European businesses likely to pay the price of Trump quitting the Iran deal
Here’s what big German, French, Italian and British companies, already doing busines with Iran, might have to rethink
Paris — European economic heavyweights, including Germany and France, are expected to pay a hefty price after US President Donald Trump decided to quit the landmark nuclear deal with Iran.
European businesses rushed to invest in Iran following the 2015 agreement, from which the US president announced his country’s exit on Tuesday. Fresh sanctions on Iran will hinder foreign businesses from operating there, with European enterprises risking US sanctions should they fail to wind up investments within six months.
Here is who could stand to lose from the sanctions:
Germany, the top European exporter to Iran, has seen a surge in financial activity in the Islamic Republic since the Joint Comprehensive Plan of Action (JCPOA) was sealed in Vienna in April 2015.
In 2016, Germany delivered €2.57bn worth of goods to the country. The following year, German exports jumped to €2.97bn, a 15.5% year-on-year increase.
Berlin’s exports include machinery, pharmaceutical products and foods. Iran’s exports to Germany, meanwhile, amounted to €314m in 2016 and €410m in 2017.
Industrial German giant Siemens, which first began operating in Iran in 1868, returned in March 2016, teaming up with local group Mapna to build gas turbines and generators for power plants. Siemens has since signed a contract for 12 compressors for two natural-gas processing plants.
Mercedes-Benz maker Daimler signed a deal in 2016 with two Iranian companies to produce and market trucks.
French exports soared from €562m in 2015 to €1.5bn in 2017, close to the sum seen prior to the reinforced sanctions against Iran. French imports from Iran in 2017 surged to €2.3bn, the highest number since 2008.
French oil giant Total has struck up a partnership with Chinese conglomerate CNPC, pledging to invest $5bn in the South Pars gas field. However, Total has only invested $100m in the project so far, according to a source close to the deal.
In 2017, French car maker PSA, which holds a whopping 30% market share in Iran, announced a distribution deal with Iranian vehicle company DS. Renault also sells cars in the Islamic Republic.
Italian exports to Iran increased by 30% in 2016 from the prior year to more than €1.5bn. Last year exports surged another 12.5% to €1.7bn. In January, the Italian government signed a credit agreement worth €5bn to support Italian investments in Iran.
Rail giant Ferrovie Dello Stato Italiane has agreed to build two high-speed rail lines in the country. Ship maker Fincantieri has also sealed multiple deals with Iran since the nuclear agreement was reached.
While Britain has urged the US not to undermine the nuclear deal, few major British companies actually operate in Iran. British energy giant BP, whose roots lie in the Anglo-Persian Oil Company founded in the early 20th century, currently has no operations in Iran.
In 2016, Anglo-Dutch group Royal Dutch Shell signed contracts to explore the possibility of investing in Iran’s oil and gas fields, but has yet to start.
According to Allie Renison of the Institute of Directors, British companies do, however, have major contracts in Iran’s infrastructure, solar power, engineering and healthcare sectors.
European aviation giant Airbus has announced contracts with Iran Air Tour and Zagros Airlines for 100 planes in all, including the new A320neo, for the sum of $10bn.