European businesses were set Sunday to speed back onto the Iranian market, hours after crippling international sanctions were lifted from Iran in exchange for Tehran’s pledge to put its nuclear program on ice.
The flurry of investor excitement and the sheer size of Iran’s economy had some analysts comparing it to the reopening of markets in the East bloc after the fall of communism. In a measure of the billions of dollars that are at stake, Tehran announced that it planned to buy 114 Airbus jets, while the head of the state-owned National Iranian Oil Co. said Sunday that the country planned to boost production by 1 million barrels a day – about a 33 percent increase in output.
European leaders, seeking a rare piece of economic good news amid sagging markets, encouraged their nations’ businesses to take advantage of the opportunity. American companies are still barred by a range of U.S. sanctions that remain in place despite the lifting of those that were related to the nuclear program. For now, few U.S. companies are openly exploring business with Iran, even as European energy giants, carmakers and banks angle for a piece of the reopened market.
The potential new investments were welcomed in Tehran, where state-run media ran scrolling accounts Sunday of the European government and business officials coming to Iran to explore deals.
“Today is a historical and exceptional day in the political and economic history of the Iranian nation,” President Hassan Rouhani told reporters in Tehran on Sunday, the state-run Islamic Republic News Agency, or IRNA, reported. “We have reached a turning point.”
Rouhani unveiled a 2016 budget that foresaw a significant boost to tax revenue as a result of new investment.
As the sanctions were lifted early Sunday, Tehran time, European officials suggested that their companies would soon benefit. More than $30 billion in previously frozen overseas assets are immediately available to Iran, and the country plans to use the money for imports, according to IRNA.
Russia, a key player in the international efforts to reach the nuclear agreement, also hopes to profit through exports of its arms and deals involving Iran’s civilian nuclear program, which has long depended on Russian technology and expertise. Both nations have said they are considering scrapping tourist visas, and Russia is planning to step up purchases of Iranian meat and produce after banning most food imports from Turkey late last year.
But Russia also stands to lose when Iranian oil hits international markets, depressing oil prices even further. The Kremlin gets half its revenue from sales of oil and natural gas. Less than three weeks into the new year, the Russia government is considering trimming the federal budget by 10 percent because of plummeting energy prices.
Elsewhere in Europe, government officials were talking up the benefits of the trade opening.
“I hope British businesses seize the opportunities available to them through the phased lifting of sanctions on Iran,” British Foreign Secretary Philip Hammond said. “The future is as important as the landmark we’ve reached today.”
Former chancellor Gerhard Schroeder of Germany was in Tehran to talk business last week, and the Czech Republic’s trade minister met Sunday with Iranian officials to discuss cooperation with electricity companies. Scores of other European officials have visited since the nuclear deal was announced in July.
But it remained unclear Sunday how quickly the enthusiasm over Iran’s business potential would translate into actual business deals. A score of U.S. sanctions remain in place despite the lifting of those that were related to the nuclear program, forcing many major European companies into a cautious creep in Iran for fear that they could run afoul of U.S. rules. Those concerns were underscored Sunday when the Obama administration announced new sanctions against 11 people and companies because of their involvement in Iran’s ballistic missile program.
European companies also fear a U.S. shift if a Republican president opposed to the nuclear deal is elected in November, analysts and industry representatives say.
“A lot of French and European companies have been preparing for business in Iran for the last year, at least,” said Nigel Coulthard, the head of the Iran Economy Circle, a Paris-based trade promotion group. But among the largest European companies, there will not be investments until there is more clarity from the U.S. Treasury Department about how Europeans can comply with remaining sanctions while doing business with Iran. That process could take several months, he said.
So for now, many big companies are being circumspect. The Netherlands’ Royal Dutch Shell denied an Iranian report that its representatives were in Tehran on Sunday to meet with top Iranian oil officials. A representative for France’s Total energy company did not reply to a request for comment about a report in Iran’s state-owned Mehr News Agency that it was doing the same.
Airbus, asked about Iran’s pledge to purchase the fleet of planes, said in a statement only that “we are studying our way forward in view of this new environment in full compliance with all international laws.”
But smaller European companies were moving ahead full speed on Sunday.
“There’s a lot of questions which I need to verify tomorrow, asking my bank, asking some other banks in Hamburg which I’m trading with,” said Ralf Schmierer, the chief executive of a German pressure-gauge company. “If it’s really the situation that we can make open business with them, of course we see a lot of chances for us.”
Schmierer said his company had done a fifth of its business in Iran until sanctions crimped that about five years ago.
“My friends always told me that the last five years were the dark times,” he said. “Now we’re hoping that this is the bright times.”