EghtesadOnline: The Dutch Embassy in Tehran brought together businesspeople from Iran and the Netherlands on Wednesday to reinforce commercial and financial ties between the two sides, amid tightening US sanctions against Iran.
Present at the meeting were Dutch Ambassador to Iran Jacques Werner, Holland’s agricultural attaché in Tehran, Hans Smolders, Dutch economic attaché in Tehran, Taco Westerhuise, managing partner of Cyrus Omron International Company, Rokneddin Ansari and managing director of Atra Andish Rad Strategic Consulting, Maryam Taqavi.
Officials and experts from Iran’s Ministry of Industries, Mining and Trade and the Trade Promotion Organization of Iran, as well as a host of Iranian and Dutch businesspeople active in economic sectors, such as water, energy, agriculture, medical equipment and pharmaceuticals, also attended the meeting.
“Both the EU and the Dutch government remain strongly committed to JCPOA [Joint Comprehensive Plan of Action—the formal name of the nuclear deal Iran signed with world powers] and will also keep supporting trade relations with Iran,” Financial Tribune quoted Werner as saying.
“As such, the range of Dutch financial and guarantee instruments remain available for business in Iran, too. At present, hard work has been done on special purpose vehicles: INSTEX [by Europeans] and STFI [by Iranians]. The Netherlands has the intention of becoming part of the instrument alongside other European partners.”
France, Germany and Britain have opened a new channel for non-dollar trade with Iran, dubbed Instrument in Support of Trade Exchanges to avert US sanctions, although diplomats say it is unlikely to allow for the big transactions Tehran expects to keep a nuclear deal afloat.
INSTEX is headquartered in Paris with a German chief executive officer. Germany, France and the UK will be shareholders.
A mirror company was officially registered in Iran late last month to partner with the European trade mechanism. The Special Trade and Finance Institute was officially registered as a private company in Tehran. It is the reciprocal entity of INSTEX.
The company provides payment settlement services to legal and natural importers/exporters, as well as domestic and foreign banks. It will seek to build relations with its European counterpart and monetary channels in other countries.
The Dutch ambassador to Tehran added that Holland currently has two programs for Dutch companies running in Iran, namely cooperation in the energy market and in waste and wastewater industries.
“Collaborations have also been defined in the fields of food safety, geo-data for agriculture, climate change policies, technology, innovations and protection against floods,” Werner said.
“Among the strong points of Iran is that it has 80 million consumers, a highly educated population, a successful diaspora, wide industrial base, abundant natural resources and geographical potentials to become a Central Asian distribution hub. And there is a hunger for technologies, which is a huge advantage of Dutch products, services and expertise.”
Decline in Trade
Asked why Iran’s trade with the EU, the Netherlands in particular, has fallen over the past few months, the Dutch economic attaché to Iran said the Netherlands has been at the forefront of most EU countries in terms of trade.
Latest data show trade between Iran and EU member states during the first quarter of 2019 stood at €1.63 billion to register an over 69% plunge compared with last year’s corresponding period.
According to Luxembourg-based Directorate of European Commission, Eurostat, Iran exported close to €217.73 million worth of commodities to the EU during the three-month period, indicating a 92.5% fall compared with the similar period of the previous year.
Exports to Greece, France and the Netherlands fell by 99.14%, 99.6% and 95.79% YOY respectively, which are the sharpest among EU member states.
Imports from the EU dropped by 40.5% to stand at more than €1.41 billion during the three months.
The top three exporters from the European bloc to Iran were Germany with €459.84 million, Italy with €219.79 million and the Netherlands with €115.61 million.
“We are aware of the figures and they worry us. But what the figures actually show are merely the statistics of the payments that are done. They are obviously not good but there are lights in the darkness,” Westerhuis said.
“For instance, there are different companies in Iran that are investing on the ground and their vision is more long term. This is also my advice for all the companies that are coming. Don’t think you just come and put a number of containers here in the port and get your money from the bank and that’s it.”
The companies that do well and are still here on the ground, including major Dutch companies, are the ones that have a long-term vision, the Dutch economic attaché said.
“At present, these companies are not repatriating their money, but are reinvesting the money they are making in their Iranian facilities. This is something that’s going on, yet, it does not get reflected in the statistics obviously,” Westerhuis said.
The official noted that the embassy advises businesspeople on alternative ways of conducting trade with Iran, one of the main ones being INSTEX.
“The sooner INSTEX starts working, the better it will be for everybody. It will not be a solution for every trade problem obviously. At present, it will be particularly focusing on humanitarian sectors. INSTEX is not just a practical solution, but it is also a psychological solution. This means that trade will be going on.”
The Dutch envoy told Financial Tribune that at the end of the day, every company makes its own decisions as to whether to do business in Iran under the current circumstances.
“But this is why we have commissioned a report on alternative ways of trade to avoid over-compliance to the sanctions and some companies have hopefully picked up on that advice,” he said.
Agrifood Trade Stabilizes
Smolders, the Dutch agricultural attaché in Tehran, said that it is true that exports from the Netherlands have fallen drastically compared with last year, yet there has been stabilization in the agriculture and food sectors.
“If you separate that from other trade, you see that trade in that particular sector and probably also in medicines has been stabilized, which means there are companies finding other ways for payments.”
Smolders noted that the Thursday meeting between representatives of businesses involved in Iran-Holland trade was aimed at raising awareness about financing and ways to transfer money.
“We will do the same in the Netherlands for our business community very soon about business with Iran. We are anxious to see how INSTEX will be developing. Hopefully, the first transfer can be done in a couple of weeks so then we can go to our businesspeople and give them more information and instructions on the matter,” he said.
Ansari, a legal, finance and business advisor with Cyrus Omron International Company, said another reason for the drastic fall in trade is that the Iranian side and their partners are being more cautious at these times and are sometimes postponing payments until a time when things get more stable, predictable and propitious.
“They are waiting to see how things unfold, but this does not mean trade is not happening; rather, the statistics do not cover all the trade that has been going on during the past few months,” he said.