Ifs and buts, conditional and subjective, Iran is one great swirling maelstrom of the unknown, but is it about to emerge blinking into the sunlight?
After decades of the political temperature remaining rock bottom, of impassioned rhetoric flying between Tehran and Western capitals, could this ancient country be on the point of seeing its modern potential unlocked and in particular witness its automotive sector unleashed once more as some sanctions are tentatively lifted?
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Any thaw of those sanctions seems almost to have come about overnight by Iranian standards, or at least in a couple of weeks, a pace of lightening change for a country that had seemingly set itself four-square against most world opinion for the past 30 years or so.
The catalyst has clearly been the recent negotiations in Geneva between Iran and the so-called P5+1 – the UK, US, France, Germany, Russia and China as well as the European Union – that have highlighted the tantalising chance automotive sanctions could be lifted to a certain degree.
Was it really only a few months ago in July that President Barack Obama issued his Executive Order concerning knock-down kits exported to Iran for assembly, which would be considered as goods and services with the automotive sector?
“The export of such kits to Iran would be sanctionable if the transaction is ‘significant,'” noted the Order.
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By GlobalDataThose words now appear draconian in any new softening of attitude between Iran and the West but the exact nature of any sanctions dilution is as-yet unclear – with so much in this story there is a vast amount of smoke and mirrors.
Indeed what some may view as a prelude to industrial normalisation, may be no more than grandstand posturing in this most political of global arenas.
What does seem to be clear is the West has given Tehran a six month window to comply with its initial requirements in a move to dissuade the country from what they see as its bid to enrich uranium for nuclear weapons.
Some have speculated the auto business could benefit by up to around US$500m, but that might only be the start as overseas manufacturers look to dust off old contacts and start again.
Some of that rebooting could be made against the background in which Iran has had to rely on producing its own components to a certain extent as ships were rerouted elsewhere, but the country appears nonetheless keen on working with former business colleagues on developing high-grade parts for its potentially burgeoning auto sector that has a middle class and educated population.
To that end, suppliers have been keeping an eye on the fast-moving situation, as the CEO of European automotive component-producing association, CLEPA, Jean-Marc Gales, told me in Brussels two weeks ago.
“Iran is a very interesting automotive market because in terms of production, it is one of the top 15 countries,” said the CLEPA chief. “It has a middle class and if this country opens up more than it has now, it will be a substantial market and suppliers need to make sure they get their fair share and not leave [it] to the already well-implanted Japanese and Korean companies.
“We need to overcome the political issues right now with Iran, but nonetheless it is a very interesting market.”
Gales should know – he said he’d been to Tehran in a previous role several times – and it seems the French in particular have kept relations if not exactly warm – then certainly simmering to quickly ratchet up again once the all-clear is given.
For example, Renault is involved in the country through its Logan and Megane models, while PSA sells almost 500,000 knock-down kits.
And embattled French President, Francois Hollande, whose poll ratings continue to seemingly hurtle downwards, was quick to spot a political opportunity to relieve at least some domestic economic pressure, highlighting: “A step towards the end of the Iranian military programme and thus to a normalisation of our relations.”
Iran Khodro (IKCO) is also particularly keen to rekindle relations, with a spokesman for the automaker in Tehran telling me there is: “A new atmosphere in Iran, we are very hopeful.”
The manufacturer was also present at last weekend’s automotive conference in the country – an event it appears that occurred with happy coincidence right after the Geneva talks – but which was nonetheless able to capitalise on the new mood of optimism sweeping the country.
As a list of any vanguard of those looking to cross the border into Iran as well as home politicians at the conference, it was pretty impressive.
Just a snapshot of attendees included French suppliers association, FIEV, vice president, Arnaud de David de Beauregard, Iranian first vice president, Eshaq Jahangiri Kouhshahi and the CEOs of IKCO and fellow-Iranian automaker, SAIPA, among others.
There were also 170 delegates at the Milad Tower conference with 50 companies from 20 countries, while the president of OICA also spoke.
Down the line from Tehran, you can almost hear the wish reverberating to re-establish what virtually everyone else in the world accepts as normal business relations in a country severely affected by the world’s tough stance concerning its political isolation.
But news of a possible breakthrough in relations has certainly not been greeted by all in the West with unreserved optimism.
United Against Nuclear Iran (UANI), has long waged a campaign against automakers cooperating with Tehran, slamming the interim agreement reached in Geneva as “disproportionate sanctions relief,” according to its CEO, Mark Wallace.
“It is unrealistic to characterise sanctions as a spigot that can be turned off and back on,” thundered the former US Ambassador to the United Nations. “By rolling back sanctions now, the international community is significantly lessening the pressure on Iran’s economy and the best measure of that pressure is the value of the Iranian rial.”
There was no less hostility emanating from Tel Aviv, with Israeli Prime Minister, Benjamin Netanyahu, noting: “It reduces the pressure on Iran without receiving anything tangible in return and the Iranians who laughed all the way to the bank are themselves saying that this deal has saved them.”
But the ink has certainly not dried on this particular agreement, despite the emminently more conciliatory noises coming from Iran following the election of President Hassan Rouhani.
As a small example of the travails of even trying to speak to Iran, I’ve been attempting to contact the Iran Vehicle Manufacturers Association and the Iranian Auto Parts Manufacturers Association, with absolutely zero success.
That difficulty is just a tiny snapshot of how difficult it can be to establish relations with the country, but the opportunities could be almost limitless were both sides of this intractable dispute to sit down and actually follow through with a potential loosening of sanctions.
One look at Iranian manufacturer, SAIPA’s website also illustrates the point. It’s half in English and half in Farsi – another challenge – but it mentions among other countries, Iraq, Sudan, Algeria, Russia, Kazakhstan and Pakistan.
I’m not clear if that’s a wish list of countries to which Iran can export or if they are already there, but either way it’s a powerful indication of the massive potential this country could have.
As the IKCO spokesman put it: “I think the future atmosphere will be very hopeful – after six months Iran could get new agreements. The future will be very bright.”
Should Iran finally emerge from its international deep freeze, the prospects could be startlingly good for overseas OEMs and suppliers.
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