Domestic Economy

France’s Defining Moment

Domestic Economy Desk
France’s Defining Moment France’s Defining Moment

With all hotels overbooked and streets the scene of motorcades rushing back and forth last week, it was indeed the ‘French moment’ in Tehran. The occasion was a visit by the high-profile French delegation aimed at scoping out the Iranian market at close range. A lot was said and done during the three days and much was planned for the near future.

“We had important meetings and discussions with ministers, the vice-president and top decision makers in the economic sectors,” said the well-disposed French Foreign Trade Minister Matthias Fekl in an interview with the Financial Tribune after being caught unawares at the dining table around midnight at Espinas Hotel, where a joint meeting between Iran’s capital market players and French business leaders had just wrapped up. The minister himself did not attend the meeting as he was busy speed-dating with Tehran officials on practical ways to get the two sides work closer together.

“We had a very important economic forum where almost 150 French enterprises participated and had discussions on the different areas of interest,” he said with eyes barely concealing the exhaustion from back-to-back meetings from early morning to this late hour.

French giants whose representatives accompanied the minister included Total, Airbus, Peugeot Adepta and Veolia to name a few. Agriculture Minister Stephane Le Foll was also present and on Monday signed an MoU with his Iranian counterpart Mahmoud Hojjati on future cooperation.

To make sure the fresh momentum in mutual ties will be sustained and promoted, it was decided that a joint economic commission be established. “We also decided with the Iranian government to set up a joint economic commission as a venue to discuss future projects and where we can meet regularly to push things forward,” Fekl said.

France opened a first major European trade office in Tehran on Monday. Head of the Business France Tehran office, Romain Keraval, told the Financial Tribune that the office will seek to facilitate commercial activities between the two sides.

“This is the 70th office of Business France worldwide. Our organization is a governmental agency in charge of promoting exports and investments. At first we [will] seek to reestablish a foothold in the Iranian market,” he said, adding that the next step would be to consider long-term investment through transfer of technology and joint projects with local manufacturers and industrialists. “And if the projects go ahead as planned, Iran can emerge as re-export hub in the region.” He noted that transportation, auto, construction, agrifood and mining sectors are of prime interest to French companies.

The decision by Paris to make an early move to restore economic ties with Tehran has surprised pundits and policymakers both in Tehran and Europe simply because of the oft-repeated hard-line stance of the government of President François Hollande during the complex nuclear negotiations between Iran and the six world powers (five permanent members of the UN Security Council plus Germany).

But that country did not waste time to patch up soured relations even before the ink was dry on the July 14 historic nuclear agreement to close the disputed nuclear dossier and move forward as serious and responsible countries more concerned about national interests and the welfare of their peoples. Small wonder Foreign Minister Laurent Fabius was in Tehran in late July to test the political waters and see how Iran plans to work with Europe after the end of the economic sanctions.

And then there is the stark reality of France’s economic ills. Searching for new markets, trade partners and new ways of doing things obviously makes sense for that nation’s political business elite, not to mention that this indeed is the demand of wisdom.

During the interview Fekl referred to the importance of Iran becoming a member of the World Trade Organization and said Paris would be willing to provide technical assistance to Tehran in its accession bid. “We also had the opportunity to discuss how France could be on Iran’s side, if Iran decided to join WTO, because we think that Iran has to be part of the world economy and world exchanges.”

In the latest development in Iran’s bumpy road to the top global institution, Iranian Minister of Industries, Mining and Trade Mohammad-Reza Nematzadeh recently called for the establishment of a “legal economic commission” to revise Iran’s foreign trade regime—the system of tariff and non-tariff barriers and export incentives—in accordance with contemporary global trade demands. A memorandum of the foreign trade regime will subsequently be submitted to WTO as a prerequisite for membership and the world body will discuss the necessary changes with the applicant country.

More than 19 years have passed since WTO first received Iran’s membership application in July 1996. It took the organization nine years to accept Iran as an observer state.

President Hassan Rouhani is scheduled to visit France next month at the invitation of his French counterpart. The visit is viewed as a milestone to build closer bonds. “We will have the honor of a visit by President Rouhani on Nov. 17. It will be a very important time. There are a few weeks left to prepare things, to prepare roadmap for different sectors and to choose different projects we want to push forward,” Fekl said.

In response to a question on barriers to normal bilateral trade, the minister referred to “financing” as the primary difficulty French firms face in wanting to work with Iran. “We are working on the banking and financing issues to ensure that businesses can work concretely in Iran; there are important steps to be taken,” he stressed.