Economy, Domestic Economy

Europe Rushes to Do Business, US Left Behind

Europe Rushes to Do Business, US Left BehindEurope Rushes to Do Business, US Left Behind

European businesses were set on Sunday to speed back onto the Iranian market, hours after western sanctions were lifted on Iran in exchange for Tehran’s pledge to limit its nuclear program.

The flurry of investor excitement and the sheer size of Iran’s economy had some analysts comparing it to the reopening of Eastern bloc markets after the fall of communism.

In a measure of the billions of dollars that are at stake, Tehran announced that it planned to buy 114 Airbus jets, while the head of the state-owned National Iranian Oil Company said on Sunday that the country planned to boost production by 1 million barrels a day, about a 33% increase in output, wrote the Washington Post.

European leaders, seeking a rare piece of economic good news amid sagging markets, encouraged their nations’ businesses to take advantage of the opportunity.

This is while American companies are still barred by a range of US sanctions that remain in place.

Soon after the lifting of sanctions, Washington said it will now allow foreign subsidiaries of American companies to trade with Iran. Authorities have also lifted restrictions on non-American purchases of Iranian oil and sales involving Iran’s energy sector, Reuters reported.

“There is not going to be a comprehensive law allowing all US companies to operate in Iran anytime soon. This will make American firms the biggest loser of the nuclear deal,” Majid Rafizadeh, a Middle East scholar at Harvard, said.

CNNMoney reported that while the US was set to lift its nuclear sanctions on Iran, many business sanctions would remain and that it would still be very difficult for American businesses to set up a physical presence in Iran or partner with Iranian companies.

“In contrast, Europe is opening up almost all trade with Iran … The result is likely to be: European companies win, American companies lose.”

There remains uncertainty about what exactly will be allowed for American companies, with the Treasury Department saying broadly that the country will allow “the sale of US origin aircraft, parts and services exclusively for commercial passenger aviation to Iran; the import of Iranian-origin carpets and foodstuff; and certain activities conducted by foreign subsidiaries of US companies,” according to Washington-based media organization media organization NPR.

CNNMoney reported that US businesses would likely have to apply for special licenses to deal directly in Iran, while Europe would be far more open.

“As many countries rush to sign contracts with Iran [after Implementation Day], the Obama administration will have to decide to either put US firms at a disadvantage or issue them licenses,” Rafizadeh said.

Only a day after international sanctions against Iran were lifted on Jan. 16, the Obama administration announced new sanctions against 11 people and companies for their involvement in Iran’s ballistic missile program. Iran has denounced the move as “illegal and illegitimate”.