The Strategist

Italy Is Ready to Invest 8 Billion Euros in Iran

01/19/2016 - 13:57

Italy is ready to invest 8 billion euros in Iran. Within two years, the Italian government is going to increase exports to the Islamic Republic fourfold. In 2015, the volume of Italian exports to Iran amounted to 1 billion euros. The goal for 2017 - 4 billion euros. State company SACE that specializes in lending to export transactions will get on financing.

Italy had had strong trade links with Iran before the sanctions were put on the country. In 2011, the turnover amounted to 7.2 billion euros, and by 2014, it had fallen in four and a half times to 1.6 billion euros. At that, Italian exports had high added value: 58% of the total accounted for machinery and equipment.

Basically, Italy sold equipment for the oil and textile industries, as well as for agriculture. Iran supplied the peninsula with oil and oil products.

Rome began to restore the old ties with Tehran before the actual lifting of nuclear sanctions. In November, a large delegation of 400 Italian companies headed by Deputy Minister of Economic Development visited Iran. The next series of meetings is scheduled for February.

Now, Bank of Italy and Iran are in talks aimed at opening a branch of one of the largest Iranian commercial banks in Rome. This will significantly simplifies the direct financial transaction in rial and euro.

Of course, reviving cooperation can cause serious problems. The most interesting sector in Iran is oil and gas. However, during the sanctions period, the equipment hopelessly went out of date, and renovation will require major investments, which at the current low oil quotes may seem unprofitable even with cost of production record low among the OPEC countries (only $ 3-5 per barrel).  

In addition, Washington has tempered justice with mercy only in terms of Tehran's nuclear program. Now, new issues are the Iranian ballistic missiles. The US is unhappy with a recent series of tests, the EuroCommission is also joining the investigation. New sanctions are already being introduced, even despite the old ones were removed a few days ago.