Frustrated Europe hopes a Clinton victory can spur elusive Iran deals
Political risks still clouding West’s deal with Iran
After a year of disappointment, European businesses are hoping a victory for Hillary Clinton in the US election next week may help break the logjam that has prevented large-scale Western investments in Iran since the opening of its economy. While no one in Europe is predicting a flurry of new deals should Clinton defeat her Republican rival Donald Trump on Nov 8, a win for the Democrat would remove some of the political clouds hanging over last year’s nuclear deal between Iran and world powers. Business groups say this could help fuel a more aggressive push into the Iranian market in 2017, especially in the second half of the year, if a Clinton victory is followed by the re-election of moderate Iranian President Hassan Rouhani next May. “If Clinton and Rouhani win, then we will have a political window of opportunity that is much bigger than we have now,” said Matthieu Etourneau, who advises French firms on the Iranian market for MEDEF International, the French employers group. “This is what the European banks and companies are waiting for,” he said.
Back in January, when the United States and Europe lifted sanctions related to Iran’s nuclear program, the excitement in Europe’s business community was palpable. With a population of 78 million and annual output higher than that of Thailand, Iran was the biggest economy to rejoin the global trading and financial system since the 1991 break-up of the Soviet Union. European politicians flocked to Tehran with dozens of corporate executives in tow. Rouhani, a pragmatist elected in 2013 on a platform to reduce Iran’s isolation, travelled to Paris and Rome to promote his country to eager investors. But within months the euphoria had vanished, replaced by frustration on both sides.
Biggest obstacle
The biggest obstacle for European firms seeking to do business in Iran has been the reluctance of the continent’s largest banks to finance deals out of fear they could run afoul of U.S. sanctions and incur massive penalties down the line. The United States has taken steps to reassure the banks. Last month the Treasury Department’s Office of Foreign Assets Control (OFAC) issued new guidance to allay concerns about doing US dollar transactions with Iran. But Secretary of State John Kerry acknowledged at a think-tank event in London this week that banks remained skittish. German officials raised their concerns about the hurdles during a recent visit by US sanctions coordinator Daniel Fried. This caution is likely to persist, regardless of who is sitting in the White House. — Reuters