Europe Reaffirms Support for Iran Investment
As high-profile Iranian and European officials gathered in Paris on Thursday for the Euromoney Iran Conference 2018, an upbeat mood permeated the event with participants forecasting better investment prospects for the Middle Eastern country despite US President Donald Trump's antagonism toward the nuclear deal.
The conference highlighted successes in the Iranian banking sector, international correspondent banking relations and cross-border trade finance, Reuters reported.
Denis Chaibi, the head of Iranian taskforce at the EU’s external action service, was a keynote speaker who said the European Union could put in place regulations to protect its firms doing business in Iran, if the United States withdraws from the 2015 nuclear deal and restores extraterritorial sanctions.
The senior EU official said one of the options would be to restore “blocking regulations”, a system from 1996 that would protect its firms.
“We are looking at a number of possibilities. It is not complicated to do it legally in that the legal instrument exists, but it doesn’t require a huge internal debate,” Chaibi said.
“It could be revived or put back, but only if it is clear that the US is putting back sanctions with extraterritorial sanctions and that they are being applied. It can’t be done protectively.”
According to Reuters, the regulations were agreed in 1996 as a countermeasure to the US extraterritorial economic sanctions against Cuba, which EU governments argued benefited US foreign policy interests at the expense of European sovereignty.
Iranian officials have repeatedly said the reluctance of major European banks to return to Iran has slowed its economic improvement, calling on European leaders to encourage businesses to return to Iran.
The European External Action Service, set up in 2009, runs a network of diplomats around the globe, drafts policy papers for EU foreign ministers and is led by the EU’s top foreign affairs diplomat, Federica Mogherini.
A senior French finance official also told the conference that France will encourage its firms to do business in Iran.
“We are encouraging companies to keep doing business in Iran,” Joffrey Celestin-Urbain, director of bilateral relations at the French Finance Ministry, said.
“We are in limbo on the international scene. Nobody knows what will happen after May. This is the uncertainty our French companies are facing and this is something you have to take for granted if you want to do business in Iran,” he said.
Along with other European countries, France has been looking to increase trade with Iran since Paris, Washington and other world powers agreed to lift most economic sanctions in 2016 in exchange for limitations on Tehran’s nuclear program.
But Trump on Jan. 12 vowed to restore US sanctions unless France, Britain and Germany change what he calls the “worst deal ever” to his liking, casting the future of the deal in uncertainty until mid-May.
"French exports to Iran for the first 11 months of 2017 rose 120% to €1.29 billion ($1.6 billion) and imports grew 80 % to €2.16 billion," Celestin-Urbain said.
"The short-term priority was to keep trade simple and complete a scheme this year to offer euro-denominated credits to Iranian buyers of French goods," he said, a move that would keep bilateral trade outside the reach of US sanctions.
The head of state-owned investment bank Bpifrance, which is putting the plan together, said he was confident the scheme, which had a pipeline of deals worth €1.5 billion, could start operating by end-May or early-June. However, he warned that talks were ongoing on how to protect French firms if the US snapped back sanctions.
“Everybody is waiting for the situation to be clarified,” said Nicolas Dufourcq. “We are currently negotiating with the Iranian authorities. Everybody understands that it would be a force-majeure event and the loan would have to be reimbursed and if we find a solution it will have to be in French interests.”
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Governor of the Central Bank of Iran Valiollah Seif used the opportunity in his keynote speech–read by a representative– to highlight Iran's progress in various areas, including the banking sector.
"We have concluded several finance agreements with our partners amounting to about €40 billion last year. These medium- and long-term facilities have up to 14 years term and will be extended to Iran’s projects by banks in several countries, including but not limited to South Korea, China, Denmark, Austria, Russia and Italy," Seif said in his speech published on CBI's website.
At the end, Seif pointed to his banks' continuous efforts to launch other reforms and stressed that "Iran's banks are obligated to refrain from offering international banking services to customers who do not adhere to international regulations".
"I emphasize, once more, that we are fully aware that we need to raise our standards and systems to provide more comfort to our partners and CBI regulates all banks to follow international standards," he concluded.
SOURCE : financialtribune