Iran President Visits Europe to Seal Post-Sanctions Deals Worth Billions French car maker Peugeot expected to sign one of a host of deals likely to be announcedBy Stacy Meichtry in Paris and Robert Wall
http://www.wsj.com/articles/irans-rouhani-starts-first-post-sanctions-european-trip-1453723466
European companies are promising billions in new deals in Iran—€5.7 billion from Italian steelmaker Danieli and more than €300 million from French car builder PSA Peugeot Citroën, among others—as Iranian President Hassan Rouhani works to revive trade and political ties on the Continent this week.
The trip will take Mr. Rouhani from Vatican City—marking the first meeting between an Iranian president and a pope since 1999—to the gilded halls of Paris’s Élysée Palace.
With a number of U.S. sanctions still in place, European countries are moving quickly to re-establish ties to sell everything from consumer goods to aircraft.
Italian and Iranian companies signed deals valued at about €17 billion ($18.36 billion) late Monday ahead of a formal dinner between Mr. Rouhani and Italian Prime Minister Matteo Renzi. Earlier in the day, Italian steel firm Danieli said it would sign deals valued at about €5.7 billion during the visit. Other firms signing agreements on Monday included oil-field services company Saipem SpA, energy group Ansaldo Energia and ship maker Fincantieri SpA, but further details weren’t available.
In France, auto makers, airport operators and construction firms were primed for a raft of accords when Mr. Rouhani visits French President François Hollande on Thursday.
French car maker Peugeot is expected to complete an agreement to manufacture cars in Iran as part of a 50-50 joint venture with auto maker Iran Khodro valued at more than €300 million, according to a person familiar with the matter. Under the planned deal, the car makers will export vehicles made in Iran to countries in the region, the person said.
After years of sanctions, Iran is eager to drum up foreign investment, unlocking pent-up demand for investment in transportation, energy and durable consumer goods such as cars. Iranian consumers have largely been limited to Chinese and Indian imports that dominated during the sanctions era.
“This visit is taking place at a very important juncture,” Mr. Rouhani told reporters before departing for Rome, according to the semiofficial Tasnim news agency.
In opening its doors for business, however, Tehran is demanding European firms locate technological know-how and factories inside Iran to revive the country’s hobbled job market.
Another key plank of Iran’s ambitions is the revamping of its creaky aviation industry. Iranian officials say they plan to buy more than 100 new jets from Airbus Group SE to replenish the country’s small and poorly maintained commercial passenger fleet.
Mr. Rouhani’s meeting with Mr. Hollande in Paris on Thursday is timed to the unveiling of about €400 million in contracts to expand Iran’s aging airports for increased tourism and business traffic, one of the people familiar with the matter said.
Tehran is expected to tap French airport operator Aéroports de Paris and construction-and-media conglomerate Bouygues SA to design and build a new terminal at Tehran’s Imam Khomeini International Airport, according to the people. French construction firm Vinci SA will develop and operate airports in Mashhad and another Iranian city, the people said.
Mr. Rouhani’s European tour also provides him with a stage to polish his image as a relative moderate in Iran’s theocratic political system.
Elected on a platform of improving his country’s economy, Mr. Rouhani will meet with Pope Francis inside Vatican City on Tuesday, bringing him face-to-face with the leader of 1.3 billion Roman Catholics who has garnered popularity world-wide for his emphasis on humility and helping the poor.
Thousands of Iranian dissidents are planning to counter Mr. Rouhani’s charm offensive by attending a rally in Paris on Thursday, said Shahin Gobadi of the National Council of Resistance of Iran, to protest Tehran’s human-rights violations as well as its support of Syrian President Bashar al-Assad, whom France has accused of massacring his own people.
“We need to show to the world Rouhani is anything but a moderate,” Mr. Gobadi said.
Despite the protest, business leaders are already vying for Mr. Rouhani’s attention.
Just minutes after Mr. Rouhani landed in Rome, Italian airline Alitalia SpA said it would boost the number of flights between Rome and Tehran from four times a week to daily, starting March 27.
Numerous European business delegations have visited Iran in recent months. A delegation of about 300 Italian businesspeople went to Tehran late last year to scout out post-sanctions commercial deals.
Peugeot’s investment in the joint venture with Iran Khodro could increase based on the number of cars produced in Iran, the person familiar with the matter said.
Before the EU imposed sanctions in 2012, Iran was Peugeot’s second-biggest market after France, with sales volume of around 400,000 cars a year. Iran Khodro assembled those vehicles using kits and spare parts sent from France.
Even after Peugeot cut official ties with the country, Iran Khodro continued to make cars bearing the Peugeot name. In 2014, it produced 319,000 Peugeot-branded cars, according to Iranian car industry registration figures, sourcing its parts from local manufacturers and other intermediaries.
European companies such as Italian oil giant Eni SpA and German auto and truck maker Daimler AG are among those expected to move quickly to resume business with Iran.
Mr. Rouhani had originally planned his European visit for November, but postponed it in the wake of deadly terror attacks in Paris that month.
As Mr. Rouhani left for Europe on Monday morning, his country’s deputy foreign minister, Seyyed Abbas Araghchi, told reporters that business ties between Iranian and foreign business are returning to normal, even as the Islamic Republic works on having remaining sanctions removed.
—Asa Fitch and Benoît Faucon contributed to this article.
Write to Robert Wall at robert.wall@wsj.com and Deborah Ball at deborah.ball@wsj.com
Corrections & Amplifications
Italian steel firm Danieli said it would sign deals with Iran worth about €5.7 billion ($6.2 million) during Iranian President Rouhani’s visit to Europe. An earlier version of this article incorrectly said the deals were worth $5.7 million. (Jan. 25, 2016)
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