Italy Gives Iran $3 Billion Line of Credit

Iran nuclear deal allows international corporations, governments to pursue deals with Islamic Republic

Hassan Rouhani, Paolo Gentiloni
Hassan Rouhani, Paolo Gentiloni / AP
August 6, 2015

Italy has agreed to give Iran a more than $3 billion dollar line of credit following several meetings this week between senior Iranian and Italian officials, according to Persian language reports.

Federica Guidi, Italy’s minister of economic development, told reporters after a meeting with the Iranian oil minister that Italy has agreed to lend Iran a three-billion Euro line of credit, which amounts to nearly $3.3 billion, according to reports issued by Iran’s state-controlled media

The rush to conduct business with Iran comes on the heels of a recently signed nuclear accord that will lighten economic sanctions on the country and permit international corporations and governments to pursue lucrative deals with the Islamic Republic.

The Italian insurance company SACE was also reported to have signed an agreement with Iran’s Central Bank, which had for years been blacklisted as a result of sanctions.

Analysts following the resumption of trade with Iran expressed concern that the quick rush to do business with the rogue regime could interfere with potential efforts to reimpose sanctions on Iran should it violate the nuclear accord.

The Italian foreign minister and the CEO of the Italian energy company ENI, which has long come under scrutiny for its business dealings with Iran, also were present in Tehran for meetings this week.

Iranian oil minister Bijan Namdar Zanganeh met with Italian Foreign Minister Paolo Gentiloni and Guidi and Thursday. Following the meeting, the sides announced that ENI would construct petrochemical units for Iran.

"We also negotiated about petrochemical industry and asked them to attend new move in this industry," Zanganeh said after the meeting, according to Iran’s Fars News Agency.

Iran also "invited Italian companies to participate in the field of manufacturing necessary equipment of oil industry and cooperate with Iranian companies in this field," according to the report.

Trade between Italy and Iran is booming, according to Iranian officials.

"The Iran-Italy trade level is above normal, and the two countries are planning balanced and long-term mutual economic relations," Iranian Foreign Minister Javad Zarif was quoted as saying earlier this week following a meeting with the Italian foreign minister.

Iranian officials estimate the level of trade between the two countries to be about $1.5 billion. They intend to double that figure in the near future.

Saeed Ghasseminejad, an Iran expert at the Foundation for Defense of Democracies, warned that this type of trade could prevent nations from ever reimposing sanctions on Iran should it violate past agreements.

"President Obama’s promise about the snapback sanction has no truth in it," Ghasseminejad said. "When international companies go to Iran and commit themselves and their shareholders to long-term multi-billion dollar investments, there will be no snapback sanction mechanism."

"It took the U.S. almost a decade to convince Europeans to leave Iran’s market, as the European companies were deeply invested in the country. Those who promise an immediate return of sanctions in future are either naïve or they are not telling the truth," he said. "Many of the delisted companies were not sanctioned for the nuclear-related reasons and the decision to delist them is not a wise one."

Under the parameters of the recently inked nuclear deal, economic sanctions on a nearly $100 billion empire owned by Supreme Leader Ali Khamenei will be lifted.

Sanctions on Iran’s Revolutionary Guard Corps, which operates a vast financial network of companies and organizations, will also be lifted as part of the deal.