Mega deals in offing as Rouhani visits Europe

ROME: Iranian President Hassan Rouhani flew to Italy on Monday at the start of his first official visit to Europe, looking to sign multi-billion dollar contracts to help to modernise Iran’s economy after years of crippling financial sanctions.

Heading a 120-strong delegation of Iranian business leaders and ministers, Mr Rouhani will spend two days in Rome before flying to France.

While diplomacy will figure high on his agenda, trade ties are likely to dominate the headlines, with Iran announcing plans to buy more than 160 European planes, mainly from Airbus, on the eve of President Rouhani’s departure.

Officials here said Italian companies were poised to sign deals worth up to $18.4 billion over the next two days, including in the energy and steel sectors.

The deals will give a boost to Prime Minister Matteo Renzi, who is struggling to revive Italy’s underperforming economy.

President Rouhani championed a deal last year under which Iran curbed its nuclear programme in return for the end of US, EU and United Nations sanctions this month.

He is anxious to prove to Iranians that the accord, contested by many hardliners, was worth it and will help ease their economic hardships.

He also wants to promote Iran’s position as a major regional player and key to any solution to the long-running conflict in Syria.

The president will meet Prime Minister Renzi, Pope Francis and local business leaders.

He is set to meet French President Francois Hollande in Paris on Thursday.

“This is a very important visit,” an Iranian official said and added: “It’s time to turn the page and open the door to cooperation between our countries in different areas.”

However, the visiting leader is likely to hear condemnation of his country’s human rights record, with Iranian opponents planning a rally in Paris on Thursday.

Europe was Iran’s largest trading partner before the sanctions were imposed, with Italy and France seen as particularly close to Tehran. Both countries sent trade delegations to Iran last year in the wake of the nuclear accord laying the groundwork for tie-ups.

Among the deals being readied for Italy was a pipeline contract worth about $5bn for oil services group Saipem, a source said.

Italian steel firm Danieli will sign commercial agreements worth up to $5.7bn with Iran, a company spokesman said. These accords will include a joint venture with other international investors, to be called Persian Metallics, worth $2bn.

Although many sanctions relating to Iran’s nuclear programme were lifted, most US measures remain in place. Non-US banks may trade with Iran without fear of punishment in the United States but US banks may not do so, directly or indirectly.

This means any trades with Iran in US dollars cannot be processed via the country’s financial system — a significant complication given the dollar’s role as the world’s main business currency.

While Italy was not involved in the talks about the nuclear programme, France was and it took a hard line towards Iran in the negotiations.

It has also been outspoken in its condemnation of Iran’s support for Syrian President Bashar al Assad and sceptical of the country’s other Middle East interventions.

“Trust needs to be built. It’s like love. It is only the proof of love that counts,” a French diplomat said.

“On the nuclear accord the relationship is relaxed, but not on the other subjects. There is no change on the Iranian position for now on a number of regional issues … so the idea (of the visit) is to open a new page.”

The Iranian leader’s visit comes as global diplomats are trying to arrange the first peace talks in two years to end the Syrian civil war.