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Bern Draws on “Special Ties” to Boost Tehran Business
Domestic Economy

Bern Draws on “Special Ties” to Boost Tehran Business

Switzerland, like much of the rest of the world, has an eye on deepening trade relations and other opportunities emerging from Iran’s newly opened marketplace.
However, that’s where many of the comparisons end, because of a decades-long special relationship between the two countries, according to Swissinfo.ch, a news and information platform produced by the Swiss Broadcasting Corporation.
Swiss President Johann Schneider-Ammann’s visit to Tehran this weekend comes at a special time, just after the implementation of a nuclear deal by six world powers aimed at limiting Iran’s nuclear program in exchange for time-bound removal of the international sanctions.
The Swiss president joins a growing line of world leaders who are making a visit to Iran to size up the opportunities and send a message that encourages new investment.
In late January, the Chinese president was the first to visit Tehran since the nuclear deal took effect.
The lifting of sanctions against Iran, plus the release of frozen Iranian assets as part of the nuclear agreement, will help revitalize the Iranian economy.
Schneider-Ammann's delegation includes representatives of several Swiss businesses.

> Opportunities for Switzerland

Iran has what the World Bank calls the second-largest economy in the Middle East and North Africa, after Saudi Arabia. Iran’s economic output was an estimated $406.3 billion and it had a population of 78.5 million in 2014.
Switzerland’s exports to Iran were worth $630 million in 2014 and could double or triple within a decade, says Switzerland’s State Secretariat for Economic Affairs, or SECO.
However, even a doubling or tripling would still only amount to about 1% of Swiss exports.
Swiss direct investment in Iran has increased significantly in recent years; three Swiss-Iranian treaties already exist for investment protection, double taxation and aviation. The Swiss also play host to global governance in trade issues.
Partly because Switzerland is not a member of the European Union, Iran has used Switzerland as a hub–sometimes through hard-to-pin-down intermediaries–for procurement in oil and finance.
Manufacturers of Swiss watches and household goods, and some of Switzerland’s major industrial producers, such as Nestlé for food processing, Novartis and Roche for pharmaceuticals, and LafargeHolcim for construction materials, are global giants and could benefit from Iran’s consumers, which include 55 million mobile phone subscribers, nearly the size of those in France or Britain.
Swiss companies that can provide improvements, high-tech or otherwise, in services, industry and agriculture are the most likely to benefit. More specifically, there are big possibilities in areas such as foods, sanitary products, pharmaceuticals, cosmetics, insurance, banking and aviation.
Iran’s economy is dominated by its hydrocarbon, small-scale agriculture and services sectors. The breakdown is 45% on service, 44.5% on industry and 10.5% on agriculture, according to SECO.
What about the oil and gas sector? Iran ranks second in the world in natural gas reserves and fourth in proven crude oil reserves. There also is a notable government presence in manufacturing and financial services. And some of the world’s biggest oil traders, such as Vitol, Glencore and Trafigura, are headquartered in Switzerland.
Those traders mostly ended their dealings in Iranian oil and refined products in the past four years after US and EU sanctions were put in place that prohibited dealing in Iranian crude.
But with the lifting of many sanctions, Iran plans to begin selling 300,000 barrels of oil per day to the European market and Glencore has become the first western company to deal again in Iranian crude.

> Swiss Competitive Edge

At a time when the global economy shows high volatility, Switzerland gets top marks for innovation, business sophistication and labor market efficiency out of 140 countries surveyed for the World Economic Forum’s Global Competitiveness Report. Singapore, the United States, Germany and the Netherlands are next. But that’s more an index of industry on Swiss soil.
The Lausanne-based IMD business school’s annual competitiveness report, in which countries were assessed by 6,000 global executives, also gives the Swiss high marks. In 2014, Iranian and Swiss business leaders launched a chamber of commerce between the two countries.
It has sponsored seminars for prospective businesses, including talk from officials in Swiss government and others in the private sector on the hurdles they face.
For decades, there has been a steady stream of Swiss diplomacy, business and other shared interests with Iran. Switzerland has represented the interests of the US in Iran since 1980, when Washington broke off formal relations with Tehran. Switzerland also has represented the interests of Iran in Egypt since the 1979 Islamic Revolution.

 

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