Iran reaches barter deal with China for $2.7bn renovation of Imam Khomeini airport

The Cradle, August 29, 2023 —

Iran will pay for the project via crude oil deliveries as Tehran continues to find ways to bypass US sanctions.

Iran has granted a Chinese company the contract to build a second terminal in Tehran’s Imam Khomeini International Airport (IKA), the country’s largest.

Saeed Chalandari, the CEO of IKA, said on 27 August that Iran will spend $2.7 billion to build a second phase at the airport under the contract signed with an unidentified Chinese company.

Chalandari said the company had been chosen for the project after negotiations with several domestic and international contractors.

Due to US sanctions that make transacting in US dollars, the world’s reserve currency, difficult, Iran will pay for the project using a barter mechanism that allows swapping crude oil for financial resources, equipment, and technical services.

Previous efforts to expand IKA and establish it as a regional aviation hub had stalled in recent years, mainly because of US sanctions on the country.

IKA is located some 25 kilometers southwest of the capital Tehran. 29 major international airlines offer flights from IKA to 64 destinations worldwide.

Chalandari said the transportation ministry had finished feasibility studies for developing the second phase of IKA and that construction will begin in September. He added that the project will be built on 410,000 hectares of land south of the airport.

The announcement comes days after Iran became one of six countries to receive an invitation to join BRICS, an economic bloc of countries that is challenging the US-led global financial order.

The bloc is led by Russia and China, two key partners with Iran in the economic and military fields.

In April, former US Treasury Secretary Lawrence Summers warned of “troubling” signs that the US is losing global influence as other powers win favor among non-aligned nations.

“There’s a growing acceptance of fragmentation, and — maybe even more troubling — I think there’s a growing sense that ours may not be the best fragment to be associated with,” Summers said.

Summers stated, “Somebody from a developing country said to me, ‘What we get from China is an airport. What we get from the United States is a lecture.’”

In recent years, the US has increasingly sought to isolate countries that oppose US foreign policy by punishing them with economic sanctions.

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