1032 GMT June 22, 2018
After the landmark agreement, hundreds of European, Asian and even American companies rushed to enter Iran’s largely untapped market of 80 million people, assured by the US and the other signatories that their investments would be safe.
This month, after President Donald Trump unilaterally pulled the United States out of the agreement, the companies heard a strikingly different message: They have 180 days to leave Iran or face being barred from the US market and being hit with multibillion-dollar fines and the arrests of their chief executives for disregarding American sanctions.
In Europe, smaller banks have leapt on opportunities afforded by the nuclear deal rejected by Trump.
There are just months to go until a November deadline issued by Washington after the US president abandoned a hard-fought agreement that loosened business restrictions on Iran.
But some firms plan to press on in their dealings with Iran despite the looming threat of penalties.
"We will continue to serve our clients," for now, said Patrizia Melfi, a director at the "international competence center" (KCI) founded by six cooperative savings banks in the small town of Tuttlingen in southwest Germany.
The center, which supports companies operating in sensitive markets like Iran or Sudan, has seen demand "rising sharply in the last few years, from firms listed on the Dax (Germany's index of blue-chip firms), from all over Germany and from Switzerland," she added.
German exports to Iran have grown since the nuclear deal was signed in 2015, adding 15.5 percent last year to reach almost 2.6 billion euros ($3.0 billion) after 22-percent growth in 2016.
Such figures remain vanishingly small compared with Germany's 111.5 billion euros in exports to the US – its top customer.
Nevertheless, the KCI will "wait and see what the sanctions look like" before turning away from Iran, Melfi said.
Transactions are carried out in euros, and the KCI does not deal with businesses that have American citizens or green card resident holders on their boards.
What's more, products sold to Iran cannot contain more than 10 percent of parts manufactured in the US.
Germany's two biggest banks, Deutsche Bank and Commerzbank, avoid Iran completely after being slapped with harsh fines in 2015 over their dealings there, with Deutsche alone paying $258 million in penalties.
DZ Bank, which operates as a central bank for more than 1,000 local co-op lenders, is withdrawing completely from payment services there, a spokesman told AFP.
That left KCI to seek out the German branch of Iranian state-owned Bank Melli in Hamburg.
Elsewhere in the German economy, the European-Iranian Trade Bank (EIH) founded in 1971 is another conduit to Tehran.
Also based in Hamburg, it for now remains "fully available to you with our products and services", the bank assures clients on its website, although "business policy decisions by European banks may result in short term or medium term restrictions on payments".
Neither does the Bundesbank (German central bank) believe that much has so far changed for business with Iran.
"Only the European Union's sanctions regime will be decisive", if and when it is changed, the institution told AFP.
Any payment involving an Iranian party would have to be approved by the Bundesbank if things return to their pre-January 2016 state.
German banking lobby group Kreditwirtschaft has called on Berlin and other EU nations to clarify their stance – and to make sure banks and their clients are "effectively protected against possible American sanctions".
On Friday for the first time since the Iran nuclear deal came into force in 2015, China, Russia, France, Britain and Germany gathered in Vienna – at Iran's request – without the US, to discuss how to save the agreement.
The European Union has made promises to take steps to protect its companies.
But the new sanctions have undeniably complicated matters for foreign investors in Iran, particularly companies with global operations, leaving many European executives bitter.
It remains unclear just how much overall impact the new sanctions will have. While foreign investment in Iran has doubled since the 2015 deal, the actual increase, to $4 billion from $2 billion, is not terribly significant in a $428 billion economy.
“Punishing foreign companies seems to be more about exerting power than really hurting the Iranian economy,” said Saeed Laylaz, an Iranian economist. “What matters really is the oil. The presence of Europeans here, not that much yet.”
Bosch, the German home appliances producer, wants Iranians to buy their dishwashers, enormous billboards show. The logo of ABB Global, a Swedish-Swiss conglomerate active in everything from robotics to electric power, is plastered on the side of a building. Signs hawk Barbican nonalcoholic beer, from Saudi Arabia.
Many of these ventures, particularly those involving high-profile companies with ties to or extensive operations in the United States, are now imperiled. Two major oil companies, Total of France and Eni of Italy, are leaving development projects. The Danish shipping companies TORM and Maersk will no longer call on Iranian ports. An Italian steel maker, Danieli, which a year ago opened a big factory near Tehran, will have to sell its shares and pull out.
But the decision is not so clear cut for numerous other companies, mostly European and Asian, that sell products that are not under sanctions — soft drinks, chocolate bars, clothes, medical equipment and medicine, for instance. Debenhams, the British department store, has franchises in Tehran, as does Adidas, the German sports apparel company. Peugeot and Renault of France sell cars here. Scania, the Swedish company, sells trucks and buses.
Then there are European and Asian consultants in Tehran and the rest of the country advising Iranian companies: importers of skin-care products, chefs working in high-end restaurants, professional football players and companies that have entered into joint ventures with Iranian partners.
The departure of the European and Asian companies undoubtedly will mean job losses for young Iranians. “I have a staff of 11 supermotivated women,” said one European executive who had built his office from scratch after his company returned to Iran in 2015. “It’s amazing to see how quickly employees here learn and adapt,” the executive said. “Now, I have to let them all go. It physically hurts me to even think of that.”
Local Iranian employers are feeling the effects, as well. “We lost 20 percent of our customers last week, and 60 percent have put their work in Iran temporarily on hold,” said Ben Karami of I.C.A., an advertising company based in Tehran. His customers used to be Procter & Gamble, the global beauty company Coty and others. “We will lose a lot of expats and a lot of know-how,” he added.
Few European diplomats and analysts believe the new sanctions on Iran will have the impact that US Secretary of State Mike Pompeo, for one, seems to be hoping. And Washington is largely insulated from much of the impact.
“The Americans now want to destabilize Iran, but they won’t live with the consequences. We will,” said one European diplomat. He added that he doubted the sanctions would have much effect. But if they did destabilize the country, Europe would face the ramifications in migration and enhanced regional insecurity.
For now, the diplomat said, most European embassies are telling their companies to take their time. “We are telling them not to make any rash decisions and keep their business in place,” he said. “But, of course, they make their own decisions.”
In Asia, Vice President of the India-Iran Chamber of Commerce & Industry said India will continue business with Iran despite US withdrawal from the deal.
In an interview with IRNA, P.S. Chandhok who is the vice chairman of India-Iran Chamber of Commerce said that his country will not join the US sanctions against Iran unless there is a sanction endorsed by the United Nations.
On the possible impact of the US sanctions on India’s projects in Iran’s port city of Chabahar, the businessman stressed that the “post-imposition of the US sanctions, the neighboring countries of Iran have launched many schemes to attract foreign investments. Therefore, there is a need to focus beyond Chabahar for India-Iran partnership, mainly by the Indian private sector and, as long as there is no UN sanctions on Iran, New Delhi will continue to boost the Chabahar.”
Reuters, New York Time and IRNA contributed to this story.