Peugeot races to Iran

Peugeot races to Iran
Iranian President Rouhani met with business leaders in France ahead of his meeting with President Hollande, and was welcomed with a lucrative car-making deal with Peugeot.
3 min read
28 January, 2016
Peugeot, partner Citroen and Iran's Khodro will produce 200,000 cars a year [AFP]
French carmaker Peugeot announced a joint venture with an Iranian manufacturer worth 400 million euros ($436 million), in a deal signed on Thursday during Iranian President Hassan Rouhani's visit to France.

The deal will see Peugeot work with the manufacturer Iran Khodro, with the first vehicles expected to roll off the production line in 2017.

It makes Peugeot the first Western carmaker to announce a return to Iran since sanctions were lifted against the country after it signed a deal to limit its nuclear programme.

Peugeot and its partner brand Citroen will work with Iran Khodro to produce 200,000 vehicles a year using parts manufactured in Iran. Peugeot pulled out of Iran in 2012 as Western sanctions imposed over the Islamic Republic's nuclear programme began to bite.

Carlos Tavares, chairman of the PSA Peugeot-Citroen managing board, said the new enterprise would be a 50-50 joint venture, aiming to produce three new models of cars starting late next year.

"We must go beyond those wounds," caused by sanctions, Tavares said. Before 2012, Iran was Peugeot's second-largest market after France.

Rouhani arrived in Paris on Wednesday from Rome, where billions of euros' worth of trade deals were reached, and was formally greeted in France on Thursday morning at the gold-domed Invalides monument where Napoleon is buried.

More business, new sanctions

Rouhani's visit was also met with protests, notably over recent executions in Iran. A nearly naked woman hung from a fake noose off a Paris bridge Thursday next to a huge banner reading "Welcome Rouhani, Executioner of Freedom."
France is available for Iran
- French Prime Minister Manuel Valls

But the thrust of the trip was about improving economic and diplomatic relations after years of hostility.

"France is available for Iran," French Prime Minister Manuel Valls said alongside Rouhani and a large group of high-level French executives interested in resuming trade with the long-isolated nation of 80 million people.

Later, Rouhani and French President Francois Hollande will oversee a ceremony for signing some 20 bilateral accords.

But France has also asked its European Union partners to consider new sanctions on Iran for its recent ballistic missile tests, officials have told The Associated Press. The possibility highlights continued suspicions between Iran and the West - despite the recent agreement curbing Iran's nuclear programme that prompted the lifting of earlier sanctions.

Iran's state-owned newspaper reported on Thursday that several European airlines would resume their flights to Iran, also grounded amid the nuclear sanctions.

The EU and the US officially lifted sanctions on Tehran on 16 January, in exchange for UN certification that Iran had scaled back its nuclear programmes. Iran said those programmes were peaceful - but critics feared Tehran wanted to build nuclear weapons.

While those international sanctions were lifted, Iran's latest ballistic missile tests have prompted new US sanctions.

Paris also wants to draw Tehran into a role as peacemaker in a Middle East that is fraught with civil war in Syria, where Iran has played an active role in support of President Bashar Assad, and in Yemen.

France, which has deep ties with Arab countries, also conducts a delicate balancing act in the region. Last week, French Foreign Minister Laurent Fabius visited Sunni-majority Saudi Arabia, Iran's fierce rival, and Paris will shortly welcome the Saudi crown prince.