At an initial glance, one might assume that Tehran’s paths for dealing with Washington’s reimposed sanctions all end in either Brussels or Beijing. It should be noted, however, that Iran is also working on opening other avenues — namely those leading to its neighbors.

Based on recent customs’ statistics, in the first six months of the current Iranian year 1397 that began on March 21, 2018 — which coincided with the United States pulling out of the Joint Comprehensive Plan of Action (JCPOA) and reimposing sanctions on Iran — 56% of the country’s $23 billion worth of non-petroleum exports were absorbed by neighboring countries. Compared to the same period in the previous Iranian year that began in March 2017, this showed an 8% increase. More importantly, Iran’s non-oil exports to its key neighbor markets — Iraq, the United Arab Emirates and Afghanistan — jumped by 44.58, 30.03 and 30.90%, respectively. Except for Turkey, Kuwait and Turkmenistan, Iran’s exports to other neighboring countries also grew during this time.

The reimposition of US sanctions and the devaluation of the Iranian rial in the past few months has played the biggest role in boosting Iran’s exports to neighboring markets and creating this new avenue. In recent years, the impacts of the fluctuating exchange rate of the rial on exports have created an incessant debate in Iran’s political economy. While various administrations have pursued a policy known as “suppressing the [dollar’s] exchange rate” due to concerns over declining social status and consequently being defeated in elections, some economists have warned against this and called for a “more realistic exchange rate” as the most important step in increasing Iran’s exports.

With US sanctions being reimposed and the Iranian government concerned over the future of the country’s currency reserves, the outdated policy of “suppressing the exchange rate” seems to be coming to an end — of course as a result of force and not by choice. In other words, external pressures have brought this old policy to a halt. Meanwhile, with the collapse of the rial, the internal economic crisis has become prevalent. But at the same time, it led to a dramatic growth in Iran’s exports to neighboring markets.