European banks have begun a fresh wave of investment in Iran, just as Washington launches another attempt at restricting links between the US and Iran. Over the past week, banks in Austria, Denmark and France have announced investment deals with Iran worth a collective €2bn ($2.4bn), while in contrast the White House on September 24 announced a fresh travel ban on the citizens of Iran and seven other countries. The wave of European financing began on September 21, when Austria's Oberbank agreed to extend a €1bn line of credit to 14 Iranian banks. The money will be used for infrastructure projects in Iran. On the same day, Denmark’s Danske Bank signing a deal for a €500m line of credit with ten Iranian banks. Since then, French state-owned bank BPI France has said it will also provide a €500m credit line to French companies wanting to invest in Iran. Iran has set up similar arrangements over the past couple of months with Export–Import Bank of Korea for €8bn and with a number of Chinese banks covering $35bn worth of financing. These deals have not necessarily come easily. Oberbank says it spent one and a half years negotiating a framework agreement for export loans, with several rounds of talks held in Iran and Austria.
* * *
An Iranian woman walks past a mural in Tehran on June 29, 2015. (Photo: BEHROUZ MEHRI/AFP/Getty Images) Those involved also have to be careful they do not get caught by fines for breaking the ongoing US sanctions against Iran. BPI for example was able to conclude its agreement because it has no operations in the US. In an interview published in Le Journal du Dimanche on September 24, Nicolas Dufourcq, chief executive of BPI France, said “We are the only French bank that can do it without risking US sanctions for a possible breach of remaining embargo rules.” The Iranian government says that, in total, it has attracted around $14bn of foreign direct investment since the nuclear deal – formally known as the Joint Comprehensive Plan of Action (JCPOA) – was agreed between Tehran and six international powers in July 2015. The agreement came into force in January 2016. Dominic Dudley is a freelance journalist with almost two decades' experience in reporting on business, economic and political stories in the Middle East, Africa, Asia and Europe. Alongside all these financing deals, individual companies from across Europe have been stepping up their involvement in the Iranian economy. Norway’s Scatec Solar is in talks to build its first solar power project in Iran, worth around $132m, while the UK’s Quercus has committed to a scheme to deliver 600MW of solar power. In the auto sector, France's Renault recently agreed to set up a joint venture in Iran and Germany’s Daimler Benz has signed a deal to build trucks in Iran in partnership with Iran Khodro, one of the country’s leading automakers. While all this has been going on, the US has been taking a completely different approach. The White House announced on September 24 another attempt at a ‘travel ban’ on countries with which it has poor relations. As with previous attempts, the list once again includes Iran, this time alongside Chad, Libya, North Korea, Somalia, Syria, Venezuela and Yemen. The restrictions do not cover Iranians entering the US under valid student and exchange visitor visas, although they will be subjected to enhanced screening and vetting requirements. The new measures are due to be implemented on October 18. In a tweet, Iran’s foreign minister Javad Zarif described the move as a “new and even more offensive travel ban”. Trump has also repeatedly threatened to pull the US out of the JCPOA, although as yet his administration has not disclosed what grounds it has for doing so. The UN’s nuclear agency, the IAEA, has repeatedly said that Iran is complying with its obligations under the agreement, most recently on September 11 when IAEA director general Yukiya Amano said “The nuclear-related commitments undertaken by Iran under the JCPOA are being implemented.” Criticism of Iran is also a familiar theme in the US Congress. On September 13, the House of Representatives voted in favour of measures that block sales of commercial aircraft to Iran. Consumer response The wildly divergent positions being adopted by US and European politicians are being reflected within Iran itself, where consumers often have markedly differing attitudes to American goods and companies compared to those from other leading industrialised nations. A recent survey conducted by IranPoll during August found that Iranian consumers look most favourably on Japanese and German companies while holding the most negative views of US companies. When asked whether it would be in Iran’s interest to have more investment and trade with companies from particular countries, 90% of Iranians said it would be ‘somewhat’ or ‘a lot’ in Iran’s interest to have more trade and investment with Japanese and German firms. In contrast, the figure for American companies was just 50%, while 47% said it would be ‘only a little’ or ‘not at all’ in Iran’s interests to have more investment or trade with them. Dominic Dudley is a freelance journalist with almost two decades' experience in reporting on business, economic and political stories in the Middle East, Africa, Asia and Europe. By Dominic Dudley , Contributor I write about business and economics in the Middle East Opinions expressed by Forbes Contributors are their own.
---Banks in Austria, Denmark and France have announced $2.4bn of support for a fresh wave of investment in Iran, just as the US government unveils a new travel ban on Iranians. --- ...