Europe rushes to sign deals with Iran

Iranian President Hassan Rouhani (left with headdress) with Italy's Cultural Heritage and Activities and Tourism Minister Dario Franceschini (right) at the Colosseum in Rome on Wednesday. Signing deals in Europe shows Mr Rouhani is trying to turn around Iran's economy. PHOTO: EUROPEAN PRESSPHOTO AGENCY

Red carpet is rolled out for Iran's President, who is eager to shop after sanctions are lifted

PARIS • Europe, whose economic struggles have grown that much greater with recent problems in crucial markets like China and Russia, is rushing to do business with a newly accessible and eager, if still problematic, partner: Iran.

With the lifting of sanctions after its nuclear deal with the West, Teheran has gone shopping this week, bringing its cheque book and a long list of items it had been unable to get for years, including jetliners, European cars, pharmaceuticals and metals.

European governments and corporations have made it clear that economic opportunity is going to trump concerns over human rights, security and politics for now.

Iranian President Hassan Rouhani began his shopping spree in Italy, and continued on Thursday in France. He was treated to full state honours at one of the French Republic's most sanctified spots, Les Invalides, and the red carpet was rolled out for him at meetings with top business leaders. Later in the day, he met President Francois Hollande at Elysee Palace.

Lest they offend their guest, the French have kept wine off the menu, and the Italians covered up nude statues. So far, the courtship has worked swimmingly.

Italian and French business leaders have barely been able to sign the contracts fast enough, even as the Germans look on enviously.

By the end of Thursday morning, less than 24 hours into Mr Rouhani's visit to France, carmaker Peugeot Citroen had signed a €400 million deal (S$622 million) with Iranian carmaker Khodro. Oil company Total said it would sign a deal for between 150,000 and 200,000 barrels a day. Airbus will sell 118 planes to the Iranians.

Mr Rouhani represents one-stop shopping by himself: The Iranian government controls 80 per cent of the country's economy. And with Iran's population of around 80 million, much of it young and eager to spend after years of cheap Chinese goods, Western companies cannot get there fast enough.

Beyond the money, Mr Rouhani's European visit has important political and symbolic overtones, experts said. Signing deals and meeting Western politicians reinforce his own moderate faction in the face of powerful conservative elements - mostly because it shows he is taking an active role to turn his country's troubled economy around.

"The logic of Rouhani, to get out of this difficult situation, is the normalisation of Iran's economic relations with the world," said Dr Fereydoun Khavand, a professor of economics at L'Universite Paris Descartes.


A version of this article appeared in the print edition of The Straits Times on January 30, 2016, with the headline 'Europe rushes to sign deals with Iran'. Print Edition | Subscribe