Economy, Domestic Economy

Germany Zooms In on Iran’s Transport Sector

Germany Zooms In on Iran’s Transport SectorGermany Zooms In on Iran’s Transport Sector

German businesses are looking forward to investing in Iran’s infrastructure and transportation sectors, said former German chancellor, Gerhard Schroeder.

Schroeder, who is leading a 27-member delegation to Iran this week, was speaking in a meeting with Iran’s Minister of Roads and Urban Development Abbas Akhoundi in Tehran on Monday, IRNA reported.  

“Representatives of Germany’s small- and medium-sized enterprises active in various economic sectors, including transportation, are accompanying me in this visit. Promoting investment in these sectors will help create jobs and enhance relations between Iran and Germany,” he said.

Schroeder is the honorary chairman of NUMOV, the Berlin-based German Near and Middle East Association, representing the trade and investment interests of the German economy in the countries of this region.

“The presence of German companies in Iran could conjure up a new era in economic relations between the two countries,” he said.

Schroeder’s visit comes as German companies have already found their Iranian market niche in the runup to the post-sanctions era.

Iran’s National Railways Company and German conglomerate Siemens transportation subsidiary, Siemens Mobility, recently signed several memoranda of understanding to develop Iran’s railroads.

The agreements concern electrification of Tehran-Mashhad railroad and Tehran-Isfahan high-speed train; Iran’s procurement of 500 passenger cars and development of the country’s railroad infrastructure as well as providing consultation and technology, according to Iran’s Ministry of Roads and Urban Development.

Siemens will be in charge of electrification of Tehran-Mashhad railroad, equipping the route with signaling systems, provision of locomotives and full maintenance services.

Under another deal on Tehran-Isfahan high-speed railroad, Siemens is to prepare a proposal, including technical and financial requirements for the procurement of high-speed locomotives and signaling systems for the route.

The rail linking Tehran, Qom and Isfahan is going to be the showpiece of the country’s entire rail network: a modern double-tracked line running at 400 km/h–the only genuinely high-speed project presently underway.

Iran’s rail industry, according to Akhoundi, should undergo major development. Under the 2025 Vision Plan, Iranian railroads are to be electrified and double-tracked. In addition, 12,000 km of new railroads are to be constructed, nearly doubling the size of the current national network.

“Based on our estimates, we need at least $30 billion in investment within the next six years to overhaul the sector. Germany stands to cooperate with us in this regard,” Mehr News Agency quoted the minister as saying.

Akhoundi and Schroeder also discussed establishment of German banks in Iran to help facilitate investment in infrastructure and transport projects.

“The German team’s visit ahead of the Implementation Day [the day sanctions are slated to be lifted] shows the importance of expansion of bilateral ties to Berlin,” Akhoundi said at a press conference after meeting Schroeder.

President Hassan Rouhani said on Monday the western sanctions could be lifted within days.

Schroeder also met President Rouhani and Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh in separate meetings on Tuesday.

The president referred to “good historic relations” between Iran and Germany as a solid basis for expansion of mutual ties. Auto, port facilities, rail, energy and manufacturing industries among other sectors, according to the president, are the potential areas of cooperation between Tehran and Berlin.

Enhancing trade ties with the European country was also stressed by Nematzadeh who said the government aims to push Iran-Germany ties not only to pre-sanctions level but further ahead, based on drafted long-term strategic cooperation plans.

  German Delegations in Review

Germany has sent 13 business delegations to Iran after the July 14 nuclear deal, according to Trade Promotion Organization of Iran. First came a 60-member high-ranking mission headed by Vice Chancellor and Minister of Economy and Energy Sigmar Gabriel who traveled to Iran a few days after the deal.

Representatives from major German companies, such as Linde, Siemens, Mercedes, BASF, Volkswagen Group and GIZ, accompanied Gabriel to meet Iranian officials and business owners to discuss potential areas of cooperation.

The delegation also attended a meeting with members of Iran Chamber of Commerce, Industries, Mines and Agriculture.

The German vice chancellor also met with President Rouhani, Foreign Minister Mohammad Javad Zarif, Oil Minister Bijan Namdar Zanganeh, Energy Minister Hamid Chitchian and Nematzadeh to pave the way for future trade visits.

Early October, the “Iran-Germany Trade Forum” was hosted by Tehran Chamber of Commerce, Industries, Mines and Agriculture, and Iran-Germany Chamber of Commerce.

A 100-strong trade delegation from the European country, headed by the state of Lower Saxony’s Economy Minister Olaf Lies, who is also a member of the board of directors of Europe’s leading automaker Volkswagen, met with Iranian economic players at the forum and expressed the willingness for doing business with Iran.

German exports to Iran sank from €4.7 billion to €2.1 billion ($5.1 billion to $2.3 billion) between 2010 and 2013.

According to German sources, around 80% of machinery and equipment in Iran are of German origin.