US companies remain hands-off Iran
The United States does is still taking a hard stance on trade ties with Iran, as is visible from the graph below. Though the US has removed some sanctions on the country, it still has in place some. There is no sanction on oil exports from the US; but sanctions on financial transactions continues.
Further, there’s a risk that the Trump administration may move away from the nuclear deal signed in 2015, a fact that President Trump had alluded to during his campaign trail by saying that he intends to “rip up” the “worst deal ever negotiated.” US companies already require special permission from the Treasury Department to operate in Iran. The fact that the President can impose fresh sanctions on the country puts Iran further out of reach for US companies.
The only significant deal coming from the US to Iran has been from aircraft manufacturer Boeing, which has signed deals for 80 planes worth $16.6 billion with Iran Air and for up to 60 single-aisle planes to Iran Aseman Airlines. However, it still hasn’t received the final nod from the Treasury to close those deals. Lawmakers, including Marco Rubio and Peter Roskam, have written to the President to block airplane deals with Iranian companies.
On the other hand Airbus, the European competitor of Boeing, has been signing deals to elevate its standing in the lucrative airplane market of Iran. The latter’s fleet is aged and given the size of the market, presents a compelling opportunity to do business. The joint venture of France-based Airbus and Italy’s Leonardo has signed a deal with Iran for planes valued up to $1 billion.
UK is cautiously optimistic
The United Kingdom (UK) has shown keenness in the opportunities Iran presents. According to official numbers, UK exports to Iran from January to October 2016 rose by 42% from the same period a year ago. Meanwhile, Iran sent across its first shipment of natural gas condensate and crude oil to the UK in October last year.
Given Brexit, the removal of sanctions on Iran could provide an opportunity for British firms to expand business ties with the country. However, the lack of banking infrastructure is the main hindrance for firms from the country.
The Telegraph reported that according to the British Iranian Chamber of Commerce, European banks are wary of the possibility of US sanctions on Iran, which is holding back trade.
British companies are not completely absent from the financials space though. Charlemagne Capital, a specialist in investing in emerging and frontier markets, in partnership with Iran’s Turquoise Capital, launched Iran-focused funds last year.
The banking and financial transactions arena remains a problem though, and it seems that companies will continue to remain hesitant. However, with European companies expanding their business ties in other areas, it’ll be interesting to see if UK firms evince interest in participating in the growth story of Iran in sectors beyond banking.