Insider news & Analysis in Iran

 By INU Staff 

INU - On Monday, the Associated Press reported that Iran had received the second of 100 Airbus jets that are set to be delivered to the Islamic Republic under an 18 billion dollar deal that was made possible by sanctions relief under the 2015 nuclear agreement. There is some contrast between the ongoing implementation of the commercial aircraft sale and the rising rhetorical questions between Iran and the United States.

Although the French-headquartered Airbus is going ahead with a deal that was already finalized before US President Donald Trump took office, many other European businesses are holding back their exploration of trade with Iranian entities until it becomes clearer whether the 2015 nuclear agreement will remain in force or whether the White House will impose new sanctions in response to ongoing Iranian provocations.

Still, there appears to be little international consensus on whether to avoid or pursue economic entanglements with the Islamic Republic. And if the Trump administration does begin to discourage such entanglements, it will face the challenge of overcoming existing international pressure in favor of opening up the Iranian economy to widespread foreign investment.

Several reports highlighted this pressure at the beginning of the week. Xinhua News Agency reported that Australia and Iran had been seriously discussing collaboration in the areas of water management and development of renewable energy alternatives. Iran’s English-language propaganda network Press TV boasted that Indian imports of Iranian crude oil had increased to three times their level from last year, thus underscoring the great international desire for Iranian petroleum. And the Jakarta Post reported that the government of Indonesia was pressing for the development of a direct payment method to facilitate trade with the Islamic Republic.

This latter topic is particularly important in terms of the threat that the US continues to pose to investment in Iran by companies that also do business within America, or rely upon financing in American dollars. It is precisely because of the tendency of trade to go through foreign intermediaries that many Western firms are concerned about doing business with Iran, since their assets could then be seized by American banks if they were found to be in violation of sanctions.

In reporting on a three billion euro oil investment deal that has been undertaken in Iran by South Korea’s Hyundai, Agence France-Presse noted that the company would likely have some difficulty obtaining financing for the deal over the next nine months because so many banks remain unwilling to provide such financing as long as the threat of American sanctions remains salient.

The difficult that Hyundai will face is indicative of the tools that the Trump administration will be able to wield if it does make the decision to actively oppose the sorts of foreign investment that were expected to be made possible by the nuclear agreement that was spearheaded by his predecessor.

 

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