President Hassan Rohani scored a major foreign policy success in his 5-day tour of Europe that yielded numerous contracts worth billions of dollars and also underscored Iran’s security symbiosis with Europe. Accompanied by a dozen cabinet ministers and some 120 trade delegation, Rohani toured Rome and the Vatican before arriving in Paris for a two-day official visit that was hailed by the French media as a timely Iran-France rapprochement; without doubt, the stage is now set for other European countries to follow suit, e.g., Sweden has expressed the readiness of its banks to finance economic and industrial projects in Iran.
Having fulfilled its nuclear obligations under the accord known as the Joint Comprehensive Plan of Action (JCPOA), which entered its implementation phase in mid-January, Iran has now entered the “post-sanctions” era that will hopefully usher in rapid economic development, in light of a recent study (by the Euler Hermes group) that projects a respectable 4% percent growth in 2016. Although hampered by the continuing low oil prices and a slow re-engagement with Iran by the Western financial institutions, the government’s economic projections focus on the expansion of foreign trade and a boon in joint investment with foreign firms as key economic implications of this new era, highlighted by the whopping 600 billion worth of MoUs signed between Iran and China during the one-day Tehran visit of China’s President, Xi Jinping, on January 23rd.
In Italy, Rohani rejuvenated the Iran-Italy ties by inking deals worth $18 billion, including a $5.4 billion contract with the pipeline company Saipem to build a 1,800 Km pipeline and to upgrade the refineries in Shiraz and Tabriz, a $6.2 billion deal with the Italian steel giant Danieli, and a similar $4 billion contract with the infrastructure development firm Condotte. The Italian Prime Minister hailed these as merely the prelude to deeper relations: “We have signed the first accords but we are only at the start of a long road.”
Europe’s warming to Iran, blessed by Pope’s embrace of Rohani in the Vatican, then reached a new milestone during Rohani’s Paris visit that resulted in the following agreements:
- Iran committed to the acquisition of 118 Airbus aircraft, a contract valued at $ 25 billion that will be distributed among the shareholders of the consortium which include the French, German and Spanish.
- PSA Peugeot Citroën agreed to invest 400 million euros over five years in a joint venture with Iran Khodro, its traditional partner in the country, aiming to produce 200,000 cars per year;
- Total will buy up to 200,000 barrels per day of Iran’s crude oil, according to its CEO, Patrick Pouyanné;
- The giant Bouygues Construction, in partnership with the manager of the Paris airports (ADP), received a Memorandum of Understanding (MoU) for the extension of the Imam Khomeini International airport outside Tehran;
- The construction group VINCI Concessions announced the signing of a MoU on the renovation, expansion and operation of airports in Mashhad and Isfahan;
- SNCF announced the signing of a protocol of cooperation with Iranian Railways (RAI) in four areas including station operations and development of high-speed lines.
- The pharmaceutical group Sanofi signed a MoU with the Iranian Ministry of Health on strengthening existing partnerships with Iranian manufacturers, participation in prevention programs of certain diseases and aids that Iran could lead epidemiological research;
- Suez, the giant water management and waste, signed a framework agreement with the National Water Company (NWWC) in the areas of cooperation in water and its treatment;
- The CMA CGM shipping company signed a MoU with the Islamic Republic of Iran Shipping Lines to exchange or rent space ships, operate joint maritime and cooperate on the use of port terminals;
- Richel, a manufacturer of agricultural and horticultural greenhouses, signed a MoU with Iran on the implementation of 50 hectares of high-tech greenhouses;
- The construction group VINCI Concessions signed a MoU with Iran on the renovation, expansion and operation of airports in Mashhad and Isfahan.
The above-mentioned wide-ranging deals simply illustrate the overall appeal of the Iranian market, widely billed as one of the top “emerging markets” in the new post-sanctions milieu. Evan Canada, which unilaterally broke diplomatic ties with Iran, has expressed its openness to restore ties and to lift sanctions on Iran in a “timely fashion” so as to allow Canadian companies join the race to re-enter the Iranian market — “because if other countries move before us, it’s not a way to help our industry,” to paraphrase Canadian Prime Minister Justin Trudeau. A big, and pertinent, question is of course whether not the US, which led the multilateral nuclear negotiations with Iran, will follow suit, in light of the existing non-nuclear US sanctions on Iran that continue to shut Iran’s doors to US companies?
Lessons for US’s One-Dimensional Iran Policy: Search for an Economic Diplomacy
In a recent article, American-Iranian Council (AIC ) President Hooshang Amirahmadi has drawn parallels between US’s current Iran policy and US’s post-war Vietnam policy, which squandered opportunities for US business due to late engagement. Unfortunately, history is repeating itself and it requires bold political leadership in Washington to draw the right lessons from both the past errors as well as the present wave of Iran’s re-integration in the global market highlighted by the above-mentioned Asian and European contracts with Iran.
Incremental US steps, such as positive signals by the White House, the U.S. Treasury, and the State Department, can be catalytic in stimulating an expansion of US-Iran trade, in light of the JCPOA’s paving the way to US subsidies overseas to do business with Iran. Eventually, however, the main existing barriers, such as Iran’s inclusion in the State Department’s list, must be removed in order to unblock the US corporate access to Iran.
Fact is that Iran today is a bulwark of anti-terrorism and has much in common with US vis-à-vis the threat of Islamic State (Daesh), Taliban, narco-traffic, and the like. The existing differences between the two countries, such as with respect to Lebanon’s Hizbollah or human rights, do not need to entirely disappear before Tehran and Washington embark on the economic dimension of a “reset.” Hypothetically, the US can continue to exert pressure on Iran on these issues, diplomatically and otherwise, under a revised scenario marked with simultaneous growth in ‘economic interdependence’. An important prerequisite here is a cognitive US re-imaging of Iran, as an anchor of regional stability and a cooperative partner in regional crisis-management, instead of as an enemy pure and simple.
Unfortunately, as illustrated by the new US visa restrictions (adversely affecting businessmen of other nations doing business with Iran), Washington still harbors the illusion of retarding the tsunami of global business interest in post-sanctions Iran. Yet, clearly as Rouhani’s successful trip to Europe has demonstrated, the US is increasingly the lone exception in the West that continues the dysfunctional self-sanctioning – that harms the US’s own economic interests. Hopefully, Europe’s red carpet for Rouhani and the multi-billion dollar deals above-mentioned spur a much-needed re-thinking on US’s part, to jettison its one-dimensional, and ultimately counterproductive, Iran policy that ought to, logically speaking, reap the benefits of US’s impressive leadership role in the arduous nuclear negotiations.
Indeed, the illogic of US’s current Iran policy consists of a dreadful lacunae in terms of a missing economic diplomacy toward Iran.