Domestic Economy

Italy Hopes to Leverage Iran Ties

Italy Hopes to Leverage Iran Ties Italy Hopes to Leverage Iran Ties

Italy is poised to send a large trade delegation to Iran at a time when many believe Europeans stand a better chance compared to their American counterparts to tap the $400-billion economy following the removal of sanctions.

"Some 300 delegates from five sectors—medical, green energy, automobiles, construction and manufacturing equipment—are scheduled to arrive in Tehran on Saturday for a three-day visit to meet senior officials and business figures," said Riccardo Monti, president of the Italian Trade Commission, FT reported.

"Representatives from Danieli, the steel group, energy company Enel, agricultural machinery maker CNH Industrial, Telecom Italia and several banks would be among the delegates."

Tehran has hosted a number of European trade delegations since July, when it signed a landmark nuclear deal with major world powers—the US, UK, France, Russia, China and Germany. The agreement is expected to lead to the lifting of economic sanctions, imposed over Tehran's nuclear program, in the first half of next year.

According to Monti, Italian exports to Iran, which totaled €1.2 billion in 2014, could rise to €2 billion as soon as next year.

Iran’s untapped market of 78 million people represents a big opportunity for Italy at a time when it is struggling to boost exports. This is while some Iranian businesspeople complain that many European countries, hit hard by the credit crunch in the global financial crisis, see Iran as an export destination rather than a market for investment—desperately needed in a sanctions-hit economy.

“Finance is a problem,” acknowledged one European businessman. “But we can secure funds in other ways, such as joint ventures with the Iranian expatriate community, which has a lot of money. Iran also needs to resort to the world’s debt market.”

For now, Iran hopes small European banks such as those in Germany and Italy will compensate for the absence of the leading lenders.

Iran’s economy—the region’s second-largest after Saudi Arabia—is a tempting prospect for Italy, one of Iran’s biggest trading partners in the years before the sanctions regime.

“Now,” said Monti, “we need to recover some of the lost time.”