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With Sanctions in Doubt, Trade Delegations Flock to Iran

With Sanctions in Doubt, Trade Delegations Flock to Iran


13th January 2014 - FDD Policy Brief

Upon the announcement of the implementation of the Joint Plan of Action (JPA) between Iran and the six world powers (P5+1) on Sunday, President Barack Obama stated that in return for Iran’s elimination of  its “stockpile of higher levels of enriched uranium,” its dismantling of some enrichment infrastructure, and accepting more inspections, the West would provide Iran with “modest relief” from sanctions.

The sanctions relief, however, is only part of the story. The very fact that the West is allowing for a more permissive sanctions environment has offered the promise of new investments to growth-hungry companies worldwide. A brief survey of recent trade delegations visiting Iran demonstrates that the regime in Tehran is poised to cash in on more than “modest relief.”

Trade delegations from Turkey, Georgia, Ireland, Tunisia, Kazakhstan, China, Italy, India, Austria and Sweden have visited Iran since December 2013. According to Mehrdad Jalalipour, the director general of Iran’s Trade Promotion Organization, 150 foreign businessmen from Turkey, Iraq, Oman, Tunisia, Lebanon, Azerbaijan, Kazakhstan, and Afghanistan participated at various trade fairs in October/November 2013 – when the JPA was being negotiated in Geneva.  This is a 70% increase compared to October/November 2012.

Foreign interest in Iran is not limited to one specific sector. Tunisia is contemplating the assembly of 30% of its tractor fleet with Iranian imports. China's delegation was interested in natural tar extraction in Kermanshah. Austria's delegation engaged in exploratory discussions with Iranian engineering firms and rail companies. The Swedish/Italian delegation discussed the establishment of modern hospitals and medical tourism, but they also held meetings with cement and prefabricated construction goods factories. The Kazakh delegation was interested in the agricultural, technical/engineering industry, but also looked at the mining and tourist sectors. The Turks, who already cashed in on the precious metal trade, are now interested in agriculture, basic foodstuffs, household textiles, autos, communications and leather goods.

Iran’s auto industry is particularly primed for investment thanks to the JPA, which relieves sanctions on the sector for six months. Days after the JPA was announced, press reports indicated that an auto industry conference was suddenly garnering great interest.

The global fear of sanctions is receding. Iran appears to be poised to cash in on the few tactical concessions it ceded in Geneva. More importantly, if Iran reneges on the JPA, the aforementioned delegations will undoubtedly serve as the regime’s anti-sanctions lobby.

Ali Alfoneh is a senior fellow at the Foundation for the Defense of Democracies. This analysis is the ninth in a series from FDD’s Iran Sanctions Project.

Tags

csif, iran, sanctions