After Geneva Agreement, Major Foreign Companies Eye Trade With Iran

The big question is whether the agreement will last the distance, or strike one of the many mines in its path and blow up at an early stage.

A photo of Dr. Zvi Bar'el.
Zvi Bar'el
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A photo of Dr. Zvi Bar'el.
Zvi Bar'el

Foreign conglomerates are lining up to do big business with Iran, now that the country has won limited sanctions relief in the Geneva nuclear accord signed Sunday.

Dozens of delegates from numerous states filled Tehran hotels this week for the Economic Cooperation Organization (ECO) conference. Iran has been elected to chair the conference, which will have practical implications this time.

Many states are waiting in line to ensure their place in the post-sanction era, including Turkey, Pakistan, India, Azerbaijan, South Africa and South American states, as well as representatives of Western companies examining possible future deals.

For example, Christophe de Margerie, CEO of the French oil giant Total, has announced that his company will resume transactions with Iran if the sanctions are revoked. Total, which won the tender to develop part of the huge gas field Farto the former’s policy toward Syria, as well as suspicions that Turkey is assisting radical Islamic organizations against Syrian President Bashar Assad, the two states are on the way to reconciliation. Turkish Foreign Minister Ahmet Davutoglu said on Wednesday that his country and Iran intend to expand their trade balance to $30 billion in 2015, and to $100 billion in 2020.

Pakistan is holding intensive talks in a bid to complete the gas pipe from Iran to Islamabad. The project came under heavy fire from the American administration, which saw it as a threat to the sanctions policy. Unless Pakistan starts buying gas from Iran by the end of the year, it will have to pay a daily fine of $3 million fine a day, under its agreement with Iran.

American companies, feeling left out, fear that by the time they are allowed near the Iranian market, als, Iran’s vast South Pars natural gas field, has unfinished business with Iran. Earlier this year a U.S. court ruled that the conglomerate, traded on the New York Stock Exchange, paid a $60 million bribe to an Iranian mediator to win the tender. The company has since agreed to settle the bribery charge and pay the U.S. authorities $398 million, a sum it will now want to make up for with handsome gas contracts.

While Total will have to wait for the sanctions that blocking energy cooperation to be lifted, France has already informed motor companies Peugeot and Citroen that the sanctions on motor parts will likely be revoked already in mid-December.
Until 2011 Peugeot had sold Iran some 458,000 car assembly kits and last year its sales dropped by 68 percent%. While the sales potential is some $500 million in the next six months, the big money is in exporting the Iranian cars to other states in the region and Russia. The French companies are likely to be joined by German ones looking to expand their trade and make lucrative future investments.

Siemens also has an open account with Iran. The German company lost the contract for the nuclear reactor in Bushehr to Russia. Now that Iran is planning to build more electric reactors it is likely to prefer German or Korean companies to Russian ones, in view of the flaws revealed in the Bushehr power plant.

Turkey is another important client. After a tense period between Turkey and Iran due l the good deals will have been taken by their competitors from Europe, Korea, Japan, China and Russia. Iranian Oil Minister Bijan Namdar Zanganeh said this week he was conducting talks with large oil companies such as Italy’s Eni, Royal Dutch Shell and Norway’s Statoil, and said Iran will invite American companies to invest in it as well.

But although American companies may sign future contracts, the administration is committed to wait until the second sanction-lifting stage before making a move.

Also rushing to Iran is Saudi Arabia. The kingdom’s objection to the Geneva deal has been used by Prime Minister Benjamin Netanyahu to corroborate his claim that the agreement with Iran was not only bad but constituted a threat. This week, however, the Saudi cabinet released a statement saying that if there is “goodwill, this agreement could represent a preliminary step towards a comprehensive solution to the Iranian nuclear program.”

The big question is whether the euphoria rising in Iran and among its future business partners is revocable and to what extent. Will the agreement with Iran strike one of the many mines in its path and blow up at an early stage, or will Iran stick to the agreement, feeling it can no longer disappoint its people, who are expecting a better life?

The old bazaar in Tehran: Foreign firms are lining up to do business.Credit: AP

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