Committed to preserving historically close trade relations between Iran and Italy, private sectors from both sides have explored the setting up a small bank to side-step the new US sanctions imposed last year after President Donald Trump abandoned the Iran nuclear deal.
"In our meetings with the private sector in Italy, they proposed opening a small bank for euro transactions with Iran without involvement of the US dollar," Lida Shahabi, general secretary of Iran-Italy Joint Chamber of Commerce told the Financial Tribune.
"Italy has a big share in Iran’s market and the Iranian market has both potential and capacity. Because Italy has been its number one trading partner [in Europe] it does not want to lose Iran," she said.
Italy is a country whose companies are mostly family businesses and small and medium-sized enterprises that have no interaction with the United States and are still working with the Iranians.
Shahabi put Italy-Iran trade (including oil) in 2018 at €5.4 billion – up 18% between the first half of the year and the second half.
"We were gaining momentum in trade especially with Italy and were inundated with requests, for example in the area of startups, to create jobs for our youth. But the (new) sanctions blunted that pace. However, we still have calls because they are still working with us” despite the mounting US pressure and hostility.
Ahmad Pourfallah, president of Iran-Italy Chamber said Italy was Iran's biggest trading partner in the past and it is still the biggest in Europe.
"We once hit a record of €8 billion in bilateral trade (before the previous round of economic sanctions). This fell to €1.7 later," Pourfallah told the Tribune.
"It’s interesting that even under the current conditions Iran-Italy trade has registered an uptick. Though it has not grown as expected, but has registered 10-18% increase while relations have been safeguarded as significant parts of infrastructure of our industries and mines are related to Italy.”
He was of the opinion that in the worst case scenario and “even if need to trade via third countries ties with Italy should continue.”
In reiterating closer ties to Italian forms, the chamber official said, "We expected higher numbers, especially after the 2015 Geneva [nuclear] agreement when delegations that came from Italy were more than any other country.
Some MOUs were signed but did not materialize because of the renewed US sanctions. Measures are underway to lessen the impact of the restrictions.”
According to the veteran businessman, Italians are approaching the US restrictions in a "softer manner" and a bit more logically.
Oil Trade
Earlier this month Iran’s oil minister criticized Greece and Italy for not buying its oil despite US waivers and said they had not offered Tehran any explanation for their decisions.
Pourfallah attributed this to Italy's economic conditions, which he said are not very good because the economy has fallen into a recession.
"I was at a seminar around the time of the Geneva agreement when an Italian energy official said 'we are not that wealthy to replace Iranian oil, not because Iranian oil is cheap but because our infrastructure has been built for processing Iranian oil."
Italians have reduced their consumption levels because their economic power is not like five years ago and now there's a recession that "I hope will be over" sooner rather than later.
The United States granted the two countries exemption along with six others - allowing them to temporarily continue buying Iranian oil as Washington reimposed sanctions on Iran’s oil and banking sectors.
"Italian businesspeople prefer to continue their trade separate from politics and are disappointed with the status quo," Pourfallah said.
About the special purpose vehicle created by Europe known as INSTEX, he said until it is operational, no one can give a strong opinion on it. "They have announced the purposes… but I have doubts on how much of a success it will be. My expectation is that the goals intended by the architects of INSTEX will not be realized."
Shahabi said however that the very fact that Europe is resisting the US and is supporting Iran is noteworthy.
"Our crisis situation and the sanctions may help first with knowledge production and execution. We now have a company in Iran that is selling cancer medicine mostly to Italy," she said.
Iran-Italy Chamber of Commerce is helping organize Iran+ TECH+ 2019 on Feb 24, a first-time event on commercialization of advanced technology in Iran.
