How French companies literally can't get enough of the Iranian market
Not to be outdone, French firms are also preparing for their return to Iran
Western powers resumed talks with Iran Wednesday over its nuclear program – negotiations likely to be followed closely by French businesses eager for the chance to gain nearly 80 million potential new customers.
If a deal is reached, it would mean the lifting of economic sanctions against Tehran, opening the door for Western firms to tap into the potentially lucrative Iranian market.
It is a market that French firms used to know well and whose loss has been costly. French carmakers Renault and PSA Peugeot Citroën, for example, used to sell upwards of 500,000 vehicles a year in Iran, before being forced to leave the country in 2012 following the imposing of fresh sanctions.
Efforts are already underway to help French entrepreneurs lay the ground work for resuming business with Iran, supported by politicians as well as lobby groups such as the Cercle Iran Économie (Iran Economy Group).
In the last few months, as the possibility of a nuclear deal nears, those efforts have accelerated. A delegation from the French Senate, headed by Finance Committee Chairman Philippe Marini, visited Tehran in April, while representatives from the French National Assembly followed in June.
The traffic has not been all one way. Iran’s Vice President Shahindokht Molaverdi and Agriculture Minister Mahmoud Hojjati visited France last month with the latter’s schedule including a trip to Brest-based poultry firm Doux - a company currently in financial difficulties that could benefit enormously from access to the Iranian market.
“Make contacts on the spot, don’t wait until the last minute,” was the advice for French firms and entrepreneurs looking to make the most of such encounters, given by Michel Makinsky, a specialist on the Iranian economy, at a Cercle Iran Économie meeting in May.
In the audience were around a hundred entrepreneurs and company heads who were part of a fact-finding trip to Iran in February.
“I encourage these companies to go there (…) it would be a shame if someone overtook us,” said Aymeri de Montesquiou, head of the France-Iran Friendship Group in the French Senate, at the time.
Competition for the Iran market is fierce. Businesses across the world, but most notably in the U.S., are keen to fill the space left by the likes of Renault and PSA Peugeot Citroën and gain access to Iran’s 78 million consumers.
U.S. giants such as Chrysler, General Motors and Boeing are moving to establish themselves in Iran once sanctions are lifted. The latter is already authorized to export parts there under the temporary nuclear agreement reached between the West and Iran in November.
Meanwhile, around a dozen American university heads visited Iran in February to tour Tehran’s best academic institutions in another sign of thawing relations between the U.S. and Iran.
Not to be outdone, French firms are also preparing for their return to Iran. Renault is currently searching for a financial partner for an Iranian re-launch, while Peugeot boss Maxime Picat has met with the brand’s long-time partner in Iran, Iran Khodro, to discuss a return to the country.
Avoiding U.S. sanctions
France is also looking at ways to circumvent U.S. sanctions on financial transactions with Iran – currently one of the main obstacles to doing business there.
Banks that deal with Iran can find themselves falling foul of U.S. authorities, as French bank BNP Paribas recently found to its extreme cost after being handed a near-$9 billion fine.
But last month, the French Senate proposed using the state-owned Banque Postale – a subsidiary of France’s post service - to finance business operations. As the Banque Postale has no dealings with the U.S., it would not be exposed to U.S. sanctions.
This would be an astonishing move given it would require direct state intervention and likely anger Washington. But French politicians are eager to make sure they do not cede any advantages to the U.S. when it comes to conquering the Iranian market.