World News

Foreign firms say more than just sanctions hold back trade with Iran

VIENNA (Reuters) - Western firms are itching to return to Iran if sanctions are lifted, but to truly fulfil its potential Tehran should do more to make its business practices efficient and its environment welcoming, executives said at a trade conference.

At the conference in Vienna, Iranian officials touted their country - with a population of just under 80 million and annual output of some $400 billion - as a potential bonanza for investors in oil and gas, mining, engineering and cars.

“Leave doubting to some quarters in Washington and Tehran. Not in Vienna,” said deputy oil minister Amir Hossein Zamaninia referring to domestic opponents to an historic July 14 deal, which promises to lift international economic sanctions in return for Iran curbing its nuclear programme.

But some of those attending said achieving Iran’s economic potential would require more than just an end to U.S. and EU sanctions that have sharply curbed trade since 2012.

“Sometimes we wait really long for our money, maybe you can change that?” Alexander Speckle, CEO of ILF Consulting Engineers Austria, a company that provides engineering expertise to industrial clients, asked during a panel discussion with Iranian officials.

Speaking on the sidelines of the conference, a representative of Austrian food and chemical company Kasel listed some of the hindrances to trade with Iran.

“Payments need to be sorted out. Infrastructure and transportation need to be organised,” he told Reuters. Goods that arrive at customs for inspections can take too long to reach customers, he said.

“They take samples, but then there are not enough labs that can analyse the samples... goods may sit in the harbour for a month at 80 degrees Celsius. The customs office needs to be reformed.”

The conference drew companies including German carmakers Daimler DAIGn.DE and Volkswagen-owned VOWG_p.DE Skoda, industrial gases and engineering group Linde LING.DE and Tehran-based venture capital fund Sarava Pars, an investor in online retailer Digikala.

At least one U.S. state department official attended, and Austrian oil and gas firm OMV's OMVV.VI new CEO Rainer Seele walked into a conference room with Iranian officials. He declined to comment when asked what would be discussed.

Iran’s deputy minister for mines and the metals industries, Jafar Sargheini, told Reuters that the biggest hurdle to trade was still the effect of sanctions on Iran’s banks: “It’s a bank problem. Once that is removed, everything will be easier.”

Many at the conference said it would be key for Iran to be re-admitted to the SWIFT global payments system, from which it was expelled in 2012. But there are also issues of trust, political risks, logistical hurdles and simple western comforts.

Iran will be a new destination for many Western executives, at a time of tumult in the Middle East. Televised images of Iranian demonstrators chanting “Death to America” can put off visitors.

Iran would have to do a better job of promoting itself as a place international business travellers can easily visit, said Thomas Puehringer, partner at Austria-based Sigmament Consulting, who has been travelling to Iran at least once a year for four years.

He said one of the first questions his clients ask him about Iran is how safe it is: “Security - not just of money but also of the people that they send there.”

Editing by Peter Graff