France and Iran, two years after the nuclear deal

Read also Shervin Ahmadi, “Iran: open for business again”, Le Monde diplomatique, January 2014. Nearly two years have passed since Iran and the major world powers reached a diplomatic agreement in Vienna over the Islamic Republic’s deeply disputed nuclear activity. Under the terms of that accord, known formally as the Joint Comprehensive Plan of Action (JCPOA), Tehran promised to roll back significant elements of its programme in return for the lifting of various international sanctions.

Since the deal was struck in July 2015, and especially since sanctions were lifted in January 2016, there has been a renaissance of diplomatic and trade activity between Iran and Europe. France has been no exception to this trend. President Rouhani made a high-profile trip to Paris last year – only the second by an Iranian president since the 1979 revolution – and left with billions of euros in deals. Visits to Tehran by French ministers and business leaders regularly take place. By one recent tally, the post-sanctions period has seen bilateral trade more than treble. France-bound Iranian exports alone skyrocketed from €30m in 2015 to more than €1.3bn last year.

Read also Alain Gresh, “France’s changed view of the world”, Le Monde diplomatique, July 2008. All this is a marked change from the pre-nuclear deal days, when France came to be seen as the most critical and hardnosed of the six governments negotiating with Iran: ‘ the bad cop’ according Iran’s Supreme Leader, Ali Khamenei. Early in his presidency, Nicolas Sarkozy referred to Iran’s proliferation threat as ‘the most serious crisis weighing on the international order today’ and supported the expansion of sanctions towards resolving it. Under his successor François Hollande, French negotiators pursed what foreign minister Laurent Fabius labelled an approach of ‘constructive firmness’, which on occasion led to daylight between Paris and its EU3+3 partners. Ultimately, however, the terms secured were sufficient to win French approval.

In the wake of the Vienna agreement, France and Iran moved swiftly to put their disagreements behind them and seek out areas of bilateral cooperation. ‘In the last ten years, both countries have missed numerous opportunities to deepen and develop their relations,’ Rouhani told Hollande days after the deal was signed. ‘Now, it is time to make up for the past.’

Trade has perhaps been the clearest indicator of how these relations have started to make up for the past. French companies have become particularly active in three fields: aviation, auto-manufacturing and energy. The blockbuster announcement from Rouhani’s 2016 visit was a massive 118-aircraft deal with Airbus worth more than €20bn, a major part of plans to comprehensively overhaul Iran’s aging fleet. Three of these jets have already joined Iran Air, as have a handful of turboprops from Toulouse-based manufacturer ATR – a deal itself worth half a billion euros.

To these ventures into Iranian skyways we can add the deals struck by Renault and Group PSA, which includes Peugeot and Citroen, to increase the French presence on Iran’s motorways. Renault reported a 161.5% surge in purchases earlier this year, nearly one in ten of all cars sold in the country. The Iranian market constitutes the vast majority of PSA’s recent Middle East business.

Then there is TOTAL, which has been at the forefront of European engagement of Iran’s massive oil and gas sector. The company was among the first to seek out Iranian oil for Europe after the continental embargo enacted in 2012 was lifted, and purchased more than $2bn worth of Iranian energy products in 2016. Underscoring this trend was the news that in September last year, Iran – which just a few months prior had no oil exports to France – emerged as the biggest single source of French crude imports. Meanwhile, officials in Tehran have suggested that a $4bn gas initiative with the French energy giant is expected over the coming weeks.

And while these big-ticket deals are the most high-profile indicators of the French-Iranian rapprochement, there are plenty of other smaller signs too. French hoteliers have begun to make forays in Tehran, and Sephora, the Paris-based, LVMH-owned purveyor of make-up and cosmetics, may be setting up shop in the Islamic Republic later this year. Tourism from France to Iran has more than soared since the nuclear agreement, and on a visit to Tehran in January foreign minister Jean-Marc Ayrault announced that visas for Iranians would be doubled. Plans are also underway for the Louvre to dispatch a selection of its famed collection to Tehran as part of an unprecedented display at the National Museum of Iran.

To be sure, there are still some thorns in this rosy picture, both with respect to Franco-Iranian trade and diplomatic relations more generally. Several French banks, like many of their peers across Europe, were penalised heavily by US financial authorities for violating sanctions. They are deeply wary of going back to Iran any time soon. Moreover, a host of Iranian policies remain troubling for Paris, including Tehran’s human rights record, its ongoing support for the Assad regime in Syria, and its repeated ballistic missile tests, which French officials described as ‘hampering the process of restoring confidence established by the Vienna agreement.’ In this regard, French foreign minister Jean-Yves Le Drian, has spoken of ‘developing political dialogue that should be part of a constructive approach with regard to solving regional crises.’

The path ahead

Presidential elections in both France and Iran in May produced results that suggest continuity in bilateral ties. Rouhani wrote to Emmanuel Macron after Macron’s win to note the ‘positive trend’ in Tehran-Paris relations, and to share his wish that ‘the obstacles on the path of further developing and deepening ties be removed.’ Meanwhile, Rouhani’s comfortable re-election to a second four-year term just days after the French polls suggests that Tehran will continue on the trajectory of seeking greater commercial links to France, and to Europe.

It also suggests that Iran will, more likely than not, remain largely compliant with the terms of the nuclear agreement for the time being. It was noteworthy that during the presidential campaign, even the candidates regarded as coming from the ‘hardline’ camp in Iranian politics indicated that they, too, would have followed the terms of the nuclear deal if elected.

But even if Tehran keeps to its side of the deal, the fate of the accord remains uncertain so long as Washington does not commit to it explicitly. As a presidential candidate, Donald Trump declared that his ‘number one priority would be to dismantle the disastrous deal with Iran.’ Initial responses from the French after his inauguration underscored a degree of apprehension over whether Trump’s campaign sentiments would dictate US policy; Ayrault admitted that ‘we harbour real concerns about the U.S. administration’s attitude towards’ the JCPOA.

Several months on, the Trump administration has not, in fact, ‘dismantled’ the deal. Indeed, it has continued to issue waivers on US sanctions in the absence of major breaches by the Iranian side. However, a review of American policy towards Iran has been set in motion – including an assessment of the nuclear agreement – and in recent months Washington seems to be adopting a more robust posture against what it regards as Iran’s wide portfolio of malicious activity across the Middle East. Non-nuclear sanctions on Iran missiles, for example, have been brought to bear. During his visit to Saudi Arabia in May, Trump had sharp words for Tehran, declaring that ‘all nations of conscience must work together to isolate Iran, deny it funding for terrorism, and pray for the day when the Iranian people have the just and righteous government they deserve.’

It seems unlikely that Iran will be curtailing those actions that the US views with concern any time soon. Meanwhile, the absence of any formal US pronouncement regarding the nuclear agreement, coupled with the near-certainty of further American sanctions, will do no favour to French or other European merchants who would like to develop their presence in Iran’s commercial space. If the US decides in the months ahead to withdraw from the nuclear deal altogether, France, and its European allies who were party to the negotiation process, will not be altogether keen to follow. And while France might have been the bad cop of the nuclear talks, it could end up one of the main defenders of its product.