Key Economic Benefits to Iran Post JCPOA
1. EU-Iran 12-month trade up 79% (year to year)
The European Union’s trade with Iran amounted to €13,7 billion during 2016,a 79 percent rise year on year, based on the latest figures released by the European Union's statistics agencyEurostat. Growth of Iranian imports from the EU has been 27 % and growth of Iranian exports to the EU was 345% (mostly oil). The EU28 is now Iran's third largest trading partner (after UAE and China).
2. Macro-economic conditions are improving substantially
IMF Executive board "commended the authorities for achieving and impressive recovery in economic growth". Real GDP grew by 7.4% in the first half of 2016/17 (but only 0.9% on average in non-oil sector). Growth is projected to stabilize in the medium term at 4.5%.
3. Banks are increasingly connected
33 Iranian banks reconnected with SWIFT. Two hundred small and medium-sized international banks have started correspondent relationships with Iranian banks (Iran’s central bank said). At least 15-20 European Banks have correspondent relationships with Iranian Banks (Europaisch-Iranische Handelsbank, KBC, Mediobanca, Banca Popolare di Sondrio etc.)
4. Oil production and export reached pre-sanctions levels
Iran has told OPEC that its oil production in August 2016 stood at 3.63 million barrels per day (bpd). The report further added that the latest figures suggest Iranian production has reached the level it pumped in late 2011, before the last round of sanctions were tightened leading to a drop in Iranian exports.
5. Billions in outstanding oil debts have been recuperated
Oil debts to Iran, which for years were out of our hands, have been returned to the country. ANDNOC’s (Abu Dhabi National Oil Company) US$5 billion oil debt has been paid and returned to Iran. Shell’s US$2-billion debt, has been returned to Iran. India’s debt of US$6 billion is gradually coming back to Iran. One billion has been paid so far, and based on an agreement with India, the balance will be paid in its entirety in the near future.
6. Foreign Direct Investment is increasing
Foreign investors announced 59 new greenfield projects worth 12bn $ in 2016, more than the amount of capital expenditure announced in the previous six years put together, according to fDi Markets, an Financial Times data service. (FT, 19 March)
Examples: Total has signed a $2 billion deal to help Iran develop its giant South Pars gas field. Vodafone intends to work with an Iranian internet service provider to improve its local network. Siemens has fully engaged with Iran. Peugeot-Citroen signed a $450 million joint venture with Iranian automaker Iran Khodro to produce 200,000 cars per year by 2018. According to Industry Minister Mohammad Reza Nematzadeh, Iran is in talks to strike similar deals with other European automakers.
Bank of Industry & Mine before implementation of the JCPOA, could provide less than €700 million in funding each year. Since then the bank has provided €5 billion in funding to various projects, including steel mills and a new railway linking Tehran to Isfahan.
7. Renewal of air fleet underway (and improving transport infrastructure)
Airbus completed a deal to sell 100 jetliners to Iran, a move described by both sides as a major step toward revitalizing Iran’s aged commercial fleet after years of sanctions and economic isolation. Boeing to sell 80 aircraft to Iran, one of the most prominent commercial transactions between the United States and Iran in decades. The first 2 Airbus have been delivered in December 2016 and March 2017. Other projects are agreed in the railway sector. Major shipping companies enter Iran without any restriction or condition.
EEAS Iran Task Force, 29 March 207