Italy Stands to Benefit from the Lifting of Sanctions Against Teheran
"We didn't do the revolution about the price of melons," said Ayatollah Khomeini to those who argued that the country was in the same, or worse, economic predicament, in spite of the Islamic Revolution that had overthrown the Shah.
Almost four decades since the 1979 revolution, the price of melons is back with a vengeance to explain one of the key geopolitical events of 2015: the accord signed at Vienna between Iran and the US, joined by other powers, including the EU. In the country's worsening situation lies the answer for the willingness of the ruling élite to find a compromise with the international community over its nuclear development program.
So if economic reasons are what put Iran at the bargaining table, it's natural to wonder what will happen now that the agreement is being implemented. European diplomacy has been very active since the event: Italy, Germany and France are trying to outcompete each other in starting a waltz with Teheran, finally untied from sanctions. If Germany is Iran's main trading partner within the EU, Italy is in second place, and could well recuperate the market share it lost due to sanctions. In this sense, the recent diplomatic crisis putting Iran and Saudi Arabia at loggerheads (with embassies being closed in the two countries) does not pose a threat to European companies who want to do business with Teheran.
Energy, cars, construction
Iran is a market of 79 million consumers, with a young and educated population: 60% are less than 30 years old and the literacy rate stands at 99%. Also, in spite of the crisis and structural impediments, the Iranian economy is the second largest in the Middle East-North Africa region, preceded only by Saudi Arabia. So the lifting of sanctions started in January 2016 can start a veritable gold rush in certain industries. Oil is the first that comes to mind. To return to pre-sanctions production levels (4.5 million barrels a day) major investment needs to be undertaken to renew obsolescent extraction and refinery plants. The building indusry and the auto industry are booming- In the former, the Iranians want to do joint ventures with Italian brands.
There are a few risks, though. Firstly, the re-imposition of sanctions, if Teheran doesn't respect the Vienna accords. The Supreme Guide Khamenei seems to lean on the dovish rather than the hawkish side of his regime, but who knows what could happen in the future. It is also worth giving a thought to the peculiar economic structure the country has taken since the revolution: an economy characterized by a high level of government intervention, based on the marriage between industry and military apparatuses.
So cautious optimism is the position that our country should take. Iran is a huge bet: Italy needs to be bold to take a stake in the game and outsmart European competitors, but it also needs to be cool about assessing costs and benefits of the Persian gold fever and not succumbing to it.