January 31-2014
by Warren L. Nelson
. . . different views of trade with Iran
Turkish Prime Minister Recep Tayyip Erdogan flew into Tehran Tuesday leading an economic delegation seeking to boost trade with Iran—the highest ranking such visitor to Iran since the Big Six agreed to loosen sanctions.
But the day before, a US Treasury official flew into Ankara to warn Turkish businessmen that sanctions have only been modified very modestly and they risk being hammered by the United States if they widen their dealings with Iran.
Turkey’s Star daily reported that Erdogan would sign five cooperation agreements while in Tehran.
But David Cohen, the US Treasury under secretary for terrorism and financial intelligence, stood before the media in Ankara Monday and said that Iran is not open for business. That was a direct refutation of President Rohani’s comments to businessmen last week at the World Economic Forum in Davos, Switzerland, where he said Iran is now open for business.
Cohen said, “Sanctions remain in place and are still quite significant, and businesses that are interested in engaging with Iran really should hold off.”
He is visiting several countries in a clear effort by Washington to prevent a general collapse of sanctions.
Earlier, US Treasury Secretary Jack Lew urged foreign firms to “proceed with caution” when approaching Iran—and made clear Washington was prepared to punish companies that cross “red lines” and violate sanctions on dealing with Iran.
Iran, on the other hand, is seen as encouraging just such a collapse. But actually, the government seems mainly to be interested in convincing the Iranian public that the world is returning to Iran and that this is the fruit of President Rohani’s new policy of engaging with the world.
It is giving great publicity to every contact it has with foreign businesses. The domestic news coverage implies that these firms are coming to sign contracts. But no contract of any size has been announced.
Most of the business visitors are concerned to show their interest in returning to Iran—after the core sanctions are removed, which they hope will happen later this year once a permanent nuclear agreement is signed.
But the interest is not necessarily to return to Iran on Iranian terms. Italy’s ENI oil giant is one of the businesses to meet with Iranian officials. But what went unreported in the Tehran media was the fact that Paolo Scaroni, chief executive of ENI, said afterward that ENI was not interested in returning to Iran until its contracting practices are drastically revised.
“I’m not going back to Iran under the old contract terms even if all sanctions are lifted,” Scaroni said last week in Davos.
In a sign of interest in change, a French delegation is to visit Tehran in February. News reports say it will include representatives from 110 French corporations. But the French government strongly supports continued sanctions, so there aren’t likely to be any contracts that would impinge on sanctions.
As for Turkey and Iran, they agreed in 2012 to boost annual trade volume to $30 billion from $22 billion. That was put on the back burner when tougher sanctions were imposed that year. Erdogan would clearly like to see trade boosted. Some suspect he will encourage Turkish firms to challenge sanctions.
Erdogan also likely has a political agenda for his Tehran visit. Iran and Turkey have been at loggerheads in Syria, supporting opposing sides in the civil war there. Erdogan’s policy is extremely unpopular in Turkey, as Turks fear the violence in Syria may overflow into Turkey. Erdogan will likely be searching for a way out of the Syrian morass while in Tehran.
Erdogan leaves behind a continuing corruption probe that led to the jailing December 17 of Suleyman Aslan, chief executive officer of Halkbank, which handles payments for Iranian energy transactions, and Reza Zarrab, an Iranian-Azeri businessman accused of facilitating illicit deals between Iran and Turkey. Trade with Iran is thus already under a cloud of suspicion in Turkey.
