Economy, Business And Markets

Moving Beyond Talks

Moving Beyond TalksMoving Beyond Talks

Germany is keen to facilitate the reintegration of Iran into the global business arena by engaging Iran in every area possible.

However, first and foremost on the German agenda is the reestablishment of banking ties as the centerpiece of economic cooperation.

“Now with the nuclear agreement and lifting of sanctions, there are new opportunities,” says Matthias Machnig, state secretary of Germany’s Federal Ministry for Economic Affairs and Energy.

“There is a lot of interest in Germany to cooperate in business and banking.”

Machnig was speaking at the Second Iran-Europe Business and Banking Forum. The three-day event kicked off on Saturday to develop dialogue and advance cooperation between Germany and Iran.

The forum is host to over 600 German and Iranian industrial players. It was organized by Nader Maleki, president of International Bankers Forum, and Iran’s Ambassador i Berlin Ali Majedi.

However, Germany is looking beyond economic collaboration.

“We hope to engage in all areas. It’s not just about the economy. It is also about [political] issues of the region and cultural cooperation. We want to intensify student exchanges,” Michael von Ungern-Sternberg, the German ambassador to Iran, told Financial Tribune.

The European enthusiasm is part of the effort to implement the nuclear deal and Iran sees the clear benefits of the deal.

“The agreement can only be successful if both sides benefit from it,” said Machnig.

Iran and world powers agreed in July to lift sanctions against Iran in exchange for cutbacks in Tehran’s nuclear program and the efforts of German authorities are bearing fruit.

“The last months have been very positive and we saw businesses engage,” said von Ungern-Sternberg.

  Long-Term Partnerships

Germans are taking the first steps to establish an enduring bond with Iran.

“German companies regard themselves as long-term business partners. They are willing to transfer technology, knowledge and provide training for their Iranian counterparts,” said Machnig.

“Iranian firms are excellent partners and complement the German side well. This is because unlike other countries in the region, Iran’s economy has an industrial backbone.”

German authorities and businessmen in the event were clear that the forum was just a stepping-stone toward the endgame.

“It is important now to become very specific in our talks,” Machnig said.

“Conferences are good but we have to identify projects and after prioritizing, we have to look on the finance side. And if we do so, progress can be made.”

  The Bottleneck

The fervor for mutual business has, however, hit a bottleneck: Finance.

“We should clarify how banks interact with one another very quickly, as without the banking sector, economic exchange cannot happen in the long run,” von Ungern-Sternberg said.

European banks know too little about their Iranian counterparts. On the other hand, Iranian financial institutions have a lot of catching up to do on regulatory issues. They need to adapt international standards, as they are the basis for cooperation.

Machnig also addressed Germany’s trans-Atlantic alliance and the US government’s stance on doing business with Iran.

“The United States, just like us in Europe, and just like the Iranian government, has strong interest in making [Iran’s reintegration] happen.”

Many European companies, especially banks, are reluctant to make a move on Iran for fear of penalties for breaching regulations from the US.

The minister said he had raised the issue with the American administration in a recent visit.

“My clear impression is that the administration wants to normalize economic and financial relations between Europe and Iran,” he said.

He added that the US is putting together a clear-cut list of permissible legal businesses with Iran.

“European banks should make good use of this information and the possibilities offered by the removal of international sanctions,” said Machnig.

Mohammad Nahavandian, the head of the Presidential Office, Majid Takht-Ravanchi, Iran’s deputy foreign minister for European and American affairs, vice central bank governors, Akbar Komijani, Hamid Tehranfar, Gholamali Kamyab and Ali Divandari, head of Monetary and Banking Research Institute, also attended the event.

Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh, Minister of Roads and Urban Development Abbas Akhoundi and Energy Minister Hamid Chitchian will deliver are keynote speakers on the forum’s second day on Sunday.