July 21, 2015 / 6:40 AM / 4 years ago

French hard line on Iran won't hurt trade, Fabius says before Tehran trip

PARIS (Reuters) - France’s hard line towards Iran in nuclear negotiations won’t hurt its businesses once sanctions are lifted, Foreign Minister Laurent Fabius said on Tuesday before a trip to Tehran aimed at reviving relations.

Fabius will next week make the first visit to the country by a French foreign minister in 12 years, just a fortnight after an agreement between Tehran and world powers designed to curb Iran’s nuclear program in return for sanctions relief.

Despite a long history of commercial, political and social links with Iran - in the 1970s revolutionary leader Ayatollah Ruhollah Khomenei lived in exile near Paris - France took one of the hardest lines of the six powers negotiating the accord.

“It’s true that France was very firm,” Fabius told France Inter radio. “Will French firms be penalized? My answer is no because in the past we had an important presence in Iran. Our (expertise) is excellent in a lot of fields and the Iranians are serious. You know in foreign policy, I think you lose nothing in being respected.”

When the sanctions start going, Iran could recover more than $100 billion from overseas bank accounts as the oil producer seeks to rejoin the international trading system.

France’s relationship with Shi’ite Muslim Iran has also been complicated by its political and commercial rapprochement with Sunni Arab states, especially Saudi Arabia, Tehran’s main regional rival.

Fabius is due to go to Tehran on July 29 and will meet President Hassan Rouhani. He will not take business leaders with him, unlike German Economy Minister Sigmar Gabriel who brought a big commercial delegation this week as the first senior Western leader to visit Iran since the deal.

But Paris is preparing for the lifting of sanctions, which could begin in the first quarter of 2016 if Iran meets obligations set under the accord endorsed on Monday by the U.N. Security Council.

About 50 senior executives from some of France’s top firms are due to be briefed on the agreement by diplomats later on Tuesday, a senior French diplomat said. France’s main business lobby group, the Medef, is sending a delegation comprising about 80 firms to Tehran at the end of September.

Historically, French firms such as automaker Peugeot (PEUP.PA) and oil major Total (TOTF.PA) were once heavily involved in the Iranian market, but European Union and in particular U.S. sanctions adopted in 2011 scared them away.

Imports from Iran to France fell to just 62 million euros in 2013 from 1.77 billion in 2011. French exports to Iran fell to 494 million euros in 2013 from 1.66 billion in 2011, according to French foreign ministry estimates.

French bank BNP Paribas (BNPP.PA) was fined almost 9 billion dollars in 2014 for transactions violating U.S. embargoes.

“It’s a real issue to see how French firms, international and Americans banks react to the lifting of sanctions, at what speed and with what inhibitions,” said a second French diplomat.

“To invest, company bosses need complete safety. They need financing, but banks will only finance if they are sure they won’t be penalized later.”

The U.S. Foreign Corrupt Practices Act enables Washington to keep an eye on transactions made in dollars even if the entity is not American.

To avoid that scenario, France, Britain and Germany have agreed with the United States that their firms would not be penalized for activities in Iran should sanctions be restored after they are lifted.

Additional reporting by Marine Pennetier; editing by David Stamp

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