,
contributing significantly to non-oil exports. Despite being consistently
targeted by sanctions, the industry has found new pathways to continue its
operations.
Petrochemical companies are the largest foreign exchange earners in
the country, accounting for 30% of non-oil foreign currency supply. Given the
current economic and political situation, enhancing domestic capabilities in
the petrochemical sector must be prioritized as a vital part of the country’s
economic infrastructure.
Expanding Export Markets and Alternative Financial Mechanisms
Given current conditions, focusing on Asian markets and strengthening
cooperation with countries that do not follow Washington's sanctions policies
could be key. China, India, Russia, and Latin American countries are among
Iran’s most important trading partners in this sector. Furthermore, utilizing
barter systems (commodity exchange) and adopting alternative currencies like the
yuan, ruble, and rupee can mitigate the effects of banking restrictions.
Reducing Raw Material Exports and Expanding Downstream Industries
One of the ways to lessen the impact of sanctions is to convert raw
petrochemical materials into higher-value, finished products. Expanding
downstream industries and producing engineered polymers, specialty chemicals,
and pharmaceutical products not only reduces dependency on raw material exports
but also strengthens domestic and regional markets, thereby alleviating the
pressure from sanctions.
Localizing Technology and Reducing Dependency on Foreign Equipment
Sanctions have often restricted Iran's access to advanced equipment
and foreign technologies. In this context, investing in knowledge-based
companies, collaborating with universities, and developing domestic
capabilities in producing equipment and raw materials can help the
petrochemical industry become less reliant on imports. Many of the industry’s
essential components can be manufactured locally, and with government support
and targeted investment, this dependency can be reduced.
Utilizing Private Sector Capacity and Domestic Investment
A significant challenge facing the petrochemical sector under
sanctions is the financing of projects. While banking sanctions have prevented
access to foreign capital, domestic resources can fill this gap. The capital
market, national development funds, and joint investment projects between
domestic companies are solutions that can provide the necessary financial
support.
Energy Diplomacy and Cooperation with Allied Countries
Iran can strengthen its energy diplomacy to open new export routes.
Collaborating with countries that require Iran’s energy resources and
establishing bilateral and multilateral agreements can help neutralize some of
the effects of sanctions. For example, signing long-term contracts with
neighboring countries and trade partners like China and India can ensure
continued access to global markets.
As these new sanctions from the U.S. demonstrate, with ongoing
economic pressures and failed negotiations, the only viable strategy for
countering these sanctions is to focus on domestic capabilities, expand
downstream industries, attract internal investment, and strengthen
international cooperation with like-minded countries. By implementing these
strategies, the petrochemical industry can enhance its resilience to sanctions
and become a central pillar of the country’s economic growth.