Daily Management Review

France is coming closer to Iran


France will continue to encourage its companies to develop their business more actively in Iran. This is happening despite the uncertainty surrounding the 2015 nuclear deal, which put the world business community in an ambiguous situation, Reuters reports citing a high-ranking French official.

France and other European countries are seeking to expand trade with Iran, as Paris, Washington and other world powers agreed to lift most of the economic sanctions against Iran in exchange for restrictions on Tehran's nuclear program. But US President Donald Trump never concealed his contemptuous attitude to what he calls the "worst deal in history." On January 12, he promised to renew the US sanctions if France, Britain and Germany did not change the terms of the agreement.

France, which had close business ties with Iran even before the fall of the Shah government in 1979 and which manages several large factories, including Renault and PSA plants, seeks to deepen trade ties, since sanctions were lifted in 2016.

French exports to Iran in the first 11 months of 2017 increased 120% to 1.29 billion euros, while imports rose 80% to 2.16 billion euros, Head of the bilateral relations department at the Ministry of Finance, said. He added that it is necessary to implement a simple and full-fledged trading scheme this year to offer loans in euros to Iranian buyers of French goods, which would make bilateral trade invulnerable to US sanctions.

Tehran hopes for rapid reintegration into world trade after the deal was concluded. However, its inability to convince Western banks to open the doors to Iranian business has become a major factor hampering its rehabilitation. The reintegration of Iranian banks into the financial system will take a lot of time and may also require the support of the Iranian government in mitigating the risks associated with commercial banks and conducting additional inspections.

"Unfortunately, the Iranian banking system has not yet fully benefited from this deal, and Iran is monitoring whether this policy helps or hinders the business," said the head of the Central Bank of Iran.

Trump's arrival to power, as well as his threats to leave the nuclear agreement, prevented Hassan Rouhani from "reviving" the Iranian economy. He was able to reduce inflation, but not unemployment. All foreign investments came to naught due to the fact that the United States turned off Iran from the international banking system. One can even ask whether Trump's threats to leave the nuclear agreement actually hide a strategy to speed up the regime change in Iran, to which, as Le Nouvel Observateur notes, the American president attaches great importance.

Nevertheless, this revolution is unlikely to take place in a moment. The Syrian tragedy, as well as the memory of the repression of 2009, makes the Iranians prefer security, not freedom. Besides, there is a risk of further tightening of the regime if the scale of the protest forces the government to entrust repression to the most determined adherents of the Islamic Republic.

It is for this reason, according to the publication, that Macron, who demonstrated his good intentions by accepting the resigned Prime Minister of Libya Saad Hariri, should not "turn his back" on President Rouhani. If France and the rest of Europe take the side of the US, for which an alliance with Saudi Arabia is a key aspect of their diplomacy in the region, Iran will eventually turn to its Russian ally, which can lead to a very disturbing increase in tensions in the region, writes Le Nouvel Observateur.

source: reuters.com