Daily Management Review

What countries are the biggest losers of Trump’s Iran decision?


05/17/2018


The decision of US President Donald Trump to withdraw from the nuclear agreement with Iran is not only military, but also geopolitical. It restores the regime of economic sanctions against Tehran that operated before the conclusion of this important document in 2015.



Elvert Barnes
Elvert Barnes
How do sanctions against Tehran work?

Deputy Head of the Federal Association of Chambers of Commerce and Industry of Germany (DIHK) Volker Treier explained that the sanctioning legislative base in the US "does not imply preservation of previously concluded contracts." This means that even projects initiated before the imposition of sanctions cannot be continued, and must be stopped within no more than 180 days from the moment of introduction of the sanctions. 

American activities of companies that violate the sanctions regime will be fined, and their American business partners will be forced to terminate their business relations with them. The fact that European companies will strictly abide by European laws does not in any way justify them from the point of view of Washington. The US may punish Europeans for bypassing complex international trade and commercial law by influencing their business interests in America. In fact, businesses face a commercial choice between American and Iranian markets. Given that the United States is the main foreign trade partner of a significant number of states, the choice of most firms is obvious.

France

France - along with Italy - was one of the first European countries, which Iranian President Hassan Rouhani visited in January 2016, immediately after the suspension of sanctions. Everyone then was in euphoria from the economic opportunities that the lifting of sanctions provided. After all, Iran is a country that has one of the world's largest energy reserves and a population of almost 80 million people.

The visit to Paris was then successful for both sides. Exports of French goods to Iran grew from € 560 million in 2015 to € 1.5 billion in 2017. The oil company Total together with the Chinese CNPC agreed to invest € 5 billion in a gas production project in the Persian Gulf. The French automaker PSA Peugeot Citroen is already controlling almost a third of Iran's automobile market.

Germany

While in Paris, the Iranian leader also agreed on a deal that relates not only to France, but also to Germany. Thus, an agreement was reached on the sale of nearly 100 passenger planes Airbus, the largest shareholders of which are Germany and France, to Air Iran. Among them are 12 double-deck super-airbuses A380 and 16 long-haul A350 airliners. One of the planes has already been delivered to Tehran, and the total amount of the deal is estimated at € 8.4 billion.

German companies Siemens and Daimler are also actively developing cooperation with Iranian companies. In general, last year the volume of German exports to Iran amounted to € 3 billion. For comparison, the volume of Germans goods and services exported in the USA amounted to € 111 billion in the same year.

Italy and the UK

The volume of exports to Iran and Italian companies grew as well: to € 1.5 billion in 2016 and to € 1.7 billion in 2017. But it's not just about goods already delivered, but also about long-term projects that are planned to be implemented. Thus, volume of contracts of Danieli group, a supplier of metallurgy equipment, amounted to about €  5.7 billion. Saipem company was going to build a gas pipeline with a length of 2000 kilometers in Iran for € 4.5 billion, and the Italian state railway planned to build a high-speed route from Tehran to the city of Qom.

The UK lags behind the amount of exports to Iran - in 2016 it amounted to about 190 million euros. However, for British-Iranian trade relations, this figure is a record indicator for many years.

China

China is the largest consumer of Iranian oil. In the next 10 years, both countries have planned to increase trade turnover by more than 10 times - to € 502 billion. The Eastern country also signed an agreement on construction of two nuclear power plants in the south of Iran. In general, Tehran plays a significant role in the plans of Beijing in the project of the so-called New Silk Road, which should be linked by trade ties with China and Europe and Africa and part of which should pass through Iranian territory.

source: dw.de






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