French firms seeking ways to continue cooperation with Tehran

IRNA- Given the six-month deadline set by US president for the departure of foreign companies from Iran, currently, many major European firms, such as the French Renault Group, are seeking a way to remain in the Iranian market and continue cooperation with the country.

This comes as the decision to be made by French companies in this respect is of utmost importance as major firms from the European country are currently cooperating with their Iranian counterparts in implementing a number of the Middle Eastern state’s oil and auto-manufacturing projects. Their exit from Iran can harm both countries and inflict losses.

Since the very first day of US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), signed between Iran and P5+1 in July 2015, French leaders adopted a different approach from that of the US toward the Iran nuclear deal and called for the preservation of the international agreement by Europe and the continuation of cooperation between French companies and their Iranian counterparts.

French officials, however, acknowledged that they would not be able to compel their companies to remain in the Iranian market, as everyone knows that in case the European country’s firms decide to continue cooperation with Iran, they will face heavy penalties by the US.

For the time being, French firms, according to French President Emmanuel Macron, have to choose between ‘the advantages of staying in Iran’ or ‘receive the penalty of countering the US.
On the other hand, in case of failing to benefit from the JCPOA, Iran will definitely refrain from remaining committed to the deal.

Although Iran is currently in talks with other countries to guarantee that, despite US withdrawal, it will still be able to benefit from the JCPOA in the future, the country is also required to do its best to persuade foreign firms to remain in its market by preparing a suitable condition to this end. This will help Iran avoid defeat in the new battle currently taking place between Tehran and Washington in the field of the JCPOA.

Speaking with Iran Daily, President of French-Iranian Chamber of Commerce and Industry Mehdi Mir-Emadi elaborated on the issue and its various dimensions.
Excerpts of the interview follow:

IRAN DAILY: What was the reaction of French firms to US withdrawal from the JCPOA?

MEHDI MIR-EMADI: As you know, US government has set 90-day deadline as well as a 180-day time limit for foreign banks and firms cooperating with Iran to reduce and, then, end their activities in the country. Thus, major foreign firms have to deliver their products, including auto spare parts, to Iran within the 90-day period otherwise they will face penalties.
Within the 180-day time limit, foreign firms must reduce their oil purchases from Iran and cooperation with Iranian oil companies. Nevertheless, French firms will continue to be present in the Iranian market and cooperate with the firms within the set time limits. After the deadline expires, a number of major French firms have announced that, they will gradually leave Iran. This comes as a number of companies from France are insistent upon staying in the Iranian market. For instance, while Total S.A. and PSA Peugeot Citroën are getting ready for their departure from Iran, Renault Group intends to stay in the country.

What factors impact French companies’ decision to stay in or leave Iran?

Major French companies interact and cooperate with the US. To avoid the consequences of violating Washington’s sanctions on Iran, they have to exit Iran. This holds true for French aircraft manufacturer Airbus. At present, Iran and France are seeking a way to solve the problem impeding the delivery of Airbus airplanes and aircraft spare parts Iran has previously purchased from the European company.

The situation is not the same for a number of small- and medium-sized French firms currently in Iran. Thus, they enjoy greater freedom in making the decision about the future of their cooperation with the Middle Eastern state. In addition, US sanctions do not cover exports of foodstuff to Iran, which enables French food producers, currently present in Iran, to stay in the country.

Why are French auto-makers reacting differently to the US sanctions?

PSA Peugeot Citroën and Renault Group carry out a large number of activities in Iran. Although PSA Peugeot Citroën has announced that it will leave Iran, it has also stated that with the assistance of the French government, it is attempting to work out a solution to stay in Iran.

Nevertheless, it is clear why Renault Group has decided not to continue its presence in Iran. In recent years, the French firm has made huge investments in the field of marketing in Iran. In addition, a large number of the spare parts for automobiles produced by the company are currently manufactured in Iran. Thus, their exit from Iran is not economical for them.

Iranian companies are still dependent on foreign firms for production of spare parts. Is this going to paralyze them, at least temporarily, and intensify pressure on the Iranian market and economy?

The important point is that we are required to take necessary actions at the earliest and prepare the ground for money transfer to or from the country to be able to import the required spare parts within the time limit set by the US. Of course, French officials have announced that they are interested in continuing economic and industrial cooperation with Iran. The two countries are seeking ways to be able to continue collaboration even after the sanctions are fully re-imposed.

The Central Bank of Iran (CBI) is required to adopt new regulations to facilitate money transfer from the country.

What is the solution?

At present, a number of French banks do not cooperate with the US. Thus, Iranian and French firms are required to be persuaded to collaborate with these financial institutes. Furthermore, Iranian banks are required to improve transparency in their operations to be able to gain the trust of foreign firms in the field of money transfer.

How do you assess trade been between Iran and France following the implementation of the JCPOA in January 2016?

In the post-JCPOA era, trade between the two countries has witnessed an upward trend. In 2017, we exported more than €2 billion to France while importing €1.5 billion from the country. The trade balance has been in Iran’s favor in this period. Iran’s exports to France in the said time-span mostly comprised oil and its byproducts, carpets and nuts. French exports to Iran included industrial equipment and auto spare parts.