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Doing Business with Rouhani’s Iran – the French Connection

February 9, 2016

By Conner Clark

A thorough “reset” played out two weeks ago between France and Iran as global sanctions on the latter were lifted, restoring Tehran’s access to the world banking system. Even as the two nations remain embroiled in contentious issues, Hassan Rouhani’s visit to Paris focused on the positive. This was the first such trip by any Iranian president to France since 1999, and it carried weight in both style and substance. Leaders at the bi-lateral talks promised a “new chapter” – not because relations are likely to become particularly close, but because until recently, they were in such a sharp chill.

France, in fact, took the hardest line against Iran’s nuclear program of all countries present, including the United States. (Israel was not party to the negotiations.) After the November 2015 Paris attacks, France joined the US in extending airstrikes from Iraq into Syria. Tehran, which supports, to different degrees, the governments still standing in Baghdad and Damascus, was implicitly cast as the “enemy of my enemy”. Yet President Hollande resisted German calls to begin talks with the regime of Bashar al-Assad, insisting instead that he step down. Meanwhile, Rouhani’s visit was met with protests from a mix of human rights activists, French citizens sympathetic to Israel, and Iranian exiles.

This all stood in stark contrast to the state reception granted the 120-strong Iranian delegation, setting a wholly positive diplomatic tone and a return to business-as-usual. Already, the implementation of the “JCPOA” nuclear agreement has unfrozen $100 billion of Iran’s oil wealth, 10% of which was held in Eurozone banks. Hollande in particular set to work alongside his counterpart with the formalities of sealing multiple deals. Iran agreed to purchase 100 civilian aiIran Article Picture 1rcraft from European manufacturer Airbus for around $24 billion, and opened itself to car companies such as Renault and Peugot. For its part, Peugot is now slated to manufacture and sell cars in Iran through a local partnership.
Longer-term, Iran seeks foreign direct investment (FDI) in its infrastructure and energy sector, keys to rebuilding its battered economy. To that end, French oil giant Total signed contracts to buy 150,000-200,000 barrels of crude each day from Iran, a substantial fraction of Iran’s overall plans to increase its daily exports by up to 500,000 barrels. The French National Railway Company (SNCF) quickly formalized a partnership with Iranian railways to provide human expertise and physical capital for numerous goals: improving suburban mass transportation, developing high-speed rail, and rebuilding aging train stations.

High-tech firms in France and throughout Europe still face a double-edged sword in Iranian markets due to sanctions unrelated to JCPOA. US companies are barred from most commercial sectors in Iran, outside agricultural, medical and other fields with “humanitarian” aspects. This may cordon off the competition for France, but any French entities who do business with bad actors, as labeled by remaining laws, become blacklisted from operating on American soil. Such actors include the Revolutionary Guard Corps, which continues to control large swaths of Iran’s economy. Paris is also standing in firm agreement with Washington over new sanctions on Iran, after the country’s recent seaboard ballistic missile tests. No sooner had Rouhani departed than French foreign minister Laurent Fabius appeared to request that the EU consider levying its own additional penalties. Amidst such uncertainty, it seems doubtful that enterprises in France would risk access to their American market shares for the tenuous prospect of higher profits in Iran. Instead, they will have to tread carefully in all their mid-eastern dealings to avoid running afoul of sanctions, whether old and new.

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