- May 9, 2016
- Posted by: admin
- Category: Market Update
Iranian President Hassan Rouhani is dragging a bulging wallet around Europe with a smile like the cat who’s got the cream after economic sanctions were lifted against his country.
In a shopping binge, Rouhani has bought more than 100 Airbus passenger jets in France, while signing deals worth billions more for vans and buses with Fiat, the Italian car maker.
Iran is outspending rival Middle East oil power Saudi Arabia after the West unlocked assets worth billions of dollars frozen in bank accounts under the sanctions imposed on his country for allegedly trying to develop nuclear weapons.
After years of tense negotiations, inspections and accusations, Iran finally stepped back into the light of world trade with Rouhani’s trip.
Besides filling the Fiat and Airbus order books, he has also signed a $2 billion deal for steel furnaces and rolling mills and $5 billion on oil pipeline equipment.
The windfall will also allow the government to build infrastructure projects such as bridges, roads, schools and hospitals.
More importantly, many of Iran’s banks have gone to the wall during the sanctions as they were cut off from the world’s money supply system and vital access to foreign currency.
The banks will receive a fresh injection of capital and are now welcome on the world markets.
The government ordered many to keep lending even though businesses and customers could not afford to repay their debts.
Around 20% of all loans are suspected to have turned bad.
Missing from the spending bonanza are companies in the USA- although Fiat is owned by car giant Chrysler.
Message to Washington
Rouhani may have met the Pope and other European leaders and dignitaries, but he sent a message to Washington if the US wants to do business with Iran.
“I can see no solution to any problems in the Middle East for America without help from Tehran,” he said.
“Our countries may have a closer relationship, but that depends on the attitude of the US.”
He also had a dig at religious rivals Saudi Arabia for the country’s military intervention in the conflict in Yemen.
The US has yet to fully lift sanctions against Iran. Washington accuses the country of funding and giving a home to terrorists.