As the future of the Iran nuclear deal looks increasingly uncertain, European leaders must take measures to protect economic and political relations with Iran. Without European support for Iran’s energy sector, the JCPOA remains fragile and open to further setbacks. Following the announcement of the EU’s External Affairs Chief, Federica Mogherini, of a new ‘special purpose vehicle’, and with the deadline for re-imposition of US sanctions looming, all eyes are on the European-Iranian relationship.
The European Leadership Network’s Policy Fellow, Axel Hellman, alongside Economist, Dr Bijan Khajehpour outline the strategic parameters to European investment in Iran’s energy sector, and report a significant overlap between Iran’s plans for the sector and European priorities.
The report draws attention to the role of Small and Medium sized enterprises (SMEs) and suggests that, if supported by adequate financial and legal structures, they have the potential to play a significant role in maintaining trade between Europe and Iran.
A future for EU-Iran energy cooperation:
- The most promising channel for future cooperation between Iranian and European companies is the advancement of relations between European SMEs and Iran private sector companies.
- The proposed European development of a special purpose vehicle (SPV) can act as a platform to facilitate trade paving the way for transactions to be processed with minimum interaction with Iranian banks
- Tehran’s emphasis on European technology in its energy sector is the desire to increase efficiency, especially in the recovery of upstream production; EU countries have a strong track record in optimising their energy mix
The opinions articulated above also do not necessarily reflect the position of the European Leadership Network or any of its members. The ELN’s aim is to encourage debates that will help develop Europe’s capacity to address pressing foreign, defence, and security challenges.