Iranian president in France for deals bonanza, including buying 114 Airbus planes

Iranian President Hassan Rouhani (centre) attends a meeting with French ministers in Paris, on Jan 27, 2016.
Iranian President Hassan Rouhani (centre) attends a meeting with French ministers in Paris, on Jan 27, 2016. PHOTO: AFP

PARIS (AFP) - Iranian President Hassan Rouhani will on Thursday agree a host of commercial deals during a visit to France that offers the clearest demonstration yet of the Islamic Republic's post-sanctions intentions.

The visit, the first to France by an Iranian president since 1999, is the second leg of a trip signalling Tehran's rapprochement with Europe following the lifting of the measures imposed over its nuclear programme.

Although not termed an official visit, Rouhani will be received by President Francois Hollande with military honours and national anthems.

The real business of the trip will come when Rouhani officially signals Iran's intention to buy 114 passenger planes from European aircraft maker Airbus.

Rouhani will also ink a deal paving the way for the return of French carmaker Peugeot to Iran, in partnership with Iranian manufacturer Khodro, according to a French government source.

Peugeot will produce 200,000 vehicles a year in Iran, beginning in 2017. It pulled out of the country in 2012 as sanctions began to bite.

After arriving from Italy, where he sealed deals for steel and pipelines worth between 15 and 17 billion euros (S$26 billion), Rouhani began his Paris visit on Wednesday by meeting top French business leaders.

France's economy minister Emmanuel Macron said Rouhani had unveiled a new government scheme to guarantee investment by French firms in Iran.

A source involved in the deal to buy Airbus planes said at this stage, only letters of intention will be signed because some sanctions are still in place.

However, Iran is said to be keen to bring its fleet of mid- and long-haul aircraft up to date, so the deal is widely expected to go ahead soon, giving a huge boost to the European aviation industry at a time of global economic downturn.

In another potential bonanza, French oil giant Total is said to be interested in buying Iranian crude.

The visit will also touch on Iran's role in Syria. Delicate talks are due to begin in Geneva to take the first tentative steps towards ending a conflict that has killed 260,000 people.

Rouhani's meeting with Hollande is also expected to touch on Iran's bitter feud with Saudi Arabia.

At a press conference rounding off his Rome visit, Rouhani was defiant when asked whether Iran would apologise to Saudi Arabia for an attack on its embassy by demonstrators furious over Riyadh's execution of a prominent Shiite cleric, Nimr al-Nimr.

"Why should we apologise, because Nimr al-Nimr was executed? We are the ones to apologise because they are killing the people of Yemen? Apologise to them because they are helping terrorists?" he asked.

"They are the ones who should apologise to Muslim people, hundreds of times."

The Paris visit was originally scheduled to take place after the Nov 13 attacks on Paris, but was postponed.

The Iranian opposition is expected to hold a human rights demonstration in the French capital to coincide with Rouhani's visit.

In Rome, Rouhani and Italian Prime Minister Matteo Renzi met at Rome's Capitoline Museum where nude statues were covered up out of respect for the Islamic Republic's strict laws governing propriety.

But Rouhani denied he had asked his Italian hosts to cover up the statues and Italian Culture Minister Dario Franceschini, who accompanied Rouhani on the museum trip, called the move "incomprehensible".

In Italy, Rouhani portrayed Iran as "the safest, the most stable country in the entire region" and said it was an ideal place to do business.

"Everyone understood that the nuclear negotiations represented a win-win situation for both sides," he said.

Rouhani then visited the Vatican for the first time and met Pope Francis, who has urged Iran to work for peace in the Middle East.

Rouhani, a 67-year-old former academic and diplomat who is seen as a pragmatist, was elected in 2013 on a pledge to end sanctions and improve relations with the West.