Recent warnings from the American authorities that sanctions on Iran remain in place after a trade mission of 116 French businesspeople visited the country may at first glance seem to be a simple reminder, but to the French at least they also must be viewed in the context of international economic competition between France and the US.
French companies may have lost out more than any other Western firms under the pressures of international and American sanctions on Iran. In 2000, Iran was France’s biggest trade partner in the Middle East and in March 2005 French exports to Iran totaled around 1.8 billion US dollars, but by March 2013 this had fallen by nearly half. A large proportion of this loss is tied up in the reduction—if not total cessation—of the activities of the largest French car manufacturers, Peugeot and Renault, in Iran.
Statistics from a 2012 Le Point report show that between the first half of 2011 and the first half of 2012, Peugeot’s sales of cars sold as individual parts for assembly abroad fell by 31.1 percent—in large part due to losses incurred from the end of Peugeot exports to Iran. Le Monde claims Peugeot has lost somewhere between 640 and 850 million Euros out of a total turnover of 42.7 billion Euros.
Renault continued trading with Iran somewhat longer. In 2012 the company exported 100,000 cars to Iran, up from 94,000 the previous year, while in the first half of 2013 they exported just 28,000 vehicles (as parts) to Iran. But in July 2013, after coming under pressure from the US, Renault too suspended its operations in the country entirely.
Former leader of the Tehran Chamber of Commerce Mohamed Reza Behzadian said that the visit of the recent French delegation “took place thanks to the initiative of the [French business association] Mouvement des entreprises de France (MEDEF). Looking back to the beginning, the trip started with four companies that were interested in going to Iran. After the idea was suggested by MEDEF, other companies expressed an interest in going to visit Iran. While sanctions prevent any French company from making economic advances in Iran, they see the country as an untapped market that is a source of hope for European businesses living through a tough economic climate.”
The weeks before this visit saw delegations from Italy, Germany, Austria, Portugal, South Korea and Turkey travelling to Iran in the hopes of securing market share should sanctions be eased.
But while it is clear that companies from other European countries, as well as South Korea and China, are all today rivals to French firms hoping to break back into Iran, there is no doubt that French car companies feel their main competition comes from across the Atlantic.
Recent talks between the Americans and Iranian companies and authorities—happening while the US rebukes France for sending this trade mission to the country—have sparked concerns among French businesses that the Americans are emerging as a new and powerful rival to France in Iran.
This fear is growing despite the fact that US Secretary of State John Kerry recently told French Foreign Minister Laurent Fabius that the idea that Western companies can trade normally with Iran is a misconception. In the wake of the American rebuke, MEDEF argued that the trade mission was simply for fact-finding and that no deals had been made. Pierre Moscovici, the French finance minister, has said that MEDEF’s meetings in Iran are not a sign of sanctions against Iran being relaxed, but rather an appraisal for the future.
Behzadian says: “The real questions now are whether Renault and Peugeot’s places in the Iranian market will still be there if they decide to return, and whether the Iranians will even want Renault or Peugeot now they have opened a dialogue with the American companies.”
This article was originally published in The Majalla.
All views expressed in this blog post are those of the author and do not necessarily represent the views of, and should not be attributed to, The Majalla magazine or Asharq Al-Awsat newspaper.