Doing business in Iran: dark clouds in front of a glimmer of hope

An interview with Dagmar von Bohnstein, delegate of the German business community in Iran and Managing Director of German-Iranian Chamber of Industry and Commerce, on US sanctions and prospects for German companies.

Donald Trump wants to punish all companies that do business with Iran. How do you assess the situation?

Most European companies have decided against their will to either significantly reduce their activities in Iran or to give up completely. German companies have long hesitated to leave Iran. After the 5th of November and the coming into force of the 2nd stage of US sanctions, many have no other choice. No German company likes to leave and no German company will completely leave. Virtually everyone will stay in Iran with a small team. They want to resume their initial work as soon as the political conditions allow for it.
 

Can the countries that want to stick to the Iran Agreement hold out?

The parties of the Joint Comprehensive Plan of Action have entered into commitments with the conclusion of the agreement. All but the USA continue to adhere to it. Immediately following the withdrawal of the US from the agreement, the other parties reaffirmed this intention. But it turns out to be very difficult to maintain economic relations in full. One of the main reasons are the banks, which no longer carry out transactions with Iran and are also no longer available for project financing.
 

What strategy do you recommend to German companies in light of the sanctions?

Our large companies (e.g. from the DAX index) are developing their own strategies in Iran. They cannot and will not risk their US business under any circumstances. But even Mittelstand companies without US involvement suffer from US sanctions. It is important for them to keep the payment traffic to Iran open. They are placing great hope in the EU and its measures, in particular their plan to secure the payment route to Iran via a new facility, the so-called Special Purpose Vehicle (SPV). This is a clearing house that avoids the transfer of money across the border. In concrete terms this means e.g: A German machine manufacturer delivers its carpet machine to Iran. However, he is not paid from Iran, but from Italy and by the company that purchased Iranian crude oil. Politics is now called upon. The SPV is an important first step that has to be put into practice relatively quickly.
 

What role does the Chamber of Commerce Iran play as the first point of contact for German companies?

The German-Iranian Chamber of Industry and Commerce is taking up the problems with which German companies are confronted here. As best as we can, we provide very individual support in solving these problems. In principle, we provide information about the current situation in Iran and establish contact with German and Iranian authorities via our network. We rely on strong partners such as the Tehran Chamber, the largest organisation in the Iranian private sector. With an experienced and competent team of employees, we are always available as a contact partner. In addition, we create opportunities for our almost 3,000 members to participate in trade fairs, events and delegation trips and offer extensive further training. Our office-in-office solutions are a relatively new service. Especially important for German companies are our individual market consulting and legal advice. Finally, we support German and Iranian companies in visa matters.
 

Do you hope that the situation will ease again in the foreseeable future?

This depends primarily on the willingness of the USA and Iran to negotiate. As an economy, we very much hope for this. But it also depends on whether Iran improves the economic policy framework conditions in the country in such a way that the market continues to be and remains interesting for foreign trading partners and investors. We very much hope for that, too.