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New perspectives for economic cooperation with Iran

The lifting of international sanctions will have a big impact on the economic relationship between Iran and the rest of the world.


Mohsen Pakparvar

Director of international economy and energy studies group, Institute for Political and International Studies (IPIS),

Peiman Seadat

Plenipotentiary Ambassador of the Islamic Republic of Iran in the Kingdom of Belgium, EU and the Grand Duchy of Luxembourg,

Benjamin Godel

Senior Manager, International Markets, Federation of German Industries (BDI),


See below for videos and presentations.

Session 1: The Iranian economy and the potential for cooperation with Europe

The event provided several interesting insights about Iran and its economy. In particular, four main aspects seem to constitute good reasons to attract investments from abroad and increase the level of economic cooperation with the EU.

First, a large, young and highly educated population that guarantees a significant level of human capital. Second, the strategic position of Iran makes it an ideal location for a regional transportation hub. Crossing the country would allow a reduction in transport costs by avoiding the expensive “ocean way”. The third aspect relates to the considerable stock of natural resources available: the country is rich in oil and gas and it plans to improve its energy efficiency. The final aspect is the development of infrastructure in different sectors: internet, airports, financial sector, etc.

Moreover, Iran has ambitious plans for the near future: a rate of economic growth of 8% to be achieved by 2030, a higher level of integration in international agreements, improvements in the level of social responsibility of the private sector and more care and respect for the environment.

The features and positive prospects of the country indeed create good investment opportunities and reasons for economic cooperation with the EU. However, there are two points on which the country should focus its efforts.

Notwithstanding its recent improvements (mechanising the majority of banking operations, introducing the use of electronic cards and showing a high level of liquidity) the banking sector still seems to struggle in playing its role as an intermediary in cross border transactions. This is to be attributed to the sanctions, which have only been partially lifted after JCPOA (Joint Comprehensive Plan of Action), as well as to the inability to guarantee a certain level of trust to foreign investors.

The second point concerns the political/economic situation of Iran, which makes investors still a bit doubtful. Past periods of economic stagnation, high inflation, fiscal imbalances, low level of economic integration and not too high levels of transparency are the most relevant.

It appears therefore that Iran is indeed on its way to increase its economic cooperation with the EU and western economies, but it needs to focus properly on domestic policy in order to face challenges in an effective way.

Session 1 notes by Elena Vaccarino, Research Assistant

Session 2: A focus on EU-Iran energy and automotive cooperation prospects

Iranian industry, having experienced a decrease in production due to sanctions, is mostly specialised in the production of automobiles, spare parts, oil and gas.

The automotive sector, which represents 18.8% of Iranian industry, is in expansion nowadays, and the goals for 2025 are to increase production and exports and improve the quality of manufactured goods. This market also represents a great opportunity for foreign investors due to large and easy access to energy and raw materials in the country. For what concerns the production of spare parts, after a fall in the last years, it is increasing from 2014. Some cooperation agreements with a number of European associations of spare parts producers are already in place, but the main 2025 goal is the establishment of a joint committee of spare parts and automobile producers.

Due to the abundance of resources and to the low production cost of oil and gas, these commodities constitute a great advantage for Iran. Moreover, the country plans to adopt policies to increase strategic reserves in order to influence the global markets of oil and gas and offer support to companies involved in exploration and production. Indeed, many countries are looking with interest at Iranian sources, aware that political turbulences in the region make the situation unstable and that financing and technology upgrades are needed to build pipelines for gas transportation to neighboring countries and Europe. Iran views Asian markets as the most appealing export destination for gas because of prices. Building corridors towards Europe is also not viable currently. However, liquefied natural gas can be a possibility, once the country has endowed itself with plants for its production.

Even though sanctions have been (partially) lifted, European companies are still hesitating to direct investments towards Iran, as three big challenges obstruct their way. The absence of trade credit insurance and the difficulties to find financial services represent structural problems, but Iran is likely to overcome these issues soon. The real challenge is the possible exposure of foreign firms, potentially entering the market, to US sanctions. However, a non-political solution to the issue exists: the creation of a list of projects compliant with sanctions and rules.

Session 2 notes by Domenico Favoino, Research Assistant

Video RecordingS

Session 1: The Iranian economy and the potential for cooperation with Europe

Session 2: A focus on EU-Iran energy and automotive cooperation prospects

Event Materials

Economic cooperation with Iran | Presentation by Marek Dabrowski
Iran Automotive Industry | Mohsen Pakparvar
Iran Energy | Presentation by Mohsen Pakparvar
Economic cooperation | Presentation by Benjamin Godel
Economic Cooperation with Iran | Presentation by Farhad Sharif