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After nuclear deal, Italian companies target Iran and expect exports to grow to €3.8 bn in 2018

by Matteo Meneghello

Italian companies are preparing to leave for Tehran. Following the easing of sanctions against Iran decided in the nuclear deal signed yesterday in Vienna, operators expect exports to grow to up to €3.8 billion in 2018 (from €1.156 billion currently), according to forecasts by SACE, the Italian export credit company fully-owned by state-backed lender Cassa Depositi e Prestiti.

Economic Development Minister Federica Guidi said yesterday that the goal is to return to “past levels.” The ministry is considering organizing in the coming weeks an economic and business mission to lay the foundations for such expansion. In pole position are companies active in the oil and gas sector and the machine tool industry, the two sectors penalized the most by the sanctions. Machine tools (which account for 57.9% of current Italian exports to Teheran) in the past five years have seen the value of goods sold halve to less than €700 million from €1.3 billion. Transportation vehicles, steel and agricultural goods also suffered a slowdown, according to SACE.

The food industry stopped growing as a result of sanctions. Without the embargo, Italy could have enjoyed higher exports for a value of around €17 billion in the 2006-2018 period.
All the requisites are now in place to restart business. “The deal with Iran represents, for Italy, a possibility to return with its business potential in a very important market that counts today 80 million of potential consumers,” Guidi said. The Economic Development ministry is “optimistic” about the economic opportunities that could come from reopening trade with Iran.

“Italy was Iran’s first economic and trade partner before the sanctions: products and know-how are still very appreciated,” the minister said. Among the industry operators in the sectors of oil and gas and power generation interested in new commercial opportunities with Iran is Alberto Presezzi, head of Lombardy-based Bruno Presezzi (power generation), which during these years has never interrupted its relations with Iran. Yesterday’s deal certainly is a step forward for companies active in this delicate sector.

“Now everything will be easier, thanks to the large funds that will surely flow to the market,” he said from Tehran. “Here people celebrate in the street, expectations are very high,” he said.

SACE however sounds a cautious note. “From 2006, Italy has lost many positions, despite remaining the ninth-largest exporter to Iran,” analysts said. “Gaining market shares will not be easy, considering that competitors like China, India, Russia and Brazil suffered much less limits in the past years, securing an important position in the country.”