Iran Reaches Deal With Renault Despite New U.S. Sanctions

By Anonymous

Iran Reaches Deal With Renault Despite New U.S. Sanctions

Still, the agreement to establish a joint venture with a government-run conglomerate is welcome news for Iran.

Renault has pledged to open two factories with Iranian partners.

One partner, the Industrial Development and Renovation Organization, a government conglomerate known as IDRO and which controls 117 companies, was long under sanctions by the United States and Europe which accused it of supporting Iran’s missile program. Those sanctions were lifted under Iran’s nuclear agreement with world powers last year, which allowed Renault and other foreign companies, including the American plane manufacturer Boeing, to do business with the country.

Officials of the Treasury Department, where the Office of Foreign Assets Control oversees the sanctions imposed on Iran, declined to comment.. But the Industrial Development and Renovation Organization Company (IDRO) is listed on the Treasury Department’s website as exempt from sanctions under the nuclear deal.

Sanctions lawyers in the United States said Renault’s decision to proceed with the joint venture indicated it was confident that the nuclear deal would survive, despite the Trump administration’s threats to withdraw from it.

Farhad Alavi, managing partner of the Akrivis Law Group in Washington, said Renault’s decision also signaled that it had “likely undertaken a great deal of care to ensure that it is fully compliant.”

Another major French carmaker, Groupe PSA, which produces brands like Peugeot and Citroën, has stepped up its activities in Iran since the lifting of the sanctions last year, while the French energy giant Total signed a deal with Tehran last month to lead a natural gas project.

But despite the various agreements, Iran remains a difficult and opaque place to do business. Corruption is widespread, and political opposition to foreign investment can raise obstacles.

Renault said in a statement that the expansion would promote its brand in Iran. The carmaker sold an estimated 68,000 cars in Iran in the first six months of this year, more than doubling its sales compared with the period a year earlier. Renault said it now has about 10 percent of the Iranian market for autos.

The French company will hold a 60 percent share in the joint venture, according to Mansour Moazzami, the chairman of IDRO. The rest will be split evenly between the conglomerate and the other partner, Negin Khodro, a private company that represents Renault in Iran.

Last week, IDRO announced another joint venture, this time with Transmashholding, Russia’s largest rail equipment supplier, to develop Iran’s dilapidated railway system. As part of the $2.5 billion deal, the Russian company will own 80 percent of the joint venture.