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Iran: Europe Embraces Reformers

The visits of the Italian and German foreign ministers to Tehran in recent days underscores European states' intention to embrace Iran's reformers. It also points up European states' desire to follow their own policy, distinct from that of the United States. RFE/RL correspondent Charles Recknagel reports.

Prague, 7 March 2000 (RFE/RL) -- German Foreign Minister Joschka Fischer wraps up a visit to Iran today which follows on the heels of Italy's Foreign Minister Lamberto Dini and seems intent on delivering the same messages.

Fischer said at a joint press conference today with Iranian Foreign Minister Kamal Kharrazi that the time has come for the two countries to rebuild their historic relationship.

And he said that Iran's recent parliamentary polls -- in which reformists won a majority of seats -- have strengthened the country's democratic credentials in Europe.

Dini, in Tehran over the weekend, was equally supportive of changes in Iran. He praised the conduct of last month's election and said Rome is intent on increasing its ties with Tehran.

Other leaders of European states are likely to follow Fischer and Dini to Tehran soon. Dini confirmed over the weekend that British Foreign Secretary Robin Cook will come in spring, at a date still to be announced.

Analysts say that the visits show the Europeans are determined to seize the moment following the reformists' victory to build their commercial relations with Iran. And they are doing so despite any past political disputes with Tehran and despite the continuing disapproval of Washington. The United States -- under what is known as the D'Amato law -- punishes firms that do business in Iran's energy sector, by restricting those firms' activities in the U.S.

European investment in Iran has grown steadily over the past years, as longstanding political disputes, such as the Islamic death sentence the Iranian supreme leader laid on British writer Salman Rushdie, have been resolved or shelved.

Olivier Roy, a regional expert at the Centre National de la Recherche Scientifique (National Center for Scientific Study) in Paris, told RFE/RL by phone that most European countries now see no political barriers to strong trade ties with Iran.

"A normalization [of political relations] between Europe and Iran has already been in place for about a year and a half, since the Iranian state undertook not to apply the fatwa against Rushdie. The victory [last month] of the liberals has mostly been a psychological encouragement ... which assures now that [the European] public is no longer opposed to Iran in any way."

Today, Italy is one of the biggest importers of Iranian oil. And according to official figures, Italy exported $400 million worth of materials and equipment to Iran last year.

Germany was until recently Iran's biggest European trading partner, a position it has since lost to Italy because of a bitter quarrel with Iran over the Mykonos affair. In the Mykonos case, a German court linked the 1992 assassination of Iranian dissidents in Germany to high-level Iranian officials, causing a downward spiral in bilateral relations. That was later aggravated by the arrest of a German businessman in Tehran on sex charges in violation of Iran's Islamic code. The businessman was released in January after a two-year ordeal.

France, too, has shown strong interest in trading with Iran. The French energy giant Total has signed deals in recent years to develop Iranian oilfields despite U.S. sanctions under the D'Amato law. So far, the U.S. State Department has waived any punishments for the actions.

Other recent signs of European interest have been a major contract for the French engineering group Alstom to provide locomotives to Iran's state railway company. And Iran's car market, though still highly protected, has attracted European manufacturers like France's Peugeot-Citroen group.

But even as European interest in investing in Iran now seems unbridled, it remains to be seen how much European firms will actually invest in the country. Roy says that will depend on a large part on Iran's own ability to carry out structural reforms of its economy. He says the reforms are needed to give European companies the assurance they can profitably do business there.

"Legislative changes are necessary; it is not only a question of political will. Iran must adopt new legislation authorizing and guaranteeing foreign investments. The Iranians have talked about doing that but ... even among the liberals there are people who are opposed to opening the country to foreign capital. It won't be through the kind of bilateral negotiations [we are seeing] today that Iran will make progress on these economic issues. First the Iranians have to modify their legislation."

He continues:

"The new [reform-majority] parliament is very important, but we have to wait to see what will come out of this new assembly on the economic level. Because the conflict between reformers and conservatives does not exactly replicate the conflict between partisans of privatization and opening-up of the economy and partisans of a predominant role for state ownership."

As Europe and Iran talk of increased trade, Roy says few European companies today feel constrained by continuing U.S. sanctions on commerce with Iran. He says that European governments have adopted a policy of leaving it to individual firms to challenge the sanctions by their own actions. If they get into trouble with Washington, the European capitals -- and the European Union -- pressure Washington not to take punitive measures.

"The Europeans leave the choice to their companies. It's up to them to decide whether or not to ignore the sanctions. But politically, the Europeans have decided to contest the D'Amato Law. So, the companies are assured of political support from the European states in the event they are punished under American sanctions. But the companies can still have problems while they wait for the pressure from their governments to take effect in negotiations with the United States. That means there's a risk for the companies even if they have political support on the part of Brussels [the European Union]."

Fischer finishes his two-day visit to Tehran today, the first by a German foreign minister since 1991. Dini concluded a three-day visit on Monday, just a few hours before his German counterpart's arrival.