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All in Economy
◢ Iran is facing the end of a four month extension given by the Financial Action Task Force (FATF) for the reform of the country’s AML/CFT regulations. Iran will be hoping for a further extension of the suspension of countermeasures at the June plenary of the FATF. Some FATF members have sought to characterize such extensions as exceptional. However, extensions are a common procedure, and FATF ought to treat Iran’s case in fair recognition of this fact.
◢ The US Treasury Office of Foreign Asset Control on Thursday announced a new round of targeted sanctions designations, including sanctions on Dena Airways, the company which operates the Iran’s presidential aircraft used by Hassan Rouhani for official travel. The new sanctions follow the designation of Iran’s central bank governor, Valliollah Seif, and reflect a further targeting of the Rouhani administration.
◢ Air France recently announced the reduction of its flights from Paris to Tehran after first switching the service on the route to its subsidiary airline JOON. At a time of uncertainty surrounding the future of the Iran nuclear deal, the reduction of flights led to speculation that the move may have been influenced by the return of sanctions. But a look to the current competitive environment shows other significant changes to the market to which Air France was forced to react.
◢ On Tuesday, French officials convened a briefing for French business on possible responses to Trump’s reimposition of secondary sanctions. French Minister of Economy Bruno Le Maire reportedly cited the French parable that “money is the nerve of war” to describe what is at stake. He may be more correct than he realizes, as the Trump administration gears-up for an economic war on Iran.
◢ Speaking on Thursday at the Center for Strategic and International Studies, a Washington D.C. think tank, Total CEO Patrick Pouyanné faced several questions about his company’s recently announced decision to wind down operations in Iran following the reapplication of secondary sanctions by the Trump administration. Pouyanné warned that the “Atlantic allies” risk giving “all the Middle East region to China and Russia.”
◢ In the years when Iran was under broad international sanctions, the country saw shortages in key foodstuffs and life-saving medicines. Despite attestations to the contrary, international sanctions hurt the Iranian people in cruel ways. As Iranians prepare for the return of U.S. sanctions, concerning ambiguity in OFAC’s new sanctions guidance may undermine the longstanding exemptions for humanitarian trade and the carve-outs for the Iranian banks which facilitate these sales.
◢ On 8 May 2018, U.S. President Trump announced that the United States “will withdraw from the Iran nuclear deal” and that the United States “will be instituting the highest level of economic sanctions”. At the same time, U.S. authorities announced that U.S. sanctions would be re-instated, at the latest by 4 November 2018. What does this mean for companies who have ties to Iran or who do business in Iran?
◢ Forced to respond by Iran’s recent currency crisis, the Central Bank of Iran is approaching regulatory reform in the financial sector with new energy. A critical deadline to meet standards set by the Financial Action Task Force is forthcoming in June. Iran needs to demonstrate progress in tackling financial crime estimated to include at least USD 27 billion in transactions annually.
◢ The last Iranian year, which ended in March, saw several interesting developments for Iranian energy, both domestically and internationally. Despite persistent challenges, Iran is keen to build on the momentum of last year’s developments. In doing so, the question of whether the Trump administration will stay in the JCPOA and renew sanctions waivers on May 12 will have great importance.
◢ The logistics industry in Iran is burgeoning with international players such as DHL Freight and Maersk Line connecting Iran's supply chains to the world. But Iran's logistics infrastructure remains underdeveloped. Iran Warehouse is making a big bet on logistics real estate and is building Iran’s first true Grade A warehouse park—a 60,000 square meter development in West Tehran.
◢ In a decisive move intended to stop the further devaluation of the rial, the Rouhani government announced it would unify the official and free market dollar exchange rates, settling on an official rate of IRR 42,000. First Vice President Eshagh Jahangiri made the announcement last night, declaring that trading dollars above the new rate would be a serious crime.
◢ The governor of the Riksbank, Sweden’s central bank, is visiting Iran on April 5th on the invitation of Iran’s central bank governor Valiollah Seif. With an agenda focused on technical exchanges, a spokesperson for the Riksbank confirmed to Bourse & Bazaar that Ingves will give a presentation entitled “Central Banking and Financial Crisis: Lessons Learned.”
◢ The filing of a complaint against Italian telecommunications firm Italtel under the OECD Guidelines for Multinational Enterprises for its business activities in Iran is a warning about the scrutiny and politicized climate surrounding investment in the Islamic Republic. But companies can navigate these claims succesfully if they remain committed to responsible business and proactive monitoring.
◢ A new report in Austria's Die Presse confirms that one of the first Western banks to sign a deal to provide project financing to Iran has had to put its projects “on hold” due to the uncertainties surrounding the Iran nuclear deal. Oberbank had signed an agreement to extend a EUR 1 billion line of credit to Iran in September of last year.
◢ A new report from the International Monetary Fund (IMF) examining “selected issues” in Iran’s economy, including the expansion of non-oil exports and the role of women in the labor force, places special emphasis on the importance of the development of Iran's government securities market, which is a priority under the Sixth National Development Plan (NDP).
◢ Despite recent uncertainty surrounding the 2015 nuclear deal, Iran Air has been moving forward with its expansion efforts, drastically changing its face in the airline industry.
◢ Iran Air's network has grown significantly since 2015, but remains much smaller than that of a decade ago. In 2002, the airline was serving 18 European destinations, compared to today’s 13 destinations.
◢ Russian news agency TASS is reporting that Zarubezhneft, a Russian state-owned oil company, has signed two major contracts with the National Iranian Oil Company (NIOC).
◢ The agreements will see Zarubezhneft exploit the Aban and Western Paydar oil fields in a consortium with Dana Energy, an private sector Iranian oil services company.
◢ Spanish football league LaLiga held a three-day football clinic in Tehran in late February, welcoming 90 children for a day of coaching and friendly competition at the Olympic Football Complex.
◢ The clinic was delivered as part of a partnership concluded between MTN-Irancell and LaLiga in December 2017, which covers joint broadcasting and marketing activities. Irancell is one of the most active companies in sports marketing in Iran.
◢ Keshmoon, an Iranian startup, connects carefully selected saffron farmers engaged in sustainable agriculture with premium consumers. The company has recently gained acclaim for its combination of ecommerce and "agritech" solutions.
◢ Starting with an initial cohort of 30 farmers in the town of Qaen in Khorasan Province, Keshmoon is encouraging a move to sustainable agriculture. The goal is to reduce water usage through means that also help the farmers improve their livelihoods.
◢ A Swedish investment company is “on course” to make a landmark investment in Moheb, the leading manufacturer of plastic and laminate tubes in Iran and the Middle East.
◢ Serkland will take an approximately 40 percent stake in Moheb with its investment, and will receive two of five board seats.
