By Benoit Faucon and Sarah Kent
Western firms have piled into Iran in the two years since world
powers agreed to lift sanctions. Now, as President Donald Trump
deals a blow to that deal, executives must decide whether to stay
the course.
Mr. Trump said Friday he won't recertify the 2015 international
deal struck with Tehran, which lifted sanctions in exchange for
promises by Iran to curtail its nuclear program. He also vowed to
cancel the deal himself if Congress and U.S. allies don't act to
address his concerns about the accord.
The moves stopped short of pulling the U.S. out of the deal. But
they send the clearest signal yet that the Trump administration is
serious about considering reimposing sanctions, raising the risk
for companies doing business in Iran of falling foul of such
restrictions. U.S. Secretary of State Rex Tillerson said the steps
announced Friday shouldn't affect American firms that have applied
for special licenses to do business authorized under the nuclear
deal.
Boeing Co. has such a license, after agreeing last year to sell
dozens of commercial planes to Tehran.
Many other companies, particularly European ones, have rushed to
take advantage of Iran's large market since the deal was struck
under the Obama administration. Since the election of Mr. Trump, a
longtime critic of the deal, and amid recent rhetoric in Washington
that the deal could be re-evaluated, some of these companies have
already had second thoughts.
In recent months, after Mr. Trump said he was considering
pulling out of the deal, France's Orange SA put on hold preliminary
efforts to buy a piece of Iran's largest cellular operator, Mobile
Telecommunications Co. of Iran, according to people familiar with
the matter. Orange had accelerated its attempts to expand into Iran
in 2016.
An Orange spokesman declined to comment Friday.
Renault SA has built up capacity to make 200,000 vehicles a year
in Iran. It said in August it would invest in a factory that would
produce an additional 150,000 vehicles a year within 18 months, in
a joint venture with state-owned Iranian conglomerate Industrial
Development & Renovation Organization and Parto Negin Naseh, an
importer of Renault products in Iran.
Speaking to reporters in Paris earlier this month, Carlos Ghosn,
head of the Renault-Nissan Alliance, said he would wait to see
exactly what Mr. Trump would say before making any decisions, but
that reimposing the sanctions may "put off some investments that we
firmly intend to do."
Still, he said any investment halt would be temporary. "If we
cannot get to work immediately, we will work in one, two or three
years," he said. "I do not think that this situation can last
forever."
The Trump administration has set upon a complicated path
requiring negotiations with Congress and European allies. That all
adds to uncertainty for companies eager for clear signals about
which way Washington is headed, and whether new sanctions are
really possible.
Amid the uncertainty, Western companies already working in Iran
are likely to sit tight amid all the uncertainty. Firms long
tempted by Iran but waiting for clearer direction from the new
Trump administration are likely to take further pause.
"There was a glimmer of hope, but it's like blowing out a small
candle," said Nigel Kushner, chief executive of London sanctions
expert W Legal. "Those who were sitting on the fence will now come
off the fence."
Big energy companies like Royal Dutch Shell PLC, Eni SpA of
Italy and Norway's Statoil ASA have told advisers they are unlikely
to strike deals in Iran if Mr. Trump's actions suggest an eventual
move toward reimposing sanctions, people familiar with the matter
said.
"If there is a chance of sanctions coming back, they are
unlikely to touch it," said Helima Croft, the chief commodity
strategist at RBC Capital Markets. "The U.S. holds a pretty big
stick."
Mr. Trump's move is unlikely to affect energy deals already in
place in Iran, such as French oil giant Total SA's $1 billion
agreement to develop an Iranian gas field in July. The deal gave it
access to South Pars -- a gas field under the Persian Gulf that is
one of the world's largest. The company will operate the field in
partnership with China National Petroleum Corp. and Iran's
Petropars.
Total is using Chinese banks to finance the deal, without any
ties to the U.S. and its sanctions on the use of dollars to finance
Iranian transactions, according to people in contact with the
company. Total declined to comment.
BP PLC, which built Iran's oil industry, has said it has
priorities beyond that country.
Shell signed a preliminary deal to explore opportunities in
Iranian oil fields late in 2016, but the company has yet to
sanction any real investment.
"We continue to explore the role Shell can play in developing
Iran's energy potential within the boundaries of the law," a Shell
spokesman said.
Boeing and Airbus SE have been among the highest-profile deal
makers in Iran. Boeing has committed to supplying 80 commercial
jets, at a list price of about $17 billion, to Iran Air, the
state-owned airline. The first is set to arrive in 2018.
Airbus agreed to sell 100 planes to the airline for a list price
of $20 billion. It has delivered one of those, while two other new
Airbus jets have arrived in Tehran from an aviation leasing
company.
European turboprop maker ATR began delivering aircraft to Iran
under a separate deal.
The Obama administration issued export licenses to Boeing and
Airbus in 2016, allowing them to deliver aircraft. Those licenses
would have to be specifically revoked to get in the way of future
deliveries, executives believe. Both Boeing and Airbus had no
immediate comment on the matter.
Robert Wall, Asa Fitch,
Nick Kostov
and
Nina Adam
contributed to this article.
Write to Benoit Faucon at benoit.faucon@wsj.com and Sarah Kent
at sarah.kent@wsj.com
(END) Dow Jones Newswires
October 13, 2017 14:03 ET (18:03 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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