Economy, Domestic Economy
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Britain in Danger of Losing the Race to Iran

Britain in Danger of Losing the Race to Iran Britain in Danger of Losing the Race to Iran

Britain’s biggest trading rivals in Europe have wasted little time in gaining a head start in the race to win billions of pounds worth of business in Iran.

With the ink barely dry on the historic agreement between the Islamic Republic and the P5+1, Britain’s competitors in Paris have already started a charm offensive to secure deals, wrote the Telegraph.

While British ministers of state have been fretting about an invasion of illegal migrants crossing the channel from Calais, their French counterparts have been pressing the flesh with key decision makers in Tehran. French Foreign Minister Laurent Fabius was in the Iranian capital this week with an invitation for President Hassan Rouhani to visit Paris in winter.

He told guests gathered at the French Embassy in Tehran: “We are two great, independent countries.”

Despite William Hague’s pledge more than a year ago to reopen the British diplomatic outpost in the Qolhak Garden compound, the gates remain firmly closed.

“With the new deal, the lifting of sanctions, France intends, if Iran is willing, to be more present in several areas,” said Fabius. Business and trade will be at the top of the list as French companies hope to gain a head start in signing lucrative contracts with their Iranian counterparts.

Following in the footsteps of Fabius, his deputy and France’s agriculture minister will lead a major trade delegation to Iran in September. French companies such as Total, Peugeot, Renault and Carrefour have previously had a significant presence on the ground and in theory would hope to do so again.

And it’s not just the French who are now travelling the route of the old Silk Road back to Persia. German companies and trade bodies have wasted no time in rebuilding bridges with potential partners.

Less than a week after the deal was struck, Sigmar Gabriel, minister for economic affairs and energy and vice chancellor of Germany, led 60 business delegates to visit Iran and met with counterparts in the country. Many of the delegates were high-ranking executives from Siemens, Daimler and other famous German enterprises.

Deutsche Bank has said that if German trade with Iran was to return to levels seen before sanctions then the European powerhouse could see up to €4.5 billion in additional revenue.

 State of Denial

By comparison, the British government appears to be in a state of denial over the implications for trade which may arise from the historic deal signed last month to lift sanctions and limit Iran’s nuclear program.

Although London is reluctant to act already, business is not. British companies, especially in the oil and gas sector, are aching to get back in. Royal Dutch Shell has already held talks with Iranian officials about the way forward and BP chief executive Bob Dudley spoke at length about the importance of Iran during the company’s earnings briefing last week.

Both UK oil giants have a long history of involvement with Iran and neither can afford to be left behind in the race to secure access to some of the world’s last remaining cheap oil and gas. However, their major French rival, Total, may have already stolen a head start. The oil giant’s chief executive, Patrick Pouyanne, will have been buoyed by the remarks of Iranian Oil Minister Bijan Zanganeh following his meeting last week with the French foreign minister.

Following the discussions, Zanganeh said: “A new chapter of cooperation with the French company Total will begin to develop Iranian oil fields.”

He added in a statement: “Total was active in developing Iranian oil projects for more than 20 years (before sanctions) … the door is again open for this company’s activities in developing oil fields.”

However, British business won’t receive any diplomatic help to re-establish their position until the UK government gives them the green light.

The UK Foreign and Commonwealth Office said in a statement: “If Iran adheres to its commitments under the comprehensive deal and sanctions are lifted, then the UK government will help business take advantage of the opportunities that arise. Until the IAEA has verified Iran’s actions on its nuclear program, sanctions will remain in place, and we will continue to enforce them rigorously.”

There are also the sensitivities of the UK’s close trade allies on the other side of the Persian Gulf on the Arabian Peninsula to consider. The British government is concerned an over-eager pursuit of Iranian deals could backfire if it results in proven markets such as the United Arab Emirates and Saudi Arabia shutting their doors.

Financialtribune.com