PARIS: France will start offering euro-denominated credits to Iranian buyers of its goods later this year, a move to bolster trade while keeping it outside the reach of US sanctions, the head of state-owned investment bank Bpifrance said. France and other European countries have been looking to increase trade with Iran since Paris, Washington and other world powers agreed in 2015 to lift many economic sanctions in exchange for controls on Iran’s nuclear program. The plan is to offer dedicated, euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through entities without any US link, whether to the currency or otherwise, the aim is to avoid the extraterritorial reach of US legislation, Reuters reported.
The move could anger US President Donald Trump, who has threatened to pull out of the Iran nuclear agreement reached by his predecessor Barack Obama. This is while on Oct. 20, 2017, US Secretary of State Rex Tillerson gave the reassurance that the Trump administration does not intend to disrupt European commerce with Iran. The president’s been pretty clear that it’s not his intent to interfere with business deals that the Europeans may have underway with Iran,” Tillerson told The Wall Street Journal. Nevertheless, Washington has maintained some financial restrictions, leaving private banks even those based outside the United States wary of financing deals. France, which has had close business ties with Iran since before the victory of the 1979 Islamic Revolution and still operates several large factories there, including Renault and PSA plants, is not alone in Europe in seeking to deepen trade ties.A French banking source said Italy, Germany, Austria and Belgium were also working on mechanisms that would shield their companies from the risk of US sanctions. It was not immediately clear how closely coordinated the efforts are. Earlier this month, Italy and Iran agreed a framework credit agreement to fund investments in Iran worth up to €5 billion. The accord was signed by Iran’s government-owned Bank of Industry and Mine and Middle East Bank, and the investment arm of Italian state-owned holding Invitalia. The Rome government chose Invitalia over state lender Cassa Depositi and Prestiti because, unlike CDP, it has no exposure to US investors and no US footprint. In October, Trump accused some signatories to the nuclear deal of profiteering from the accord. He later rowed back, saying he had told French President Emmanuel Macron and German Chancellor Angela Merkel they could “keep making money” in Iran. French banks have been severely penalized by US financial authorities for their dealings with Iran before. BNP Paribas received a $9-billion fine in 2014 for violating US financial sanctions-even though it was imposed before the nuclear agreement was reached. European aerospace giant Airbus has complained about the banks’ wariness, which has cast a shadow over deals linked to rival Boeing. Dufourcq said French export credits could be offered as soon as May or June. Bpifrance’s total export credits jumped to €186 million ($231 million) in 2017 from €30 million a year earlier. It plans to more than double the amount to €400 million in 2018. Following the conclusion of the Joint Comprehensive Plan of Action–the formal name of the nuclear deal Iran signed with world powers in July 2015 and implemented in January 2016, France has arguably been the most proactive countries in the European Union to resume business ties with Iran.
