ROME — When the last Iranian president touched down in the Eternal City for a U.N. summit in 2008, Italian officials and businessmen ran the other way. But they are already lining up for Hassan Rouhani.
The current Iranian president lands here Saturday as the man of the hour, with his first official European trip heralding the promise of Iran’s nuclear deal to jump-start an economy crippled by a decade of international sanctions while providing a boom for business in the West.
U.S. relations with the Islamic republic may remain relatively frosty, but Europe is rushing in where Washington fears to tread. Europe’s companies and countries are eager for a slice of post-sanctions Iran, leaving executives and officials jostling for face time with Rouhani to strike preliminary deals for what may be a bonanza of business worth billions of euros.
Back in Iran, hard-liners leery of any thaw with the West are arresting journalists and activists. But Rouhani’s tour, which was to include France after Italy, is offering a counterpoint to that crackdown: a glimpse into a world where Iran is no longer a pariah state.
Freed by the nuclear deal to extend a welcome, Prime Minister Matteo Renzi will guide Rouhani through the statuary and mosaics of the Capitoline Museums to mark the rekindling of the ancient ties between Iran and Italy — a modern industrial power that was once Tehran’s largest trading partner in Europe. The two are poised to sign a deal Saturday evening. Rouhani will also be whisked past Vatican City’s Swiss Guards for a tete-a-tete with Pope Francis.
Rouhani has dubbed the trip “a new beginning” for Iran and the European Union. He even set it up with an awkwardly friendly interview in Italy’s Corriere della Sera in which he managed to both denounce Israel and profess Iran’s “love” of Judaism.
“Iranian people can hate Zionist policies and Israel while loving Judaism, its prophets and the Book, at the same time,” he said.
At its core, however, Rouhani’s multi-day trip is all business — an event heralding Iran’s emergence from economic isolation. If and when Iran’s pledge to limit the scope of its nuclear program is verified next year, the Islamic republic could soon find itself with tens of billions of dollars worth of unfrozen assets. At the same time, European companies could see substantial sums long frozen by the Iranians unleashed for investment — enough cash, Tehran hopes, to launch an economic miracle in the Persian Gulf region.
Bilateral restrictions will continue to limit U.S. companies’ access to Iran. But the lifting of international sanctions would give the Europeans fresh entree to a burgeoning market of 77 million in a country poised to modernize its industries and infrastructure.
To lay the groundwork for investment and be the first through the door, hundreds of European companies have already sent representatives to buzzing Tehran, and even more are on the way. Official trade delegations led by high-ranking ministers have been sent to Iran from a growing list of European powers, including Germany, Italy and France.
The German state of Bavaria has announced the opening of a business office in Tehran. Italy, on the heels of a business mission in August, will this month dispatch a delegation representing more than 230 companies, including aerospace giant Finmeccanica, shipbuilder Fincantieri and the Prysmian Group, an energy and telecommunications business.
U.S. and Israeli critics of Iran’s nuclear deal with six world powers have been quick to remind Europe that until Iran complies with the terms of the agreement, the rules do not change. And if Iran violates the deal, sanctions could be quickly restored. But even some opponents grudgingly acknowledge a new era.
“Rouhani is coming for a victory round in Europe,” said Naor Gilon, Israel’s ambassador in Rome. “Undoubtedly, Iran is coming out of this more self-assured.”
Oil and gas, European business executives say, is only the beginning. They project that Iran will refurbish or extend 4,300 miles of railways, build 4 million homes, upgrade factory equipment, construct highways, expand Tehran’s international airport, renovate entire neighborhoods, purchase high-tech hospital equipment to attract medical tourism, and invest in modern machinery to ramp up production and exports of saffron, pistachios and grains.
“And more,” said an excited Licia Mattioli, a vice president with Confindustria, a powerful Rome-based association of Italian industries. Doing business with Iran “is not taboo anymore. You cannot be ashamed of it.”
Still, there remain signs that this is not entirely true. Some companies may be angling to enter Iran, but others remain reluctant. Confindustria, for instance, initially said Fiat would send a company representative with the Italian business mission to Iran this month. But a spokesman for the company quickly denied it would join the trip and said Fiat instead was taking a “wait-and-see approach.”
Rouhani will deliver a speech to UNESCO and meet with French business executives on Monday. But officials in Paris said his meeting with President François Hollande would focus on political and not economic issues, vowing that the French leader would press Rouhani on human rights and Iranian involvement in Middle East.
A general wariness of investing in Iran may also linger, especially for big banks. Germany’s Deutsche Bank, for instance, was fined $258 million by the United States this month for defying existing sanctions on Iran and Syria. Experts predict it may take years before Deutsche Bank and many other major European financial institutions are willing to finance large projects in Iran even after international sanctions are lifted.
“I don’t believe in all this talk of a gold rush,” said Michael Tockuss, director of the Iran-Germany Chamber of Commerce. “There will be lots of new investment. But big deals will still need improvements to privatizations and international transparency rules in Iran. It’s going to take a little bit before there’s a gold rush, and right now they’re still selling oil for less than $50 a barrel.”
Some companies are waxing poetic about the “new Iran” while others are taking a middle-of-the-road approach. Nicola Tognana, chairman of Tognana Superoof, a Treviso-based tile company, will be heading to Tehran this month to weigh the opening of a factory to capitalize on what some predict will be an Iranian building boom. He is enthusiastic about the prospects but also said he was reluctant to commit immediately.
“We’ll need to get a better understanding of this game over the next two to three months,” Tognana said.
Stefano Pitrelli in Rome and Virgile Demoustier in Paris contributed to this report.