For a second time in just over two months, Italian and French officials are polishing the welcome mat for Iranian President Hassan Rouhani this week, hoping to begin a new chapter with the strategic Middle Eastern nation. This time, they hope it will bear fruit.
Rouhani’s trip to Europe was originally scheduled for November, but abruptly canceled following the terrorist attacks in Paris that killed and wounded almost 500 people.
Now Rouhani has dusted off his aborted agenda, as he pays a groundbreaking visit to Italy, the Vatican and France to forge new ties with Europe as his country emerges from isolation.
He arrives in Italy on Monday, where he meets with Prime Minister Matteo Renzi and other top officials, and speaks at an economic forum. He also holds talks with Pope Francis becoming the first Iranian leader to do so in almost two decades, before heading to Paris on Wednesday.
Back on international scene
Rouhani comes to Europe empowered by the lifting of international sanctions against Iran earlier this month, as payback for the nuclear deal struck with world powers in Vienna last year.
“Iran’s return to the international stage is possible,” French President Francois Hollande said last week, but signaled it was up to Tehran to realize this by reducing tensions in the Middle East, and notably with Saudi Arabia.
For his part, the Iranian president brought the message that Tehran was willing to do business with Europe, said analyst Philippe Moreau Defarges, of the Paris-based French Institute of International Relations.
“He’s here to say to heads of government and to Europeans, ‘we are a normal state, we want peace, we want to work with you and strike deals with you,’” he said.
Foreign investment
The Iranian leader may get one of his warmest welcomes from Italian and French business leaders, eyeing a market of 75 million people. Rouhani said Iran’s goal of 8 percent annual growth could only be achieved through billions of dollars in foreign investment.
Italian businesses like energy group Eni are eager to rekindle historically thriving business ties, amid a larger European push to reboot annual trade with Tehran to its pre-sanctions level of roughly $30 billion.
In France, Rouhani signaled in an interview with French media late last year that Iran was interested in doing deals in areas like car manufacturing, agriculture and aviation “that will form the basis of our commercial agreements” with France.
Noting several major French companies were already present in Iran, including Toulouse-based European aircraft maker Airbus, Rouhani added, “we will buy from these big companies, notably Airbus.”
Indeed, on the eve of his trip this week, Iranian Transport Minister Abbas Akhoondi announced Tehran plans to buy 114 Airbus aircraft, as well as planes from US manufacturer Boeing.
For their part, French carmakers Peugeot and Renault are vying for Iranian business, while telecoms company Bouyges and Aeroports de Paris are reportedly in talks to construct a second terminal at Tehran’s Imam Khomeini international airport. The Sephora beauty company and sporting goods retailer Decathlon reportedly also have plans to open stores there.
But French banks, including Credit Agricole and BNP Paribas, are more hesitant. They did not take part in a business delegation visiting Iran in September, underscoring lingering fears about the risks of investing there. Both were fined for violating U.S. sanctions against Tehran.
Nor is everybody sold on the opportunities in the Middle East’s second largest market after Saudi Arabia. “The Iranian market is not the Chinese market,” analyst Defarges said. “And I think that many French businessmen are going to realize that they’re going to have to compete with many others, like the Americans, the British and the Germans. It won’t be an easy game.”
Diplomatic challenges
For his part, Rouhani faces diplomatic challenges. France and Iran have a long diplomatic history, but relations have been prickly in recent years.
While Iran’s spiritual leader Ayatollah Ruhollah Khomeini spent part of his exile outside Paris, France today hosts many refugees from Iran’s subsequent 1979 revolution. That includes Maryam Rajavi, leader of the opposition People's Mujahedeen of Iran, which is based in the small French town of Auvers-sur-Oise.
Other roadblocks can be traced to France’s own diplomacy. Not only did Hollande’s government adopt one of the toughest Western positions during the Iran nuclear talks, but it is among the most adamant voices demanding the ouster of Syrian leader Bashar al-Assad — who counts Iran among his biggest champions.
There have even been gastronomic tensions. Rouhani’s planned visit in November was overshadowed by reports of a cancelled state meal with Hollande over Iranian demands that only Halal meat and no wine could be served.
Iran, however, wanted to show it didn’t hold grudges, Defarges said. “It wants to show it’s not bitter, it’s willing to talk with anybody, including France,” he said.
The context has also changed since November’s terrorist attacks for which the Islamic State group, a shared enemy of Tehran and the West, has claimed responsibility. Defarges believes Hollande’s government may be shifting back to France’s historically pragmatic approach when it comes to Middle East diplomacy.
“Mr. Rouhani’s visit to France will be easier than before the terrorist acts, because the French government knows now it must work with Iran,” Defarges said.
“Of course, Iran is not a very nice country,” he added “but in a balance-of-power situation, the enemy of my enemy is my friend. Which is the case when it comes to the Islamic State.”
