Economy, Domestic Economy

European Firms Forge Alliance for Stronger Stance

European Firms Forge Alliance for Stronger StanceEuropean Firms Forge Alliance for Stronger Stance

Multinational companies from Europe are forging an alliance to overtake their US rivals in trade with Iran as the ongoing nuclear talks between Iran and the world’s six major powers could eventually lead to the removal of sanctions against Iran, opening a vacuum in Iran’s lucrative market that can be seized upon by whoever steps in first.  

“Three European business bodies – the Iranian chambers of commerce of France, Germany and the UK – have formed an alliance to facilitate business between Iran and the European Union. The European companies feel impeded in trading with Iran, in part because many banks refuse to handle their payments,” Wall Street Journal reported recently.

“Their main concern is that European companies face often-complicated national regimes to approve exports to Iran while their US counterparts operate with a unified, clearer export approval process,” the American daily wrote.

US exports to Iran more than tripled between 2006 and 2013 to $313 million, while EU sales to the Islamic Republic more than halved to €5 billion from €11 billion during the same period, says Martin Johnston, director general of the British-Iranian Chamber of Commerce (BICC).

Giants such as aircraft manufacturer Boeing , which is set to compete with Airbus in Iran, and computer maker Apple, have taken steps to enter the promising consumer market.

Upon his election, President Hassan Rouhani promised to open up Iran’s economy to the outside world, following years of stagnation created mainly as a result of the dispute with the West over Tehran’s nuclear energy program.

The decade-long nuclear standoff between Iran and the West has made many foreign investors avoid taking the risk of making investments. However, with nuclear talks currently underway between Iran and the P5+1, the government hopes that a final deal will make the participation of foreign companies in large projects possible.   

“The progress made in foreign policy drew foreign investors to look for opportunities in Iran and choose the country for investment,” Ali Tayebnia recently said, noting that foreign investment is showing a positive trend after two years of stagnation impinged upon the country’s economy as a result of the sanctions and recession.

On October 7, 2014, President Rouhani said that his government had prepared a comprehensive plan to attract foreign and domestic investors, a move which was seen to be a part of his government’s broader plan to stimulate the economy that plunged into recession for two consecutive years.

“The administration is seeking to provide a proper and secure investment and business environment, create market stability and optimism for the future and is, thus, taking measures to assure good returns on investments for the private sector,” the president said.

European Business Alliance is the latest attempt made by EU influential members to show a united front against the American counterparts to seize the opportunity offered by the Iranian market.

“I am already seeing a rush to market by US and EU companies and no one wants to be left behind. There is certainly an element of competition between US and EU exporters and EU companies may feel they have strength in numbers by unifying,” said Nigel Kushner, a director of BICC and the chief executive of W Legal Ltd., a law firm that specializes in sanctions

“Our voice will be more effective with the European Union’s Commission and the parliament if we act as a group,” explained Nigel Coulthard, head of the Cercle Iran Economie, a group of French industrialists and academics focused on Iran’s business sector, which is part of the alliance.

Summary:  Three European business bodies – the Iranian chambers of commerce of France, Germany and the UK – have formed an alliance to facilitate business between Iran and the European Union