As I See It
Western brands will be among the winners in Iran
An opportunity for Europe
They poured on to the streets of Tehran, joyous at being allowed back into the global family of nations. The young in particular expressed their excitement. Many have lived and worked in the west and believe the agreement reached on their country’s nuclear ambitions will at last lift the suffocating tyranny of sanctions that has hung over them for more years than they care to count.
In Austria on Tuesday, a deal was finally rubber-stamped that halts Iran’s atomic bomb-building programme and allows it to trade freely. Inevitably, the traffic will be mainly one-way, and already key sectors are rubbing their hands in anticipation of the opportunities awaiting them.
Big oil and gas producers such as BP and Royal Dutch Shell have been looking at how to take advantage of this long-awaited breakthrough with an energy-rich state of 80 million people. It may now also buy more of everything the west and the newly-emerged nations can sell, from handbags to SUVs.
Others most likely to benefit are those in the fast moving consumer goods and luxury segments. Top end cars, jewellery and fashion labels are high on the list of demands from wealthier Iranians. Companies such as Glenmorangie owner Louis Vuitton Moet Hennessy are ready to pour their resources into building a significant market share. Tobacco companies will be keen to exploit a country that smokes almost 53 billion cigarettes a year.
Companies that already have a presence in Iran but suffered as a result of sanctions can expect to do well. French carmakers Renault and Peugeot have large but mothballed operations in Iran that may enjoy a new lease of life.
For Europe generally, getting access to a market equal to the size of the UK and the Netherlands could be just the tonic its struggling economies need. Engineering companies will be among those seeking to modernise its infrastructure. Iran was once a big importer of dairy products from Europe. In spite of sanctions it has continued to grow, from $2.1 billion in 2010 to an expected $18 billion by 2020.
Despite the eagerness of western companies to move into Iran, there remains some caution, not least from those sceptical about the solidity of the deal. Historic tensions will be difficult to erase. It is also likely to take years to properly make any headway.
However, with sufficient safeguards and a commitment from Iran to comply with the terms of the agreement it may come to represent a major milestone in international relations and world economic expansion.