Domestic Economy

Rouhani’s Visits to France, Italy to Mark Economic Turnaround

Rouhani’s Visits to France, Italy to Mark Economic Turnaround Rouhani’s Visits to France, Italy to Mark Economic Turnaround

Following Iran's July 14 nuclear deal with the world powers in Vienna, foreign trade missions are still visiting the country one after another.

This time round, however, it is Iranians’ turn to fly overseas to test the waters.

President Hassan Rouhani, accompanied by Minister of Roads and Urban Development Abbas Akhoundi, Oil Minister Bijan Namdar Zanganeh, Agricultural Jihad Minister Mahmoud Hojjati, Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh and the head of Iran Chamber of Commerce, Industries, Mines and Agriculture, Mohsen Jalalpour, are scheduled to visit Italy and France on November 14-17, at the invitations of the two European countries.

IRNA quoted Jalalpour as saying on Sunday that preparations and coordination with the two countries are in the final stages so that the “historic visits” will have the most efficiency, as the implementation of the Joint Comprehensive Plan of Action draws near.

“During the visits, a multitude of economic agreements will be signed,” he said. “New capacities will be generated for joint investments.”

The president will also be accompanied by a number of private sector business players who are planning to find new ways of profitable cooperation with their European counterparts and discuss collaboration fields specified during the recent visits of French and Italian trade missions to Tehran.

> French Restart

French officials were among the first foreign delegations visiting Tehran after the nuclear pact was reached.

“Respect and restart are two key words that describe the current phase of our bilateral relations,” French Minister of State for Foreign Trade, Tourism and French Nationals Abroad Matthias Fekl told the Financial Tribune prior to his late-September Tehran visit, in which he was accompanied by French Minister of Agriculture and Agrifood and Government Spokesperson Stéphane Le Foll.

“The lifting of sanctions following the Vienna agreement has created excellent opportunities for both French and Iranian businesses in the interests of both our countries,” he added.

While in Tehran, the two French ministers inaugurated the "Business France" office in Tehran with the aim of reviving bilateral economic ties.

The two French ministers headed a delegation of representatives of some 130 heavyweight companies, including Airbus, Total, Alstom, CMA-CGM, Sanofi and Vinci. Aviation, oil and gas, construction, transportation, banking, pharmaceuticals, agriculture and auto sectors have been France’s main areas of interest in Iran.

Before the imposition of sanctions, French businesses used to have an active presence in Iran’s market. French automakers Peugeot and Renault, for instance, are seeking to resume partnership with Iran’s auto giants IKCO and Saipa. Auto part manufacturers Michelin and Continental, however, are newcomers, keen to tap into Iran’s market.

> Regaining Markets

Iran, on the other hand, is considering regaining markets for its main exports, namely oil, gas and petrochemicals.

“Before the sanctions were imposed, Europe used to be a good market for Iran’s petrochemicals,” says deputy minister of industries, mining and trade, Mojtaba Khosrotaj.

Iran’s future exports to Europe, he says, will mostly be petrochemicals, as the Europeans are “in need of such products”.

France’s expertise in telecommunications, electronics, agriculture and health will also prove helpful for Iran as it seeks technological upgrade in the agricultural and manufacturing sectors to keep up with international standards after years of economic downturn as a result of western sanctions.

During the French mission’s visit, Le Foll and Hojjati signed a memorandum of understanding on exchange of knowhow on new plant varieties and plant protection products, cooperation in cattle breeding, issuance of health certificates, organizing research tours in agriculture sectors and boosting joint investments.

The two ministers also inaugurated a joint fish farm on the southern island of Qeshm.

France, according to Le Foll, is ready to expand agricultural cooperation with Iran in research, education, genetic modification, seed production and development of modern irrigation systems. It is one of the well-developed European countries in terms of irrigation equipment and efficient water consumption methods.

Tehran and Paris are also considering cooperation in the health sector.

“France is Iran’s most prominent partner in the pharmaceutical industry,” Iranian Health Minister Hassan Hashemi said.

“Collaboration will not be limited to importing technology from France, but will also cover joint efforts in scientific areas, including student exchange programs in universities and using Iran’s specialized capacity as a gateway for the French to invest in regional markets,” he said in a meeting with his French counterpart Marisol Touraine in Tehran mid-October.

Touraine’s Iran visit was aimed at working out an MoU between Tehran and Paris on health cooperation, which is set to be finalized during Rouhani’s upcoming trip to France.

According to Jalalpour, four specialized meetings between business players of Iran and France along with visits to commercial and industrial sites in Paris are among other plans of the Iranian delegation.

The Iranian and French presidents will also attend a summit on joint economic cooperation.

“We will have the honor of a visit by President Rouhani on 17th of November. It will be a very important time. There are a few weeks left to prepare things, to prepare roadmaps for different sectors and to choose different projects we want to push forward,” said the French foreign trade minister in a face-to-face interview with Financial Tribune in Tehran.

> Italy Wants Pre-Sanctions Stature

Sanctions’ impact on trade with Italy was substantial. In 2006, Italy was Tehran’s number one European trade partner. Around €7 billion in bilateral trade in 2011–before the sanctions were imposed–nosedived to slightly above €1 billion afterwards, according to Italian Minister of Economic Development Minister Federica Guidi.

Guidi, along with Minister of Foreign Affairs and Cooperation, Paolo Gentiloni, headed a delegation of Italian business leaders to Iran in early August with the aim of “regaining Italy's pre-sanctions stature in the Iranian economy,” in Gentiloni's words.

Guidi's remarks in a meeting at ICCIMA headquarters in Tehran pointed to Rome’s firm decision to bolster trade ties with Tehran. She said her country is eager to develop "long-term mutual cooperation” with Iran rather than simply maintaining its presence in Iran’s consumer market.

Unlike France whose pre-sanctions cooperation with Iran used to revolve around auto industry for the most part, Italians had deep-rooted collaborations with several Iranian industries, ranging from textile and tile sectors to petrochemical and steel industries.

In the absence of Italians, Iran’s tile factories turned to Chinese brands for their manufacturing machinery, which helped the sector prosper. However, it was not the case with textile factories.

Iran’s textile industry is currently in a bad shape, which, according to experts, is due mostly to the fact that they have been stuck with old methods and equipment and have failed to keep pace with international standards.

This is while Italian equipment, according to Mohammad Mehdi Behkish, secretary-general of International Chamber of Commerce’s Iranian Committee, makes for an ideal option for Iranian factories.

"Italy can provide Iranian firms with modern machinery at prices lower than other European technology-savvy countries like Germany," he wrote in the Persian weekly Tejarat Farda.

Italians have already been gearing up to make a successful comeback to Iran’s textile industry. Last month, the Association of Italian Textile Machinery Manufacturers said it aims to consolidate its presence in Iran and accompany an Italian trade mission due in Tehran late November.

The mission, headed by Carlo Calenda, Italy's deputy minister of economic development, will also include representatives of Italy’s Ministry of Economic Development, Italian Institute for Foreign Trade, the European country’s industrial and banking unions and commerce chambers union.

Apart from the manufacturing sector, Iran is also eying cooperation with Rome in mining industries. Iranian Mines and Mining Industries Development and Renovation Organization, otherwise known as IMIDRO, reported last week that CEOs of three Italian steel and aluminum giants have proposed investment in Iran’s steel and aluminum sectors.

Gianpietro Benedetti and Martin Wright, the CEOs of Italy’s Danieli and FATA Aluminum Companies respectively, proposed to establish a joint company with IMIDRO and implement two projects for the production of 6.5 million tons of iron ore pellets and 3 million tons of sponge iron with an investment of $4.3 billion, 60% of which are to be undertaken by the Italians.

CEO of Milan-based SMS INNSE Company Albetro Bregante also proposed cooperation with IMIDRO for the production of high-quality seamless steel sheets, a product widely used in the manufacture of oil and gas pipelines.

Establishing joint ventures with Italy for transfer of modern technologies to Iranian firms and exporting a portion of the output with the help of Italians are Tehran’s policy in its approach toward the European country, according to Iran’s commercial attaché to Italy, Mohammad Razi.

Furthermore, a safe transit pathway has already been discussed between the two sides to facilitate freight transit from Iran to the European country. The route passes through Azerbaijan, Armenia, Georgia, Bulgaria, Greece and Italy.

The corridor, when finalized, will not only ease trading between the abovementioned countries, but it will link Italy to Iran’s neighboring markets and will also provide a pathway for transit of Italian goods to Central Asian states and vice versa.