29 Mar 2024
Wednesday 12 September 2018 - 16:22
Story Code : 319372

Here's how the European Commission will allocate EUR 18 million in Iran

Bourse and Bazaar | Esfandyar Batmanghelidj: For Iran, EUR 18 million represents just a drop in the bucket in terms of the foreign direct investment that the country needs for its economic development. But in terms of development funding, this amount, an initial tranche of a larger EUR 50 million bilateral allocation introduced by the European Commission and the European External Action Service this month, represents a highly significant, first-of-its-kind, intervention to support Europe-Iran trade and investment.

Iran is an unusual recipient for European development aidby the usual metrics, the country is too rich. But after some internal political wrangling, the European Commission decided to proceed with a special measure in order to support the policy priorities of the European Union, namely the preservation of the Joint Comprehensive Plan of Action (JCPOA).

However, the funding is not primarily intended as an attempt to mitigate the effect of returning U.S. secondary sanctions. Rather, as made clear in the action document which details how the development funding will be distributed, the European Commission has allocated the funding in line with the European Consensus on Development to provide targeted support in the areas of Prosperity, Planet and People.

In the area of Prosperity, the European Commission will seek increased and diversified trade in goods and services by supporting better trade policy, more effective investment promotion activities, and greater support for entrepreneurship and innovation. In the area of Planet, the European Commission will seek the decoupling of economic growth from environmental degradation by supporting programs that improve waste management and reduce water and air pollution through technologies that improve efficiency and greater awareness among policymakers and the general public. Finally, in the area of People, the Commission seeks to support comprehensive and evidence-based drug use prevention, treatment, rehabilitation and social reintegration with a special focus on the use of opiates such as heroin and its role in spreading HIV/AIDS. The Prosperity and Planet areas have been allocated EUR 8 million in funding, while People has been allocated EUR 2 million.

The implementation of the funding differs in each area and will use both direct and indirect management, with the Commission ensuring that that the EU appropriate rules and procedures for providing financing to third parties are respected in all cases.

Funding in the area of Prosperity will be allocated through the International Trade Center (ITC), a United Nations agency. The ITC will assist Irans Trade Promotion Organization, a agency of the Ministry of Industry, Mine and Trade to develop a national export strategy with a particular focus on boosting the capacity of small and medium-sized enterprises (SMEs) as well as the internal managerial and technological capacity of TPO. ITC and TPO will also collaborate to develop a Youth Trade Accelerator Program which will youth-led enterprises. Initial meetings have already been held between ITC officials and Irans TPO and the cooperation envisioned and funded by the Commission builds on an MOU signed between ITC and TPO in 2016.

In the area of Planet, the European Commission will directly administer the funding on the bases of grants and will reply upon pillar-assessed organizations from its member states, a designation that applies to those organizations which have been pre-approved to implement resources from the European Unions general budget. Efforts in this area will build on the EU-Iran framework for technical cooperation on the environment signed by Irans vice president for environment Masoumeh Ebtekar and EU environment commissioner Karmenu Vella in Brussels in September 2016. A consortium of member-state organizations is expected partner with Iranian stakeholders to drive the implementation of pilot projects that contribute to enhancing Irans self-reliance in the areas of addressing water pollution and integrated water resources management, air pollution, waste management and soil degradation.

Finally, in the area of People, funding will be directly managed and dispersed via grants. The Commission will issue a single call in the first trimester of 2019 for proposals to finance projects aiming at comprehensive and evidence-based drug use prevention, treatment, rehabilitation and social reintegration, with special emphasis on high-risk groups. Interestingly, these grants will not be made directly to Iranian institutions. Instead, eligibility criteria mandate that grants flow to agency, non-governmental organization, public sector operator, local authority, international research organization, university or university related organization from an EU member state or a small group of international organizations. While the public health benefits of these grants will no doubt be substantial, these restrictions raise the question of how much of the financial impact of the EUR 2 million in grant funding allocated for the area of People will be felt in Iran.

Overall, the Commissions efforts are encouraging for their scope and the clear willingness to deepen bilateral ties between the European Union and Iran at a fraught political moment. But beyond good intentions, implementation will be key. To this end, the Commission outlines a series of assumptions which underpin the feasibility of the planned cooperation with Iran.

The envisaged cooperation requires that Iran ensures the necessary human, financial and material resources to facilitate the implementation of projects as far as cooperation with national authorities is required andin a crucial consideration given still-unexplained arrests of Iranian environmentaliststhat technical exchanges and cooperation between public sector and civil society actors remain non-sensitive and feasible.
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