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Iran, a Promising Market Coveted by French Groups

french Companies are eyeing up the Iranien market
Iranian customers in the store of a Renault car dealership, July 16, 2015 in Tehran. – Ebrahim Noroozi / AP / SIPA

The agreement on the Iranian nuclear situation suggests a lifting of economic and financial sanctions in early 2016 and the opening of a market where already French Groups are eyeing up the market …

Two weeks after the signing of the agreement on the Iran nuclear situation, the prospect of the lifting of the embargo is imminent.  Many Western companies are preparing for the opening of the Iranian economy, and French groups are not far behind.

Financial and trade between Western powers and Iran are limited by sanctions implemented by the United States , the United Nations  and the European Union .  The agreement between Iran and the countries US, Russia, China, France, Britain, Germany, which must be submitted to the  US Congress , is the first step towards a  slow recovery for Business.  The opinion of  the International Atomic Energy Agency (IAEA) , expected for  December 2015  will be decisive in the gradual lifting of Western sanctions, from  the beginning of the year  2016.

Automotive, transportation, telecommunications

“[The need for Iran] are significant,” said Thursday the Foreign Minister Laurent Fabius, France Info, citing trains, planes, food.  The needs are particularly acute “in infrastructure, including electricity and water, and telecommunications,” adds Thierry Coville , researcher at the Iris and Iran specialist, who also highlights significant opportunities in the automotive, textile, food, electronic commerce and tourism.

All areas in which the French groups can hold their own game, provided to “enhance technology transfer and to develop local subcontractors,” Hassan Rohani regime wishing that the Iranian economy less dependent on oil.

Increased competition

Alstom is interested in renovating the Tehran metro and rail transport between major cities. On the automotive side, the PSA Peugeot Citroën group hopes to win back its market share after it was abruptly abandoned by Peugeot when they left the country in 2012, “overnight”, says Thierry Coville.  Besides the bad image left by the hasty departure, it will also have to deal with a difficult competition.

“During the past six years, Asian and especially Chinese companies have taken the place left by European companies,” observes Nigel Coulthard, president and co-founder of the association  Circle Iran Economy . “In 2006, France, Germany and Italy were among the major importing countries in Iran, but China, India and South Korea have dethroned them. ” Although the competition is tougher now, the former boss of Alstom in Iran ( from 2003 to 2010 ) states that the Iranians have expectations vis-à-vis the return of European companies. “You have to prepare the ground and contracts,” he says. For this,  a delegation of a hundred French business leaders will visit Iran in September.

Trade between France and Iran was worth only 500 million euros in 2013, compared to over  $ 4 billion in 2004 . According to Nigel Coulthard and Thierry Coville, transactions between the two countries could not only regain their level from the past 12 years but could largely exceed it.

Towards an “economic boom”

The margin of economic growth is considerable. Nigel Coulthard predicted an “economic boom” in part driven by oil.  Iran, whose oil reserves  are huge,  currently produces three million barrels per day , against six million in 1974. “The US sanctions have blocked the transfer of oil exploration technology,” he explains.

The country’s growth,  estimated at 1.5% by the World Bank in 2014 , “could be 4 or 5% in 2016 and reach 6-8% in the medium term,” says Thierry Coville.

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