Business Czech Republic prepares for export boom to Iran
With the ending of current sanctions expected to come as soon as the start of next year, Iran is now the target for trade delegations and missions from around the world. The Czech Republic is no exception and, after a ground breaking visit by the foreign minister, is now looking at the practical steps needed to exploit the opportunities when full two way trade resumes.
The visit to the 80-million strong resource rich country by foreign minister Lubomír Zaorálek in September was seen as a breakthrough in putting relations between Prague and Tehran on a better footing. Since then, the Czech Republic has been working on the basics of what is needed for full blown bilateral trade and the sectors that are most likely to benefit.
A new economic agreement between the countries and one offering investment protection for both sides are some of the priorities that could be pushed through fairly quickly. Czech business sectors that look like they could most profit from an end to sanctions are engineering, energy and transport infrastructure, those offering hospital and other healthcare facilities to Iran’s relatively backward services, and the food processing sector.
Deputy foreign minister responsible for relations with non-European countries and economic diplomacy, Martin Tlapa, was one of the key speakers at the conference. He believes that Czech firms can build on solid foundations in Iran.
“The Czech Republic, former Czechoslovakia, has diplomatic relations 1925. So we are one of the countries with the longest relations with the country [Iran]. Despite circumstances, the links and the name of the Czechoslovakia and the Czech Republic, like Škoda and Bat’a, are well known in the country. I think there were a lot of deliveries in the past of machinery and for the modernization of the Iranian economy, so we hope that we can share that value in the future.”
One of the main questions though is whether Iran’s economy, restricted so long by foreign sanctions, will be really be the bonanza for Western companies that it is being portrayed. Without optimal oil and gas export earnings for many years, Iran’s state and private coffers are not that full, so deputy minister Tlapa says Czech companies should be cautious about how potential Iranian partners can finance deals.
“I think that the timing of resourcing on the Iranian side is an issue and we hope that because resources are a strong part of the Iranian economy that it will be possible. Of course, it is a limitation that has to be a part of the whole evaluation of the projects and that is something that we suggest be taken into account when the businesses are talking about future contracts and that they use all the financial instruments to that they can be on the safe side of the road.”
With that in mind, Czech state advice, aid, and safety nets for exporters are being readied. It was announced Monday that the Czech state export insurer, EGAP, is ready to boost its budget eightfold next year, to 5.24 billion crowns, for underwriting Czech exports to Iran.