Gertz’s - GEOSTRAT-DIRECT:
What nukes? Europeans scrambling to resume trade with Iran
By Jack Caravelli*
July 14 signing of the Joint Comprehensive Plan of Action between major
nations and Iran on its nuclear program is months from being
implemented, but European nations already are moving forward with plans
to resume trade with Iran as the process of lifting sanctions unfolds.
sanctions had reduced Iranian oil and gas exports by at least 50
percent and crippled badly needed investment in the aviation and
Iranian Foreign Minister Mohammad Javad Zarif with Belgium’s Minister of Foreign Affairs Didier Reynders. Reuters
Aug. 12 the Swiss Federal Council released a statement from Bern that
the nuclear agreement “opens up new political and economic prospects
with Iran, including bilateral relations. Given the important turning
point in the 12 year nuclear dispute, the Federal Council decided on 12
August to lift the sanctions against Iran.”
The Swiss statement added that it seeks “to promote a broad political and economic exchange with Iran.”
a meeting in June at the Italian Foreign Ministry in Rome, senior
ministry officials described their government’s decision to move as
quickly as possible to resume trade ties with Iran.
The Economist, French automakers Renault and Peugeot for years had a
strong market presence in Iran. They are seeking to return to that
highly profitable market position by working with local automakers.
Peugeot, for example, has agreed to restart production with Iran Khodro, its former partner, says the magazine.
labor costs in Iran over time also could induce European automakers to
build production plants there as well as Peugeot has done in Morocco and
Renault in Algeria.
Looking to move beyond the European Union’s
(EU) policy of financial confrontation with Iran, the French government
is actively promoting in Teheran the business goals of two of its most
European attitudes toward resuming trade with
Iran were confirmed last month in Washington when Tedo Japaridze,
former Foreign Minister of Georgia, said that in the three trips he has
made to Iran this year he has seen “scores” of Europeans around Teheran
preparing for the end of international sanctions on Iran.
The Europeans and Iran see mutual benefit in resumed trade and an overall improvement in relations.
European nations are not as concerned about the details of the nuclear
deal as the United States or Israel, focusing on the economic
opportunities of resuming trade.
The practical effects are
apparent. In addition to the tens of billions of dollars that are
scheduled to be released to Iran in coming months, Iran can begin to
address critical needs in parts of its economy.
The most obvious
and important for Iran’s hard currency earnings is modernizing the
infrastructure in the oil and gas industry. Italy, for example, is
highly energy dependent and sees resumed trade with Iran, which has
significant energy reserves, as a way to address those needs.
will increase its purchases of Iranian oil, as will other European
nations along with past customers such as India and Japan, a financial
windfall that if applied efficiently will improve the energy
Many commentators have pointed out that once
sanctions imposed by the U.S., EU and UN are lifted, Iran will reclaim
tens of billions of dollars in assets that had been frozen.
present Iran is estimated to be spending annually about 6-16 billion
dollars in support of terrorist operations in the region, including
funding support to Hizbullah and Hamas according to a former U.S.
Department of the Treasury senior official.
Iran can be expected
to use some of the forthcoming funds to increase its support to
terrorist operations around the Middle East.
At the same time, and
no less important to Iran, the lifting of sanctions is likely to be a
financial boon to what for years has been a stagnant and even crippled
economy described by President Barack Obama as headed “to the Stone
Iran will be able to sell oil on the international market,
participate in the international financial system and resume
international trade with the Europeans and other trading partners. Such
are the significant rewards for the nuclear negotiations.