Europe back in business with Iran
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The delegations of European entrepreneurs and the visit of Italian Prime Minister Matteo Renzi to Tehran have brought the country back to the center of European foreign policy

Iran is drawing closer to Europe. The delegations of European entrepreneurs and the visit of Italian Prime Minister Matteo Renzi to Tehran have brought Iran back to the center of European foreign policy. France, Germany and Italy are first in line in investments in the country.
European multinationals have for months signed multi-million dollar contracts with local authorities. While the rapprochement with the United States has not yet been achieved, mainly due to Republican resistance, the moderate President, Hassan Rouhani, strengthened by the parliamentary elections of last February, decided to start from Rome in his recent trip to Europe. Not only that, but the Russian authorities have started delivering the first S-300 anti-aircraft defense systems to Iran.

 

Iran and European foreign policy

On April 12 and 13, 2016 Renzi visited Rouhani and was the first European Prime Minister to travel to Iran following the signing of the agreement on the nuclear issue on July 14, 2015. It was a visit of great strategic importance, as was that of then Prime Minister Romano Prodi in 1997, who met former President Mohammad Khatami.
"It is a mistake to confuse Islam and terrorism," assured Renzi. "Italy is a precious friend of Iran’s," reiterated Iranian President Hassan Rouhani, recalling the role that cropped up at the last minute by Federica Mogherini, the High Representative of the European Union for Foreign Affairs, during the talks on the nuclear issue. The Italian Prime Minister was presented with a large delegation, comprising the Minister of Education, Stefania Giannini, and the Deputy Minister of Economic Development, Ivan Scalfarotto. The Italian delegation also included the CEO of Eni, Claudio De Scalzi, and the managing directors of Saipem, Mediobanca, Fs, Sace and Danieli.
For years, together with Germany, Italy has been Iran’s number 1 trading partner and the fifth trading partner in the world, after Russia, China and Japan. Yet, since the creation of the European Contact Group in October 2003, to then move on to the negotiating effort of informal meetings between the Iranian and Italian authorities in 2006, Rome has never sat at the negotiating table regarding the Iranian nuclear program, comprising member countries of the Security Council plus Germany (P5+1).
However, following the reaching of the agreement on the nuclear issue on July 14, 2015 in Vienna, Hassan Rouhani decided to start from Rome on his visit to Europe, where he also met Pope Francis. Last January, 17 agreements were signed and a roadmap was adopted for the development of bilateral relations between Italy and Iran, with a value of signed contracts amounting to approximately €18 billion, or a total of €28 billion, adding the investments approved by Germany and France. "The agreement on the nuclear issue has opened the possibility of integration of the Iranian economy into the global market", explained Paola Rivetti, Professor of International Relations at the University of Dublin, to Abo.

 

The talks in Doha and the price of oil

However, Tehran is also active on another vital front for the recovery of the country’s economy: the negotiations on oil production levels with OPEC countries. The oil-producing countries have so far not reached an agreement required for the freezing of production levels and this could benefit the Iranian economy in the short term.
At April’s meeting in Qatar, it was the confrontation between Iran and Saudi Arabia that made it impossible to reach an agreement. Tehran has staked everything on the postponement of any decision, in order to take advantage of the lifting of the sanctions and to leave production levels unchanged. During the talks in Doha, an excess supply amounting to 1-2 million barrels of oil per day (mbd) worldwide was discussed: the rapid production, especially in Russia and Saudi Arabia. Iranian Oil Minister Bijan Zaganeh admitted that Tehran has no intention of freezing production until it is restored to the 2011 levels. The uncertainties that emerged in Doha have suffered significant effects, triggering both protests by oil industry workers in many Middle Eastern countries, especially in Kuwait, and on the financial markets. The New York Stock Exchange closed with plummeting oil prices. The same reaction was recorded by the Saudi financial market. Italy and Europe are back in business with Iran. Yet the end of international sanctions against Tehran is struggling to take off with many banks reluctant to release frozen assets following the measures imposed against the nuclear program, in force for over 10 years. The visit of Iranian President Hassan Rouhani to Rome and Paris, and the following mission of the large Italian delegation which visited Tehran, bode well for Iran’s rapprochement to the European capitals. However, the issue of oil production levels with Saudi Arabia within OPEC, which could undo the positive effects in economic policy of the gradual end of international sanctions and limit the spectrum of reforms desired by moderates, remains open.


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