Italy, France Court Iran, Face Competition From Germany

$ENI, $VLKAY

Italian Prime Minister Matteo Renzi will host Iranian President Hassan Rouhani in Rome, as he seeks a huge share of new business in the opening up nation of 80-M people..

Pres. Rouhani’s trip is his 1st to the EU since his election in Y 2013. He has chosen to start it in Rome, and the Italians, once Iran’s biggest European trading partners, will court him as the country returns to the international fold after the nuclear accord signed in July.

Saturday, PM Renzi will escort Pres. Rouhani on a tour of frescoed halls, statues and mosaics in the Capitoline Museums that overlook the Roman Forum, heart of the Imperial  Roman Empire.

Pres. Rouhani will also meet President Sergio Mattarella and executives of leading companies, and audience with Pope Francis.

Italy aims to boost trade with the Middle East’s 2nd-biggest economy to more than the$7.8-B peak reached before sanctions were tightened in Y 2011. At the time, Italy led Spain, Germany and France, according to Eurostat. Italy-Iran trade slumped to EUR 1.2-B in Y 2013, with Italy behind Germany.

Pres. Rouhani said on the eve of his visit, “On international and political issues, Italian leaders have always had a moderate attitude towards us. “Under the new conditions, Italy can be one of the most important partners for us.”

Pres. Rouhani and his ministers for industry, infrastructure and agriculture will meet firms keen on Iran’s $415-B economy, 2nd only to Saudi Arabia in the Middle East.

Eni Spa, (NYSE:ENI) Italy’s largest Crude 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 MOU (memorandum of understanding) with the National Iranian Drilling Company to increase cooperation in the drilling sector. Iran boasts the world’s 4th-biggest Crude Oil reserves.

The Europeans are trying to take pole position, but have to be wary of the fact that if they have links to the United States and move too quickly and without State Department approvals, the US could slap fines on them.

Under the reached reached in July, international powers agreed to ease economic sanctions in exchange for curbs on Iran’s nuclear program. The US will not lift sanctions until the International Atomic Energy Agency (IAEA) confirms Iran has curtailed its nuclear work. Diplomats expect sanctions to be lifted within Q-1 of Y 2016.

The lifting of sanctions could lead to an immediate EUR3-B increase in Italian exports to Iran in the frame up to Y 2018, according to a report by the country’s export credit agency SACE SpA.

Regaining market shares lost in Iran will not 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.

Pres. Rouhani will witness more focus for attention in Paris, where talks are due with President Francois Hollande next Tuesday. Accords will be signed in the areas of air transport, health, agriculture, political dialogue and economic cooperation, Pres. 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 (OTCMKT:VLKAY) and Siemens AG in a meeting with Industry and Trade Minister Mohammad Reza Nematzadeh, the IRNA news agency reported.

It is still too early for signing contracts, but there is a huge demand in Iran for everything from new modern technology homes to modernizing roads and railways.

Stay tuned…

HeffX-LTN

Paul Ebeling

 

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