Safavid Dynasty - Economy - Foreign Trade and The Silk Route

Foreign Trade and The Silk Route

The Portuguese Empire and the discovery of the trading route around the Cape of Good Hope in 1487 not only hit a death blow to Venice as a trading nation, but it also hurt the trade that was going on along the Silk Route and especially the Persian Gulf. They correctly identified the three key points to control all seaborn trade between Asia and Europe; The Gulf of Aden, The Persian Gulf and the Straits of Malacca by cutting off and controlling these strategic locations with high taxation. In 1602 Shah Abbas I drove the Portuguese out of Bahrain, but he needed naval assistance from the newly arrived British East India Company to finally expel them from the Strait of Hormuz and regain control of this trading route. He convinced the British to assist him by allowing them to open factories in Shiraz, Isfahan and Jask. With the later end of the Portuguese Empire, the British, Dutch and French in particular gained easier access to Persian sea-born trade. Although they, unlike the Portuguese, did not arrive as colonisers, but as merchant adventurers. The terms of trade were not imposed on the Safavid shahs, but rather negotiated.

In the long term, however, the sea-born trade route was of less significance to the Persians than was the traditional Silk Route. Lack of investment in ship building and the navy, provided the Europeans with the opportunity to monopolize this trading route. The land-born trade would thus continue to provide the bulk of revenues to the Persian state. Much of the cash revenue came not so much from what could be sold abroad, as from the custom charges and transit dues levied on goods passing through the country. Shah Abbas was determined to greatly expand this trade, but faced the problem of having to deal with the Ottomans, who controlled the two most vital routes: the route across Arabia to the Mediterranean ports, and the route through Anatolia and Istanbul. A third route was therefore devised which circumvented Ottoman territory. By travelling across the Caspian sea to the north, they would reach Russia. And with the assistans of the Muscovy Company they could cross over to Moscow, reaching Europe via Poland. This trading route proved to be of vital importance, especially during times of war with the Ottomans.

By the end of the 17th century, the Dutch had become dominant in the trade that went via The Persian Gulf, having won most trade agreements and managed to strike deals before the British or French were able to. They particularly established monopoly of the spice trade between the East Indies and Iran.