“The president of the French Republic is not the CEO of Total”

The European Union is scrambling to find a solution to the US pulling out of the Iran Nuclear Agreement to protect European firms that had started doing business in Iran, after the original sanctions were lifted by the Obama administration in 2015.

Already, some European giants such as Total (with a planned 2 billion $ investment) and Airbus (with a backlog of more than 100 planes headed for Iran Air and Iran Aseman Airlines) are backing out of negotiated deals, and more are pondering what to do as European leaders are considering all their options.  Angela Merkel has announced that, “as for compensating all businesses in a comprehensive way for such measures by the United States of America, I think we cannot and must not create illusions.”  Billions of investments, from not only large multinationals but also SME’s, are to be lost. Emmanuel Macron went on to add: “”we’re not going to impose on French businesses to stay in Iran.  The president of the French Republic is not the CEO of Total.”

However, beyond the loss of revenue from products already backlogged that now cannot be sold to the Iranian marketplace (which, in any case, can be retrofitted and sold to another marketplace), one important loss of revenue will come from the servicing of already sold and installed machinery in Iran.  Many investments had been made since 2015 in factory machinery, power grid infrastructure, construction equipment, and transport.

With American, European, and some Asian firms (from Japan and South Korea) now pulling out of Iran, this leaves a huge vacuum of service revenue to be picked up.  A huge opportunity that could profit… Chinese and Russian firms, not likely to comply to American imposed sanctions.

To read more in detail on how the sanctions may impact European firms, read this interesting article: https://www.investing.com/analysis/iran-sanctions-threaten-european-firms-heres-whats-at-stake-200316860

Thomas Igou
Content Director
Copperberg