What's at stake for business in Iran's nuclear deal

 13 Oct 2017 - 20:52

What's at stake for business in Iran's nuclear deal
Secretary of State John Kerry (L) and Iran’s Foreign Minister Mohammad Javad Zarif pose before resuming talks in Lausanne, March 16, 2015. Reuters/Brian Snyder

AFP

Paris:  If the Iran nuclear deal fails then all the countries involved have a lot to lose -- and not just for political and security reasons.

US President Donald Trump on Friday announced that he will not certify to Congress that Iran is complying with the deal, which could pave the way for future sanctions that could have a big impact on countries and companies which have re-engaged with Tehran since the 2015 deal.

The nuclear agreement is designed to prevent Iran developing a nuclear weapon, and saw Tehran halt its nuclear programme in exchange for the lifting of international sanctions.

Since it came into force in January 2016, the Iranian market of 80 million people has been opened up to European, Russian and Chinese businesses.

Many investors have held back but others, including several large companies, have already concluded some big deals, including European aircraft manufacturer Airbus which has signed agreements with Iran to deliver 100 aircraft.

Here are some of the other major trading partners and what's at stake for them:

Germany

Before sanctions, Germany was Iran's main trading partner.

After the lifting of sanctions, German exports to Iran increased by 26 percent in 2016, and continue to rise, according to the federation of German industry(BDI).

The Siemens group relaunched in Iran in March 2016, signing an energy agreement with Iranian power and infrastructure group Mapna.

Daimler signed letters of intent with two Iranian groups in January 2016 to produce and market Mercedes-Benz trucks.

"Companies that have since resumed commercial relations with Iran and are also active in the United States would be extremely destabilized by the reintroduction of sanctions," warned the BDI.

France

Trade, which had collapsed under sanctions, rebounded dramatically after the end of sanctions, rising by 235% in 2016, mainly due to oil imports.

Carmaker Peugeot-Citroen (PSA), which was forced to leave Iran in 2012, returned in 2016 after signing production deals worth 700 million euros.

Renault, which had remained in the country and already makes about 200,000 cars per year there, signed a joint venture agreement to step up production and make more than 300,000 cars a year.

Total, for its part, was the first Western oil group to return to Iran in more than a decade. It signed a $4.8 billion gas deal in early July, heading an international consortium alongside Chinese CNPC.

Italy

Trade between the two countries, which had collapsed due to sanctions, saw a sharp rise in 2016, to such a level that Italy was named the first trade partner of Iran in the EU.

In 2016, Rome and Tehran signed a number of agreements, including in tourism, renewable energy and railways.

Russia

Moscow and Tehran have had close political and economic relations for some time.

In the nuclear field, Iran has begun building a second nuclear plant with Russian help.

Tehran already runs one Russian-built nuclear reactor at Bushehr and plans to build more.

In March 2017, railway business RZD International, part of the Russian company RZD, signed a 1.2 billion euro contract with Iran for the electrification of a railway line.

In June 2016, gas giant Gazprom signed an agreement with the Iranian company NIOC for a joint operation in the Iranian gas field Farzad.

China

Beijing, a gas and oil importer, has significant economic interests with Iran, the sixth largest oil producer in the world.

In January 2016, during President Xi's visit to Iran, the two countries signed a memorandum of understanding on the peaceful use of nuclear energy.

In February, Chinese builders began the electrification of the high-speed Tehran-Mashhad rail line.

In October 2017 Arish Kordi, CEO of the Iranian group Tavanir, announced cooperation with China to renovate Iran's electricity infrastructure.