When it comes to (re)doing business with Iran, France is clearly ahead of everyone else
A delegation of more than 100 French companies arrived in Tehran on Monday in the biggest demonstration of western business interest in Iran for more than a decade, Financial Times reported.
The three-day visit, which includes top French companies such as oil major Total, engineer Alstom, telecoms group Orange and carmaker Renault, has raised hopes in Iran that an interim deal on its nuclear program could lead to a return of foreign investment.
France is moving quickly to take advantage of last month’s potential opening up of a big new market for its companies.
Medef, the employers’ federation which is leading the French delegation, said it had received huge demand when it announced the trip after making a preliminary visit in December.
“The possibility of access to a market of 80m people is very attractive,” said a Medef official.
“Of course, European companies have to rush and be prepared before American companies come,” said one western diplomat in Tehran.
Companies on the trip include representatives from consulting, asset management, engineering services, the food industry, shipping, law, insurance, advertising, construction, pharmaceuticals and sports training, as well as one bank.
Organizers stress that the visit is exploratory and aimed at contact-making, with no contracts expected at this stage. “It is a prospective visit,” said a spokeswoman for Lafarge, the leading building materials supplier.
Many European companies, including from France, Germany and Italy, either left Iran or scaled back in recent years due to the imposition of sanctions.
But the victory of centrist president Hassan Rouhani last summer paved the way for the country to strike an interim nuclear deal with six major powers – the U.S., UK, France, Russia, China and Germany – in November 2013, which took effect in January.
Iran has since started limiting its nuclear program while sanctions have been suspended on certain sectors, such as petrochemicals and auto companies. Frozen Iranian funds worth $4.2 billion will gradually be released over the next six months. However, oil and banking sanctions will remain in force during this period.
Renault, which was selling nearly 100,000 cars a year in Iran before sanctions came into force, has already resumed shipments to Iran and expects its car production in the country to pick up in the first half of this year.
Rival French carmaker PSA Peugeot Citroën, which sold 458,000 cars in Iran in 2011, accounting for nearly a third of the total market, is also poised to return to the country, which was once its second largest market after France.
Jean-Baptiste de Chatillon, Peugeot’s chief financial officer, said last year that the sanctions had cut €10 million a month from operating profit. Renault took a €512 million write-down on its Iran operations last June.
Other countries are also preparing to seize opportunities which may be created if sanctions are eased. A German business delegation, comprised of specialized companies in the food industry, health, spare auto parts industries, as well as in urban planning and engineering, is due in late February. A Dutch delegation is also expected soon.
Meanwhile, rumors are rife in Tehran that American companies through their representatives in other countries are also negotiating with senior Iranian officials.
France sees Iran opportunity if sanctions are lifted: finance minister
France will have "significant commercial opportunities" in Iran if sanctions are lifted, Finance Minister Pierre Moscovici said on Sunday.
The three-day visit of French business leaders is intended to "convey the message that, if the situation improves, there will be significant commercial opportunities for France in Iran", Reuters quoted Moscovici as saying.
"But the underlying message should be read as an (encouragement) to the Iranians to keep their word," he said.
- Trouble getting them, trouble keeping them? Middle East firms challenged in attracting, retaining talent
- Does capitalism provide a solution to terrorism?
- No pain, no gain: Tunisian economy needs three years of tough love before rebounding
- How will MENA economies look in 2015?
- Sanctions face-off: Iran to unveil its corporate side in London next week
- A new era? 110 French firms to return to Iran next month
- US says "Iran not open for business"? Who cares! Turkey rushing to do business with Iran
- Saudi-French business council established
- All EU Eyes on Iran: Europe muscling for investments with Tehran
- Time to copy the French? US oil companies to rush to Iran next month