It is no secret that external sanctions have imposed massive costs and limitations on Iran’s economy and international trade. Barter arrangements are among the remedies that Iranian authorities have considered to reduce the constraints caused by commercial and banking sanctions. However, it is a controversial policy among various stakeholders, especially when Iran is considered the weaker trading partner.

Rise and return of barter trade

Prior to the 1979 Islamic Revolution, the Central Bank of Iran notably had an office entitled “Office for Barter and Export Issues.” The entity oversaw the organizing of such trade with Eastern European countries, including Hungary and Romania. Back then, Iran was the stronger party as it exported crude oil and was thus able to dictate the pricing and quality of traded commodities. The same experiences were utilized during the 1980-88 Iran-Iraq War, when the country’s main export item—namely oil—was exchanged for basic goods...