Daimler is wasting no time getting back into the Iranian market.
The German automaker announced plans yesterday for a joint venture in the country to build Mercedes-Benz trucks after trade restrictions tied to Iran’s nuclear programme were lifted over the weekend. Similarly, bankers from Italy’s Mediobanca, executives at Boeing Co in the US and senior managers from French automaker PSA Peugeot Citroen have been laying the groundwork to do business in the nation.
More declarations of investment are likely in coming weeks as companies seek to profit from rapprochement with a country that has the world’s largest natural gas reserves, a young, well-educated population of almost 80mn people and a $406bn economy served by a relatively developed road and rail network.
Yet for all the optimism, Iran’s re-admittance into the world economy may be a slower journey.
“I would expect European companies to be faster to engage with Iran than their US peers,” Daniel Salter, an equity strategist in London at Renaissance Capital, said in an e-mail. “But they will also be cognizant of the risks of sanctions snapping back, so I would expect a gradual process of re- engaging.”
The International Atomic Energy Agency said on Saturday that Iran met its commitments under last year’s deal with the US, China, France, Germany, the UK and Russia. Those nations lifted the sanctions tied to the nuclear programme.
The US is maintaining significant measures against Iran to punish the country for involvement in terrorism and missile development, and the restrictions tied to the nuclear programme can be reimposed if the country violates the agreement.
“Anybody going into Iran needs to have a short-term exit strategy in mind,” said Parham Gohari, co-founder of Frontier Partners, which advises multinationals on entering Iran.
Iranian banks also still need to reconnect to SWIFT, the international network that financial institutions use to communicate.
Daimler, based in Stuttgart, has signed letters of intent with Iran Khodro Co for production of trucks and power-trains, and with Dubai-based Mammut Group for distribution of Fuso-brand vehicles. Daimler said it’s done business with Iran Khodro for 50 years.
“Right now, there is a huge demand for commercial vehicles, especially trucks,” Wolfgang Bernhard, the head of Daimler’s commercial-vehicle unit, said in the statement. “We will quickly resume our business activities in the market.”
Italian investment bank Mediobanca wants to play a role in the privatisation of Iranian state-owned companies and in foreign investments in the country’s oil, energy, automotive and financial industries, according to an internal memo confirmed by the bank. The bank signed an agreement in August with the Italian government and Iran’s Finance Ministry and central bank to develop trade relations between the countries.