Domestic Economy

Tehran-Vienna Ties Sustainable, Ever-Growing

Domestic Economy Desk
Tehran-Vienna Ties Sustainable, Ever-GrowingTehran-Vienna Ties Sustainable, Ever-Growing

Iran and Austria enjoy a time-tested relationship.

As part of the European Union, Austria has always supported Iran’s right to nuclear technology under the safeguards of the International Atomic Energy Agency by promoting dialog over Iran's nuclear standoff with the West.

Identifying itself as neutral on the nuclear issue, Austrian support for American policy toward Iran was among the lowest in the European Union, Los Angeles Times reported.

In February 2009, Austria was among the few EU countries, namely Greece, Cyprus, Spain and Sweden, to oppose a list of additional stricter sanctions proposed by the P5+1 group against the Islamic Republic.

On the economic front, Vienna resisted some American pressure to reduce bilateral trade ties and freeze assets of the Islamic Republic beyond UN and EU sanction requirements. Particularly in the energy sector, Austria and some Austrian corporations have continued to cooperate with Iran despite sanctions.

Austrian President Heinz Fischer was the first head of a European state to visit Iran after the nuclear deal between Iran and world powers, which was incidentally signed in Vienna. As part of the visit, Austrian businesses in wide-ranging sectors, including automotive parts, information technology and engineering, sealed a series of agreements at a forum in Tehran, becoming the first western firms to put down concrete stakes in the country since the July deal. The president was accompanied by a 240-member economic, cultural and academic delegation.

Late in March this year, a delegation of representatives of Iran's private sector visited the Austrian capital to attend a joint business forum with their counterparts. Deals worth over $2 billion were signed during the gathering.

The Iranian side was headed by Chairman of Iran Chamber of Commerce, Industries, Mines and Agriculture Mohsen Jalalpour and the other side by the head of Austrian Federal Economic Chamber, Christoph Leitl.

The Financial Tribune interviewed the Austrian business leader for more on the visit as well as his insight on the broader Tehran-Vienna ties. Below is the full text of the interview:  

- During the recent visit by an Iranian trade mission to Austria, the two countries signed $2 billion worth of "memorandums of understanding", mostly in the steel industry among other sectors. Can you elaborate on the signed agreements? What do these MoUs actually mean? How far are they from real contracts?

I personally think what matters most in today’s global business is reliability, fairness and humanity behind businesses. Austrian-Iranian business always showed a very high level of reliability in common business.

In order to strengthen the ties between our two countries and build up sustainable partnerships instead of short-term businesses, it is inevitable to do more than only signing contracts.

A memorandum is a commitment between two or more entities securing the achievement of a common goal with common resources and passion. I am very proud to announce that the economic forum at the Austrian Federal Economic Chamber was highly successful in terms of business-matchmaking. More than 500 companies registered for the event and more than 10 memoranda were signed.

Also in September 2015, when Austrian President H.E. Dr. Fischer visited Iran, we were welcomed by 1,000 Iranian businessmen and 10 MoUs were signed also. Some of these memoranda were converted into “real contracts”, as you call it, soon, for example a joint venture in the automotive sector for the local production in Iran or another joint venture in the medical sector for the treatment of diabetes mellitus; only to mention two of them.

- Following Iran’s nuclear deal with world powers, global businesses have been rushing to Iran to do business or resume cooperation. What are Austrian companies’ chances in engaging with Iran? What is Austria’s competitive advantage over other European countries?

First of all I would like to emphasize that we don’t see this as a race where businessmen are rushing into a new market. I congratulate all Iranians on the agreement in the nuclear question with the E3+3.

Second of all, and this is of highest priority, is the fact that Iran’s industry and Iran in general should “recover” from the dire period within the sanction’s time. And I would be delighted if Austrian economy could contribute. Iran has big potential, especially in the heavy industry, in new technologies and automotive.

In Austria, we have a broad network of over 50,000 exporting companies; many of them are hidden champions, European or even global market leaders in the same fields. If our countries will use the synergies, I see splendid opportunities.

I also refer to the big knowhow capacity of the very young population of Iran and the excellent educational level in Iran. I see many ways how Iranian expertise should find its way to Austria.

- Global banks, including those in Europe, have been cautious in resuming relations with Iranian companies. So have been many international companies. Do you see such hesitation on the part of Austrian companies? If so, is it justified? Should that raise concerns about the future of trade ties?

The facts in the long history between Austrian and Iranian friendship speak a different language. Our ties reach back for many hundreds of years. Austrian institutions in Iran, such as the Austrian Embassy, our ADVANTAGE AUSTRIA office in Tehran responsible for trade and the Austrian Cultural Forum have never closed their doors nor have they limited or stopped their activities.

The Austrian president was the last European president visiting Iran before hard sanctions were imposed and the first head of a European state after the “Vienna agreement” last year. Many companies still facilitated business even in the “darkest” hour, especially in the medical sector, pharmaceuticals and foodstuff.

Nonetheless, there is certain pressure from the international community when doing business with Iran. I think a professional businessman has to be aware of not offending internationally valid regulations in order to be successful. This has to be considered since not all international sanctions against Iran are suspended yet.

- What are the major obstacles to trade between the two countries presently? And what measures do you think the two sides should take to tackle the barriers?

To this day, many Iranian banks have returned to SWIFT but the technical opportunity of direct transactions between our two countries is still not possible. I am optimistic that this will change for the better in the next weeks or months to come.

As soon as export insurances will be re-installed again, I see major improvements in our bilateral trade. I also see a challenge in the exchange rates for export business between our two countries, where we carefully observe the situation in Iran also. But in the end, we need to be patient. Rome was not built in a day, neither was Tehran.

- Austria helped broker the nuclear deal. Other than that, the country has always had friendly political relations with Iran. How big of a role do you think the good political relations will play in expansion of economic bilateral ties?

Politics and economy are entangled; politics can pave the way for successful business, and good business relationship can be an advantage in political discussions. I think that the political relationship between Iran and Austria is very good and hence good soil for promising business.

- Two-way annual trade currently stands at around $300 million, which is remarkably low. Where do you think the figure is headed? What is your view on the future of Iran-Austria trade ties?

Considering the fact that bilateral trade used to be almost double in the past, we need to regain former strength. Taking into consideration that we expect the export financing to become more “business friendly” we estimate a sum as high as a billion dollars in bilateral trade to be possible in the long run.

- In their negotiations with international businesses, Iranian officials have repeatedly said they want to turn the country into a hub for supplying goods to the region. Is it something Austrian companies are taking into account?

The ADVANTAGE AUSTRIA office in Tehran is well informed about the status quo of the Iranian business scene and the potentials of collaboration. Last year, they organized and accompanied more than five business delegations of significant size and also this year two major delegations were brought together with their Iranian counterparts.

It is crucial to let Austrian professionals understand what the Iranian side is interested in; consulting our companies about this fact is one of their jobs. I was convinced this job is being done when visiting Tehran last time in September 2015.

The Commercial Counsellor emphasized as much as he possibly could that our aim has to be collaborating with Iranian partners and create added value in Iran instead of only selling products. I think that message was well received.

- Are there any future plans regarding economic ties between the two countries, including any prospective visits or agreements?

Listing up the next exhibitions in Iran where Austrian companies will be present or naming the next political/economical delegations to Iran as well as counting all the Iran-related events in Austria would possibly exceed the scope of this interview.

Instead, I want to point out that Iran and Austria agreed on installing a joint economic commission between our two economic ministers: Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh and our Minister for Science, Research and Economy Reinhold Mitterlehner. Our ministries are currently working out a strategic roadmap until the year 2020 on how to collaborate and use our synergies in the best possible way.

We see a very sustainable partnership which is growing day by day.