The trip of Iran’s President Hassan Rouhani to Italy and France this week marked the first visit of an Iranian head of state to Europe in 15 years.

The four-day stay, which involved a short stop in both capitals, was originally scheduled in mid-November, but was postponed in light of the Paris attacks.
Because of the timing of the visit, which took place only 10 days after the implementation of the Iranian nuclear agreement – known as the JCPOA – was announced, the Iranian delegation mostly held meetings with the business communities in Rome and Paris.

Prior to the implementation of unilateral sanctions against Tehran in 2010, European countries were Iran’s major trading partners. EU machinery, transport equipment, manufactured goods, and chemicals accounted for about a third of Iran’s total imports. Furthermore, up until 2012, when the oil embargo was imposed, EU purchases of Iranian oil amounted to nearly 600,000 barrels per day and constituted about 90 percent of goods the EU imported from Tehran.

Italy was one of the three main importers of Iran’s crude oil (the other two being Spain and Greece), buying slightly more than 10 percent of its crude from Tehran. Italian industries, such as Danieli, Ansaldo, Fiat and energy giant ENI, even maintained a presence in Iran during the first year of sanctions, but then decided to pull out.

France, on the other hand, dominated the automotive sector in Iran, with companies like Renault and Peugeot having a strong presence and losing nearly 10 percent of global deliveries when they suspended sales in Iran as a result of sanctions.

It is therefore not by chance that the 120-large Iranian delegation decided to re-engage with the European business community.

Both Italy and France have carefully watched developments on the nuclear dossier and, every time positive signals were emerging in terms of the likelihood of having sanctions lifted, they sent large trade delegations to Tehran to test the ground for future business opportunities. France was even criticized by the U.S. administration for sending a 116-strong business delegation representing major French international companies, including Total, and Peugeot, right after the adoption of the interim agreement in January 2014.

Back then sanctions relief was only targeted and reversible, while the P5+1 - the permanent five members of the UN Security Council plus Germany - committed to keep the international sanctions regime that was built against Iran in 2010. The U.S. administration was concerned that, by giving the false impression that Iran was once again open for business, France - together with those countries sending trade delegations to Tehran - could prematurely dismantle the sanctions regime and thus pressured against any business with Tehran, even when legitimate.

With the JCPOA fully in force and UN, EU and U.S. nuclear-related sanctions now effectively lifted, Iran could for the first time in 6 years talk business with Italy and France.

While in Rome, Rouhani met with the Italian heads of state, but he also delivered a speech to a large Italy-Iran business forum, during which he said that Iran is “ready to welcome investment, welcome technology and create a new export market”, aiming at exporting 30 percent of what is produced in Iran. Following his stay in Rome, Iran appeared to have signed some $18.4bn worth of business deals with Italian companies, ranging from a $4bn contract for oil services group Saipem to a $6bn contract for steel firm Danieli.

Similar news emerged after Rouhani’s short stay in Paris. Soon after arriving, Rouhani was accompanied to the French business group MEDEF by several of his cabinet members, including Iran’s oil minister, Bijan Zanganeh, who said that Total expressed its interest in buying 150,000 to 200,000 barrels a day of Iranian crude.

Then, Peugeot announced a joint venture with the Iranian car company Iran Khodro of about $600mn to produce 200,000 cars a year in the country, constituting the first western company to sign a binding contract with an Iranian group following the lifting of sanctions.

Discussions between the parties also focused on an Airbus contract which would involve 114 aircraft, only a small portion of the new aircraft Iran needs in the coming years. In reference to U.S. pressure against French attempts to reengage with the Iranian economy, Rouhani said that “France doesn’t need any permission from any other country [to enter business with Iran] and it’s not receiving orders from above and that’s very important for us.”

At first glance, the signature of mega-contracts would seem the main driver to Rouhani’s trip to Europe. However, the linkage between the deals and Iranian domestic politics also plays a big role. During his electoral campaign in 2013, Rouhani said that his main priority would be the resolution of the longstanding nuclear issue. He argued that this step was going to be crucial in improving Iran’s economy, which was hit by financial and energy sanctions imposed against the country since 2010.

After successfully closing the nuclear dossier, the president has turned to demonstrating the immediate domestic benefits of the agreement to marginalize those who are critical of the outcome of the negotiations.

The trip to Europe and the announcement of appealing deals with large companies therefore seems to be an administration strategy to gain additional leverage at home. By demonstrating that the trickle down effects of the nuclear agreement are larger foreign investments and trade exchange with European countries and by improving the public image of Iran from the previous administration, Rouhani hopes to convince his constituency that, similarly to the nuclear dossier, he will also be able to improve the country’s economy. This seems a particularly crucial move, given the elections of the Iranian Parliament (Majlis) and Assembly of Experts that will take place at the end of February.

Despite the deals signed in Paris and Rome, however, whether he will be successful at home remains to be seen.

(Source: middleeasteye.net)