This week saw a momentous victory for the leadership of Iranian President Hassan Rouhani and his argument that in opening up to the West on Iran’s own terms, the nation could isolate the US as opposed to being isolated. For now, things seem to be going in his favour and will give the president much-needed respite following increased tensions between himself and the supreme leader Ayatollah Khamenei.
Total the French oil and gas giant settled a $4.8bn deal which could see Iran’s oil revenues, in theory, grow by $84bn in 20 years. Not so much an immediate flow of oil wealth but long term investment for stability, prosperity and leverage. Volkswagen and Peugeot also have announced today (4 July) that they intend to start selling cars in Iran for the first time in 17 years.
These deals were perhaps already an established fact seeing as Total has been developing a section of the South Pars field since 1995 – 1997. But since the sanctions, nothing has been a given. A question remains. Will even more follow? French or otherwise, Iran needs foreign direct investment to reach its full potential for a young population highly educated, skilled and hopeful for a less antagonistic future.
The Persian Gulf is a nervous place at the moment but for Iran the strategic blessings are seemingly endless with renewed and boosted relationship with the EU, European business, banks, Oman, Qatar and Iraq. The sabre rattling of the Trump White House and the Gulf Cooperation Council (GCC) lead by Saudi Arabia has failed so far.
US isolation has comes as a result of a failure to seize the initiative after the Iran Deal with Republicans and Trump slipping back into fantasies of never ending war. Everybody needs an enemy.
At the Security Council in New York last Thursday, sharp American criticism of Iran was in contrast to expressions of support from other Western members for the Iran Deal (JCPOA), which European representatives hailed as “effective and historically significant”.
US Ambassador to the UN Nikki Haley was a minority voice, a lonely reed shivering in the diplomatic cold as she slammed the Security Council for not acting against Iran despite “repeated and deliberate defiance of UN resolutions”. These are in fact non nuclear infractions but the Trump administration has attempted to connected Iran’s IRGC missle tests with the Iran Deal to no effect.
Rouhani in a speech this week (3 July) pointed to this as evidence that his way was succeeding. “Our foreign policy should be of such effect that would make powers condemn the U.S. and reproach it, should it choose to stand against us”, he said to the Iranian Parliament.
The judgement of the Financial Action Task Force (FATF), an international counterterrorist finance and anti-money laundering body has additionally proved him right.
Europe has instead, although not yet possessing the military spending and commitment to back up its independent perspective in the Middle East, taken the lead in trying to be a broker of stability. Iran surprisingly but wisely has accepted this overture knowing that European acquiescence to the Iran Deal and increased European investment are an international shield against cowboy man-child presidents. Tiny hands can not reach for control panels if the adults mind the crib. So Europe will play mother much to the relief of those in Tehran and general humanity.
But has France, the nation which alongside Germany has been the EU power most keen to invest in Iran – played a double game? Much more money and services will have to flow between the two countries to secure the impression that Europe’s will carries clout as well as the difference to America.
If we look at the French-Iranian relationship in terms of trade following the signing of the Iran Deal bilateral trade in the 11 months of 2016 stood at €1.7 billion. This represented a three-fold increase. The hope is for more cooperation in the sectors of oil and natural gas, petrochemicals, transportation, mining, science and technology, water and environment since these sectors are Iran’s priorities in the sixth five-year development plan running until 2021.
The opening of the new Business France office in Tehran has the aim of easing commercial relations between the two countries. And dividends have been substantial with major French corporations, including aviator Airbus, oil giant Total and automobile manufacturers Peugeot and Renault all signing deals with Iranian companies following the nuclear deal.
France has issued 40,000 visas to Iranian nationals to help with the human capital flow between the two nations for services and tourism and Iran for its part has signed deals with French companies totalling €40bn up this year alone. But deals are not completed and guaranteed trade simply MoUs (memorandum of understanding).
But the relationship is still light compared to how the French play with the Saudi Arabian kingdom. With $15.3bn of French foreign direct investment (FDI) in Saudi Arabia, France is the 3rd biggest investor in the Kingdom.
In January of this year, France’s Foreign Minister Jean-Marc Ayrault visited the kingdom to see the construction of the $22.5bn Riyadh Metro rapid transit project, in which French company Alstom is part of a consortium building the system. Ayrault also said on the trip the usual guff about France “will reaffirm the strategic partnership uniting France and Saudi Arabia,” So what is happening now? What is France playing at?
Economics is leverage and the EU has decided to use something it has over the US for the first time when dealing with the situation in the Persian Gulf, Yemen and the horror in Syria. The fact it has a channel of trade and political dialogue to both camps at the heart of those conflicts. The US has to put it politely bupkiss and has thrown itself headlong into the relationship with the new impetuous crown prince who is set on confrontation instead of actual reform at home.
The issue that led some to think the French are putting this clever strategy at jeopardy is their attachment to arms with Saudi Arabia. The UK, US and France vie with one another to see who can deliver the most death to Yemeni civilians from above. Each one terrified of losing the lucrative trade in bombs that underpin Saudi dealings with the West.
France and the European nations must also consider how their economic leverage will in future be used to secure decisive reforms in the judicial system in Iran. Empowering Rouhani through prosperity, in theory, should pave a way for dual nations to be released and gain better treatment, the reduction of internet restrictions, equality of women in the economy and safety of political prisoners. These are all things to consider and work on.
It was the socialist government of Francois Hollande which voiced active support for Saudi actions in Yemen in 2015 and Macron has for the time being been silent on the topic. His only foreign policy position has been to say Syria’s embattled and blood-soaked leader Bashar al-Assad would be inevitably part of any peace agreement and then to support US proposed actions for a chemical attack it says happened recently. Not reassuringly stable.
France and the EU cannot be serious about taking the lead from the US in engaging in the region as equals of the nations there if they insist on being one sides arsenal. In the words of Iranian Foreign Minister Javid Zarif, security can not be bought, especially in the Middle East.
Both nations are seeking to diversify their economies away from the petrodollar dependency stereotype into services, financial, life sciences and light manufacturer. If this is the way to stability, peace and dignity then its Europe leading the way. But let’s have no double dealing for history and future’s sake.