In the face of recently-imposed US sanctions on the Islamic Republic of Iran, France is expanding trade cooperation with Tehran after Iran’s 2015 historic nuclear deal. Since the nuclear agreement, the French press has begun to call Iran an “El Dorado” for French auto, energy, and high-tech firms.
These deals refers to sharp objective economic conflicts between the European Union (EU) and the United States, which underline the increasing strategic and military tensions between the two blocs. Washington has threatened to abandon the Iranian nuclear deal, undertaking a 90-day review of its policies toward Tehran.
Recently, the US Congress overwhelmingly passed a bill targeting Russia, North Korea, and Iran, accusing Iran of terrorism and involvement in regional wars, meanwhile, the Islamic Republic of Iran strongly denies any involvement in terrorism and itself is a chief victim of terrorism.
According to the World Socialist website, US sanctions are aimed not only at Iran but at other powers, including China and the EU, who are developing trade ties with Tehran. US sanctions on Moscow, Pyongyang and Tehran have been sharply censured by European powers, and Germany and France have threatened to take retaliatory sanctions against the United States.
As Iran concludes multi-billion-dollar deals with European firms, including Germany’s Volkswagen and Italy’s Ferrovie dello Stato, French capital is moving aggressively into Iran. This includes France’s auto companies, which are desperate to expand sales amid the economic crisis in Europe.
Major partners
In early August, Foreign Minister Mohammad-Javad Zarif in a meeting with French Minister for Europe and Foreign Affairs Jean-Baptiste Lemoyne said France is one of Iran's major partners in the European Union.
He said ample grounds are available for cooperation with France on bilateral and regional levels.
Lemoyne said, “We will make serious endeavors to protect the JCPOA. We are interested in cooperation with Iran to tackle regional crises. Expansion of cooperation with the Islamic Republic of Iran, especially in the economic domain is among our priorities.”
IMIDRO- Renault joint venture
Several months ago, Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) and French carmaker Renault signed a cooperation pact in the form of joint venture.
As per the agreement, Renault has agreed to produce two of its products Renault Symbol and Duster in Iran by 2018.
Renault said it would start a joint venture in Iran, tapping into the country's fast-growing car market as it opens up to foreign investment after the end of Western sanctions.
The venture, in which Renault will hold a majority stake, includes a new production plant that is to raise Renault's production capacity in Iran to 350,000 vehicles per year from 200,000 now, it said in a statement.
Previous Minister of Industries, Mines and Trade, Mohammad-Reza Nematzadeh called Renault, which has been active in Iran for more than 12 years, the ideal partner for this project.
Renault chief Carlos Ghosn said Iran's car market is projected to reach two million vehicle market by 2020, giving it 'undeniable potential'.
The factory is to roll out its first Symbol and Duster models in 2018, Renault said.
The venture will, for the first time, give Renault its own distribution network in Iran, complete with sales and after sales services, it said.
According to the media reports, Renault sales in Iran rose by 56 percent in 2015 from a year earlier to 51,500 vehicles, giving it a market share of 4.8 percent. Growth continued to be strong in the first eight months of this year, the company said.
Historic occasion
The Renault deal comes after another French carmaker, PSA Peugeot Citroën, which has 35 percent of the Iranian market, signed a deal last year to open a plant producing 200,000 vehicles annually. Peugeot was a major producer in Iran before sanctions were imposed. PSA only avoided a fall in overall global sales last year due to increased sales in Iran.
Meanwhile, France’s Total and the China National Petroleum Corporation (CNPC) signed a 20-year, $4.9 billion contract with Iran’s Petropars to invest in the South Pars offshore gas field, which is split between Iranian and Qatari waters. With an initial $1 billion investment, Total will have a 50.1 percent stake; CNPC and Petropars will own 30 and 19.9 percent, respectively.
Total CEO Patrick Pouyanné called the occasion “historic” and encouraged other companies to invest in Iran. “We aren’t a political organization, but I hope this agreement will encourage other companies to come to Iran because economic development is also a way of building peace,” he told AFP. “We are here to build bridges, not walls.”
Total is working to circumvent US sanctions, appointing a compliance officer to ensure that it is not targeted by Washington—as in 2014, when the US imposed a $9 billion fine on France’s largest bank, BNP-Paribas, for violating the embargo. Iran’s oil minister Bijan Namadar Zanganeh said Iran’s oil industry needs some $200 billion in investment over the next five years.
The European powers long enjoyed special access to Iranian markets, as Washington cut ties with Tehran that emerged from the 1979 revolution against the CIA-backed Shah of Iran. Particularly after the Stalinist bureaucracy’s dissolution of the Soviet Union in 1991, US-EU rivalries surged in the Persian Gulf. France’s companies grabbed Iranian market share in the 1990s, while its diplomats argued that European influence in the Persian Gulf was necessary to build a “multi-polar” world. These tensions culminated in the illegal and unilateral US invasion of Iraq in 2003.
In 2006, however, Washington and the European powers jointly voted to impose sanctions against Iran over its uranium enrichment program, which Iran insisted was for peaceful purposes. Over the last decade, China has increasingly developed its trade with Iran, which joined the Chinese-led Asian Infrastructure Investment Bank (AIIB) and became a focus of China’s plans for a web of transport, energy and trade routes across Eurasia.
The US-backed UN sanctions slashed Franco-Iranian economic ties. Trade in 2014 amounted to only €514 million, compared with €4 billion in 2004. France’s market share in Iran fell from seven percent to one percent.
Since the 2015 nuclear deal, European ruling circles are desperate to reestablish their presence in Iran, which has the world’s second-largest gas reserves and fourth-largest oil reserves, and an internal market of nearly 80 million people. The EU is likely to clash with Washington, should it seek to reimpose sanctions on Iran in the near future. After the nuclear deal was initially ratified, the European Council on Foreign Relations issued an analysis on August 26, 2015, headlined “Europe won’t bow to an anti-Iran-deal US Congress.”
It said, “Europeans are now looking beyond a nuclear-centric vision of Iran to focus on how they can use the opening up to engage Iranian President Hassan Rouhani’s administration. Both Iran and Europe are eager to reignite their once-prosperous trade relations, and Europeans would also like to work with Iran to more constructively deescalate conflicts in the Middle East. This kind of progress can’t be easily undone, and if it is, European policy makers may blame Washington rather than Tehran for prematurely derailing an agreement that was given virtually global acceptance.
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