Economy, Business And Markets

Europe Doubles Down on Iran Deal as Trump Steps Away

president Hassan Rouhani welcomes Swedish Prime Minister Stefan Lofven who arrived for a three-day visit in Tehran  on Feb. 11. president Hassan Rouhani welcomes Swedish Prime Minister Stefan Lofven who arrived for a three-day visit in Tehran  on Feb. 11. 

Before the platters of roast lamb and fragrant rice were served, visiting executives squeezed into the front room of the Swedish ambassador’s home in Tehran to applaud ambitious plans to restore Iran as a top trade partner.

The men and women representing companies, including AstraZeneca Plc and truckmaker Scania AB, had flown in with Prime Minister Stefan Lofven who was making the first official visit to Iran by a Swedish premier since a mediation effort during the 1980s war with Iraq. 

The 75-member delegation was intent on doing business, but the politics was inescapable: As the US under Donald Trump steps away from Iran, Europe is moving forward, unwilling to throw away years of tortuous diplomacy, reads a Bloomberg article. Below are excerpts:

“Before sanctions, Iran was the biggest export market for Sweden in the Middle East,” Swedish Trade Minister Ann Linde said at the Feb. 11 event attended by Iranian businessmen and ministers. “We hope it will be again.”

European leaders are emerging as strong backers of the 2015 six-nation nuclear deal with Iran. They want their companies to prosper in a largely untapped market of 80 million people.

The Swedish trade delegation was sandwiched between a high-level French political and commercial visit, led by Foreign Minister Jean-Marc Ayrault, and a Feb. 12 automobiles conference attended by senior executives from Peugeot, Citroen, Renault and Hyundai.

“I’ve been to Iran 25 times in less than two years,” Jean-Christophe Quemard, Peugeot’s executive vice president for the Middle East and Africa, told reporters when asked if his latest trip was in any way motivated by Trump’s policies. 

“What does this mean? Times have changed. You need to get used to seeing our faces in Tehran.”

Sanctions imposed on Iran over its nuclear program slashed its trade with Sweden by 90% to about 1 billion krona ($112 million) in 2012. Among the documents signed during Lofven’s visit was a €110-million pact between Scania and Iranian heavy-vehicle maker Oghab Afshan to produce 1,350 buses. 

Hamid Akbari, a member Oghab Afshan’s board, said the company was in talks with three Swedish lenders for financing.

For Europeans turning up in Iran, pledging to boost business is the easy part. Delivering is harder, especially as sanctions not lifted under the 2015 accord–primarily US curbs–continue to scare away major banks.

Two of Iran’s biggest post-sanctions deals—contracts for Airbus and Boeing aircraft worth a combined $26.6 billion–have been complicated by the remaining US restrictions and difficulties arranging finance. 

Finding ways to “finance business in Iran” is a major challenge, Linde said. 

“Sweden’s export credit agency, SEK, was doing more to guarantee short-term loans but longer financing deals remained problematic.”

Iran’s own banking system is only slowly recovering from years cut off from international finance.

France’s Treasury is planning to issue direct loans to businesses that want to work in Iran, according to a French government official, who declined to be named. French business lobby group Medef International has set up an office in Iran.

Germany’s KfW development bank agreed a €1.2-billion loan to Iran for a railroad in November, while Italy’s export credit agency SACE SpA and the CDP Group last year extended about €9 billion in loans and guarantees.

European leaders were quick to point out that they considered last month’s launch of a ballistic missile by Iran—seized on by the Trump White House which put Tehran “on notice”—didn’t contravene its commitments under the nuclear accord. 

Francois Senemaud, France’s ambassador in Tehran, urged all stakeholders to help make a success of the deal at the carmaker conference. 

“We are ready to take our share of this endeavor,” he declared.

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