Economy, Business And Markets

Chamber Awaits Positive Impact of German ECG

Chamber Awaits Positive Impact of German ECG Chamber Awaits Positive Impact of German ECG

Now that debts have been repaid and coverage of Euler Hermes has resumed, a rise in Iran’s business dealings can be expected, says Seyyed Razi Haji-Aghamiri, head of Export Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture.

In a talk with the news website of the chamber, Haji-Aghamiri said the clearance of the Hermes cover debt by the government could prove a very useful step in the expansion of Iran’s business deals with other countries including Germany. Last year, Hermes covered €25.8 billion worth of German exports to other countries.”

On June 20, Iran’s ambassador to Berlin announced that the Hermes cover debt – amounting to about €500 million ($567 million) – has been repaid, and as a result, the Euler Hermes coverage will resume.

Hermes cover is a common way of referring to an export credit guarantee (ECG) by the German government. The guarantees are an important part of German foreign trade policy and protect German companies in the event of non-payment by foreign debtors. The export credit guarantees of the Federal Republic of Germany offer an array of insurance options which are mainly targeted at exports to developing countries and emerging markets.

Detailing one of the main problems of Iran during the sanctions era, Haji-Aghamiri said: “Letters of credit would be opened but no insurance company would underwrite them. Both in the case of exports and imports, we were facing serious problems and business was a kind of risk. Many dealings had to be halted because as international laws dictate, many countries and companies take no steps without insurance.

“After the implementation of the nuclear agreement the problem was resolved. Now with Hermes reopening its export guarantees, Iran’s business deals will witness a rise.”

 Subject to Western Ties

As to when the coverage would actually commence, he said that depends on Iran’s performance – “meaning our way of dealing with the West” – will decide how long it will be before the coverage will in fact restart supporting trade with Iran.  

“The JCPOA is a legal matter. A contract has been signed and many things, including the easing of sanctions, have happened as a result of it”, he said, referring to the Joint Comprehensive Plan of Action, which is the official name of the nuclear deal with the six world powers.

But there will always be barriers on the way of such a deal, says Haji-Aghamiri, explaining: “After the JCPOA, it was announced that foreign banks can establish links with Iran and based on this, a bank might say they are still constrained by the fear of US penalties. They are worried that the US may introduce a legal note saying a certain action is unrelated to the JCPOA and concerns other sanctions.”

Citing the export of Iranian carpets to America – which is banned – as an example of existing problems, he added: “If there is a carpet exhibition in America and an Iranian citizen takes carpets there from Iran, they would not be able to return the carpet to the country because according to the US rules, sanction on imports have been lifted but not on Iranian exports.”

Haji-Aghamiri believes there are loopholes in the JCPOA that need to be addressed, adding that an Iran-US chamber of commerce, which should have been formed after the JCPOA but still hasn’t become a reality, could facilitate business ventures and help solve many  problems.