What is at Stake for Business in the Nuclear Deal of Iran


If the Iran nuclear deal fails, all the countries that are involved have a lot to lose — and not just for security and political reasons.

On Friday, US President Donald Trump announced that he would not certify to Congress the compliance of Iran with the deal, which could pave the way for future sanctions that could have significant effects on companies and countries which have re-engaged with Tehran since the deal in 2015.

The nuclear agreement is intended to prevent Iran from developing a nuclear weapon and saw Tehran stop its nuclear programme in exchange for the dismissal of international sanctions.

The Iranian market of 80 million people has been opened up to Russian, Chinese, and European businesses since it came into force in January 2016.

Many investors have held back. However, others, including various large companies, have already concluded some huge deals, including Airbus, the European aircraft manufacturer, which has signed agreements with Iran to deliver 100 aircrafts.

Listed below are some of the other major trading partners and what is at stake for them:

– Germany –

Before sanctions, Germany was the main trading partner of Iran.

According to the Federation of German Industry(BDI), after the lifting of the sanctions, German exports to Iran grew by 26% in 2016, and continue to rise.

In March 2016, the Siemens group relaunched in Iran signing an energy agreement with Mapna, the Iranian power and infrastructure group.

In January 2016, Daimler signed letters of intent with two Iranian groups to produce and market Mercedes – Benz trucks.

“Companies that have since resumed commercial relations with Iran and are also active in the United States would be extremely destabilised by the reintroduction of sanctions,” the BDI warned.

– France –

Trade, which had failed under sanctions, dramatically rebounded after the end of sanctions, rising by 235 percent in 2016, mainly because of oil imports.

Peugeot-Citroen (PSA), the carmaker which was forced to leave Iran in 2012, returned in 2016 after signing production deals that are worth 700 million euros.

Renault, which had remained in the country and produced around 200,000 cars per year there, signed a joint venture agreement to expedite production and produce more than 300,000 cars per year.

Total was the first Western oil group to return to Iran after more than a decade. In early July, it signed a $4.8 billion gas deal managing an international consortium alongside Chinese CNPC.

– Italy –

Trade between the two countries, which had failed due to sanctions, observed a sharp rise in 2016, to a level that Italy was named as the first trade partner of Iran in the European Union.

In 2016, Tehran and Rome signed numerous agreements, including in renewable energy, railways, and tourism.

– Russia –

For some time, Tehran and Moscow have had close economic and political relations.

In the nuclear field, Iran has started building a second nuclear plant with Russian help.

Tehran already operates one Russian-built nuclear reactor at Bushehr and is planning to build more.

Railway business RZD International that is part of EZD, a Russian company, signed a 1.2 billion euro contract with Iran for the electrification of a railway line in March 2017.

In June 2016, Gazprom, the gas giant signed an agreement with the NIOC, an Iranian company for a joint operation in Farzad, the Iranian gas field.

– China –

Beijing, an oil and gas importer, has important economic interests with the sixth largest oil producer in the world, Iran.

During the visit of President Xi to Iran in January 2016, the two countries signed a memorandum of understanding regarding the peaceful use of nuclear energy.

In February, Chinese builders started the electrification of the high-speed Tehran-Mashhad rail line.

In October 2017 the CEO of the Iranian group Tavanir, Arish Kordi, announced cooperation with China to renovate the electricity infrastructure of Iran.