- Italy aims to reconquer leading EU7b trade balance ranking
- Europeans jostling for business after Iran nuclear deal
Italian Prime Minister Matteo Renzi will show off the glory of Imperial Rome to Iranian President Hassan Rouhani as he seeks to spearhead a conquest of his own: a huge share of new business in the Islamic Republic.
Rouhani’s trip is his first to the European Union since his election in 2013. He has chosen to start it in Rome, and the Italians, once Iran’s biggest European trading partners, will court him assiduously as the country returns to the international fold after the nuclear deal signed in July.
On Saturday, Renzi will escort Rouhani on a tour of frescoed halls, statues and mosaics in the Capitoline Museums that overlook the Roman Forum, heart of the ancient empire. Rouhani will also meet President Sergio Mattarella and executives of leading companies, and call on Pope Francis.
"We had a strong presence in Iran before sanctions and we aim to go back, at least, to the trade volume of that time," Marco Simoni, economic adviser to Renzi, said in an interview. "We’re seeing contacts in many sectors like energy, infrastructure, manufacturing, machinery and food."
Italy aims to boost trade with the Middle East’s second-biggest economy to more than the 7.2 billion-euro ($7.8 billion) peak reached before sanctions were tightened in 2011. At the time, Italy led Spain, Germany and France, according to Eurostat. Italy-Iran trade slumped to 1.2 billion euros in 2013, with Italy behind Germany.
Rouhani himself struck an encouraging note on the eve of his visit.
"On international and political issues, Italian leaders have always had a moderate attitude towards us," he told the Milan newspaper Corriere della Sera on Thursday. "Under the new conditions, Italy can be one of the most important partners for us."
Rouhani and his ministers for industry, infrastructure and agriculture will meet firms keen on Iran’s $415 billion economy, second only to Saudi Arabia in the Middle East.
Eni Spa, Italy’s largest oil producer, which has maintained a presence in Iran, defense and aerospace company Finmeccanica Spa, power equipment maker Ansaldo Energia SpA and cruise vessels builder Fincantieri Spa are among interested firms, according to Italian officials.
Eni declined to comment this week on a report by the Italian news agency ANSA that it had signed a draft memorandum of understanding with the National Iranian Drilling Company to increase cooperation in the drilling sector. Iran boasts the world’s fourth-biggest oil reserves.
"It’s a question of who can get in there first and strike when the political moment is right," said Scott Lucas, an Iran analyst and professor of international politics at Birmingham University. "The Europeans are trying to get into pole position but many have to be wary of the fact that if they have links to the United States and move too quickly, the U.S. could slap fines on them."
Under the pact reached in July, international powers agreed to ease economic sanctions in exchange for curbs on Iran’s nuclear program. The U.S. will not lift sanctions until the International Atomic Energy Agency confirms Iran has curtailed its nuclear work. Diplomats expect sanctions to be lifted within the first three months of 2016.
The lifting of sanctions could lead to a 3 billion-euro increase in Italian exports to Iran in the period up to 2018, according to a report by the country’s export credit agency SACE SpA.
Still, regaining market shares lost in Iran won’t be an easy matter "considering that competitors such as China, India, Russia and Brazil have been subject to fewer restrictions in recent years and have gained important positions within the country," the report said.
Rouhani will witness more jostling for attention in Paris, where talks are due with President Francois Hollande on Tuesday. Accords will be signed in the areas of air transport, health, agriculture, political dialogue and economic cooperation, Hollande’s office said.
Italy and France face competition from Germany, among others. German Foreign Minister Frank-Walter Steinmeier, on a trip to Tehran last month, urged cooperation with companies including Volkswagen AG and Siemens AG in a meeting with Industry and Trade Minister Mohammad Reza Nematzadeh, the IRNA news agency reported.
Italian businesses, many of which traveled to Tehran with the Italian foreign and industry ministers in August, will be back knocking at Iran’s door at the end of the month.
"We’re taking more than 230 companies with us," said Licia Mattioli, deputy-head of the employers lobby Confindustria, who will be traveling with Carlo Calenda, deputy minister for economic development. "It’s probably early days for signing contracts, but there’s a huge demand in Iran for everything from new homes to modernizing roads and railways, and we want to lay the foundations for the future."