As Sanctions Impede Business, Where Next for Iran-Italy Relations?

Iran-Italy relations, which date back to the time of the Roman and Persian empires, are marked by important affinities. Historical and cultural traditions as well as commercial and economic connections have deeply shaped mutual perceptions. Unlike the other major EU countries, Italy is not seen as a former colonial power still trying to "dominate" relations with Iran, but rather is appreciated as a partner willing to expand tied based on mutual respect.

The legacy of Iran-Italy commercial ties begins in earnest with Enrico Mattei and Italian state oil company ENI. Mattei’s excellent leadership in the 1950s and 1960s strengthened Iran-Italy ties through energy cooperation. Mattei’s approach still influences the way most Italian companies engage their Iranian counterparts—with great respect and consideration. Iranian companies are inclined to deal with Italian companies because they talk a similar business language.

Back in 2003, the positive perception of Italy among European nations led Iran to insist that Italy join the European group pursuing the first nuclear talks. Despite the fact that the Italian government did not participate so as not to strain relations with the US already stressed by disagreements over the Iraq war, Iran’s point of view did not change. Rouhani’s choice of Rome as the first European capital to visit following the implementation of the JCPOA nuclear deal is indicative. More recently, Italy was asked by the E3 nations of France, Germany, and the United Kingdom to become a member of the new E4 group driving negotiations with Iran on Yemen.

Despite these strong relations, President Trump’s withdrawal from the JCPOA and his reimposition of economic sanctions, has introduced significant challenges for Italian enterprises. As with other European companies, Italian firms are unwilling to jeopardize their presence in the US market for the sake of opportunities in Iran.

While some firms have opted to remain—shipbuilder Fincantieri, railways company Ferrovie Dello Stato, and power giant Ansaldo among them—other companies have announced their activities are on pause. Italian oil giant has stated “We have no presence in the country” and Gruppo Ventura affirmed, “We were expecting to expand to Iran, build rails there. We are no longer going to proceed.” The state-owned vehicle intended to finance Italian projects in Iran, Invitalia, announced “the “project is on pause” and that the company is “waiting for the situation between the United States, Europe and Iran to be clarified.” One estimate suggests US sanctions have impacted EUR 30 billion of planned Iran-Italy trade and investment.

The US government’s decision to grant an oil waiver to Italy will probably mean little. There is no indication that Italy intends to use the waiver. In any case, major banks in Italy are still reluctant to facilitate trade.

Yet, Italy and Europe have every interest to see that Iran continues to be an important trading partner and a supplier of energy. Iran can be a source of stability in the region if positive commercial ties, help dissuade expansionist tendencies.  In order to maintain trade relations with Tehran despite US sanctions, different proposals emerged, including using Russia and other third countries as a trade intermediary as well as joining the special purpose vehicle (SPV) being developed by France, Germany, and the UK.  This is undoubtedly a very delicate set of challenges, as they involve the Italian government and its international alliances.

Italy is a particularly important partner for the development of Iran’s industry and infrastructure. Italy delivers high quality manufacturing technology and infrastructural works. The "made in Italy" concept has burnished the value of Italian exports. Italy exported over EUR 1 billion in machinery and transportation equipment to Iran in 2017.

However, given the current political situation, many commercial relationships with Iran have come to a momentary halt. The entrepreneurs and consultants I have interviewed have confirmed that at least since February 2018 commercial ties with Iran have weakened—banks lack the willingness to support exporters. Furthermore, the deterioration of Iran’s economy, including high inflation, points to insecurity in the investment environment. Tecon, a manufacturer of equipment for the footwear and leather goods industry, is but one example; due to the devaluation of the Rial, their products have become too expensive for Iranian buyers.

Today, the question is how Italy-Iran relations will develop. The Tehran-Rome axis remains mutually beneficial: to Italy for its important exports flow, to Iran for the economic and political advantage of being a partner of a Western country that can act as a mediator. This was clear during Iranian foreign minister Javad Zarif’s contribution during the Mediterranean Dialogues conference sponsored by the Italian Ministry of Foreign Affairs.

Hope for the future lies in the two populations’ intrinsic will to continue their mutual relations despite today’s uncertain and confusing scenario of international relations.

Photo Credit: IRNA

Culture and Tourism in Iran: Lessons from Italy

In this day and age, cultural tourism plays a crucial role in establishing relations between countries. Awareness is spreading about the amazing opportunities that a prudent enhancement of the cultural patrimony can deliver. The connections between diplomatic relations, commercial opportunity, and touristic exchanges are powerfully joined in the idea of cultural tourism.

Iran and Italy are two countries that are both heirs and custodians of a huge historic, artistic, and cultural heritage. In fact the preservation of such heritage has been recently been the basis for close collaboration. Italian archaeologists have worked on sites in Persepolis and Esfahan among others. The Citadel of Bam earned UNESCO World Heritage status shortly after the devastating 2003 earthquake, largely because of the reconstruction efforts of the Italian Istituto Superiore per la Conservazione ed il Restauro.

But cultural exchange is much more than a commitment to history. Cultural exchange can be a useful means of supporting the dialogue among civilizations necessary to establish a model for development and growth informed by and linked to a national heritage.

I would summon, in this regard, two scenarios where the Iranian culture has recently been able to introduce itself globally as an absolute excellency, while still showing openness to interaction with other national cultures, starting with Italian culture itself.

The first scenario is exemplified by the film industry, in which Iranian directors have been acclaimed among the world cinematic masters. These master filmmakers include Abbas Kiarostami and Mohsen Makhmalbaf, whose works have been applauded and awarded by the most important international film festivals, including the Venice Film Festival. Jafar Panahi triumphed in 2000, winning the Leone D’Or for his film The Circle. In 2008, Abbas Kiaorastami won a special honor for his remarkable contribution to cinema.

Iranian contemporary art has also made its way to Italy and the city of Ferrara, where, in 2010, six Iranian world-renowned women artists had exhibited their work as part of the Fourteenth Biennale Donna.

Reflecting on the origins of Iranian contemporary art, I also think about the exceptional importance of Iranian craftsmanship which constitutes a heritage of incredible artistic value by itself, and which should definitely be more acknowledged and appreciated worldwide, as it is one of the foundations of Iran’s national identity.

These are just a few examples of the relevance and the richness of the Iranian civilization, which could become the premise for a virtuous exchange between the civilizations of countries—even those seemingly different in regard to sensibilities and culture.  

On this point, I quote a passage from the memorable speech given by President Mohammed Khatami to the United Nations on September 5th, 2000, during a round table about dialogue among civilizations:

In order to provide natural unity and harmony in form and content for global culture and to prevent anarchy and chaos, all concerned parties should engage in a dialogue in which they can exchange knowledge, experience and understanding in diverse areas of culture and civilization. Today it is impossible to bar ideas from freely travelling between cultures and civilizations in disparate parts of the world. However, in the absence of dialogue among thinkers, scholars, intellectuals and artists from various cultures and civilizations, the danger of cultural homelessness seems imminent. Such a state of cultural homelessness would deprive people of solace both in their own culture and in the vast open horizon of global culture. 

While I was serving my country as Minister of Cultural Assets and Activities and of Tourism, I went on an official trip to Iran. On that occasion— and during a subsequent trip— I had the chance to recognize and appreciate the greatness of the Iranian cultural heritage. My experience made it clear that by leveraging strength of its cultural heritage Iran could stand to develop a valuable tourism model. As my former ministerial title demonstrates, the relationship between culture and tourism has been vital to Italy’s economy. The tourism sector contributes about 10% of the country’s overall GDP.  Iran ought to follow in the Italian model to protect its cultural heritage, even if the pursuit of economic interests is a primary aim.  

The bond between culture and tourism in Iran is clear and undeniable. Iranian artistic and environmental heritage represents one of the key resources for the creation of a sustainable tourism model, as it defines the country's identitarian traits as an attractive destination. If Iran’s heritage is properly utilized as one of the country’s fundamental touristic levers, inbound tourism would become an exceptional way to guarantee international awareness about its cultural assets, promoting efforts and providing funding to preserve and protect cultural heritage. The fruitful link between culture and tourism would emerge as a virtuous cycle, one that can enhance the potentialities of both areas, without undermining their complex and specific peculiarities.

I firmly believe that tourism related policies in Iran should follow the path of environmental, cultural and social sustainability in order to produce vital income and employment. Looking to successful practices in Italy would be my best possible advice. Future Iranian tourism policies must be correctly devised, so that development is truly respectful of the artistic and historical landscape.

In this way, Iranian tourism could represent both a means of economic growth and means to present a new image of Iran, which might overcome the prejudices towards the country to which Western nations are often induced. The point is to consider every cultural asset as a unique public good, deserving of protection and investment.

Such a commitment, by the way, is already written in the history of Iran, with its tradition of public endowments. Devising renewed commitment to public goods, and how they ought to be developed involves the analysis of the whole Iranian political, economical and social system. Cultural and environmental assets cannot be mere treasures, tightly owned and exploited. 

Tourists are becoming harder to please as consumer characteristics like income, tastes, and habits diversify. Such demand could be only satisfied by similarly diversifying the possible combinations of Iran’s cultural offerings, adjusting them to more and more complex requests. To do this work, private enterprise will need to bring its energy and expertise to the table, forging new public-private partnerships. It would be also advisable to enact specific tourism policies, which promote innovation through the application of new technologies.

The future of Iran's inbound tourism will be determined by the ability to build networks, which must reflect the true potential of a country both rich in history and eagerly awaiting the future. Government bodies, private businesses, community organizations, academic institutions, and other stakeholders must actively seek synergies in the spirit of cooperation. The project to preserve and promote Iranian cultural heritage is both crucial and thrilling. 

Photo Credit: Farzad Gavari