By Tim Marshall
Airbus, BP, and Citroen, along with companies representing pretty much the rest of the alphabet, are beating a path to Tehran in the wake of the July 14th nuclear deal. If the deal leads, as expected, to the lifting of sanctions it will herald a potential business bonanza in a country of 80 million people.
The Germans have been quickest of the mark, followed by the French, with the British taking an interested look, and the Americans being somewhat more sanguine.
Last week the German Vice Chancellor Sigmar Gabriel was in town bringing with him executives from Siemens, Volkswagen, and Mercedes. EU foreign policy chief Federica Mogherini was hard on his heels. This week it is the French Foreign Minister Laurent Fabius bringing with him interest from Citroen, Total, and Renault among others.
Not to be outdone by the quick economic work from the Germans Fabius raised the stakes in the political game – delivering an invitation from President Hollande to President Rouhani to visit Paris in the autumn. If Rouhani accepts it will be the first time an Iranian President has been in the French capital since 1999.
Mr Fabius said “Today is the beginning of a new chapter in cooperation between Tehran and Paris.”
He may be right. Certainly he’s not going to wait to find out if the deal will stick, he and the others are engaged in a race to lead foreign involvement in Iran’s potentially lucrative economy.
It’s a risky business in a tough neighbourhood. The French, Germans, Brits, and others who come seeking contracts will be dealing with senior company executives with long proven records of money laundering and dodgy deals. That may be true in many parts of the world, including France, Germany, and the UK…. but in dealing with highest echelons of Tehran’s businessmen and women, you are also dealing often almost directly with the Ayatollahs and the Revolutionary Guard. The RG for example is a huge company involved in all sorts of activities including construction.
The second, and perhaps, greater risk, is that anyone investing in Iran could find themselves out of pocket if the nuclear deal breaks down and the sanctions ‘snap back’ into place requiring a quick commercial exit.
However, the potential prizes are proving irresistible. For example Iran needs to replace its aging fleet of airliners, requiring as many as 400 new ones over the next twenty years at a cost of up to $20 billion. The dilapidated oil industry requires modernization. Hence Mr Fabius spent time with Oil Minister Bijan Zanganeh who told reporters – “We emphasized the necessity of bilateral cooperation in oil, gas, and also petrochemical fields.”
Most of the Iranian media were cock a hoop. Sharq’s editorial said “In the course of the next six months to a year, Iran can add one million barrels to its oil exports thereby impacting the international crude market. It also can choose its partners among Western companies in order to develop its oil and gas fields…”
Not everyone was so welcoming. Khayan noted that although it was the ‘Great Satan’ who was mostly to blame for sanctions, “.. it was the cooperation of its European lackeys which made life more difficult for our people. They are rolling out the red carpet for them as if a dear guest or a sincere servant is returning home after a long absence, and not a stubborn, envious and vindictive enemy”
The Central Bank of Iran took a different view, announcing that foreign banks will be allowed to set up branches in Iranian Free Trade Zones.
Watching carefully are hundreds of other companies, some small, some huge. Apple is rumoured to be already talking to potential distributors for what would be, for a young tech savvy population a probable ‘must have’ brand.
It will take time for the outside powers to agree that Iran is abiding by the deal before the sanctions are then lifted and they can all get down to business. However, by the beginning of next year the scene will be set for the gold rush.