European losers in new Iran sanctions game

PARIS: United States President Donald Trump’s decision to pull the US out of the 2015 nuclear accord with Iran and reimpose a raft of sanctions will hit European businesses in Iran.

Here is an overview of how firms stand to be affected when the sanctions kick in today:

French carmakers Renault and PSA have taken different approaches.

PSA, behind the Peugeot, Citroen and Opel brands, said in June it was suspending activities in Iran, its chief foreign market by volume, noting those units account for “less than one per cent of sales”.

The group last year sold more than 445,000 vehicles in Iran, making the country one of its biggest markets outside France.

Renault said it intended to keep up activities in Iran albeit scaling them back. On July 16, the carmaker announced a 10.3 percent drop in sales in Iran to 61,354 units.

Germany’s Daimler was teaming up with two Iranian firms to assemble Mercedes-Benz trucks.

Volkswagen said last year it would seek to resume sales in Iran for the first time in 17 years, yet the scale of its US activities could force the jettisoning of those plans.

German firms’ business with Iran was a modest US$2.6 billion (RM10.6 billion) of 2016 exports, rising to US$3 billion last year.

Italy is Iran’s main European trading partner, but Germany is still the bloc’s biggest exporter to Teheran.

Aviation saw beefy contracts drawn up following the nuclear accord as Iran targets modernisation of an ageing fleet.

Airbus booked deals for 100 jets although only three have been delivered.

The potential loss of business in Iran would not weigh overly heavily on Airbus as overall orders on its books at the end of June stood at 7,168 planes.

Franco-Italian planemaker ATR was fretting on the fate of 20 planes earmarked for Iranian delivery, though Iran Air said on Saturday that five ATR-72600 aircraft would arrive yesterday, creeping under the deadline to add to eight already delivered.

French energy giant Total has moved away from a contract to develop an offshore gas field at South Pars.

Because Total’s investment in the field had barely just begun, the company is avoiding incurring significant losses on a US$5 billion project, which Iran said Chinese group CNPC would take up.

After a 30 per cent jump in 2016 in exports of Italian-made goods to Iran, Italian exports grew 12.5 per cent last year to €1.7 billion (RM8.04 billion), according to official data.

Italy stands to lose out in these sectors with national railway operator Ferrovie dello Stato Italiano having signed a deal to build a high-speed line linking Qom to Arak in northern Iran.