Lebanon eyes share in sanctions-free Iran

Friday 23/10/2015
Banking on Iran

BEIRUT - Lebanon is counting on doubling trade with Iran a short time after the Is­lamic Republic is relieved of Western economic sanc­tions, while circles friendly with Tehran call for a revival of some of its old promises, including the army’s provision with weapons.
Iran is stepping up efforts to im­plement a landmark nuclear deal by January to benefit from sanctions relief, with European companies lining up for what could prove to be the most attractive opportunity in frontier markets globally.
On October 18th, Iran is to begin taking steps to meet its obligations under the July nuclear accord and the United States will issue waiv­ers for specific sanctions. However, the defining moment will come when the International Atomic En­ergy Agency verifies that Tehran has taken the steps outlined in the agreement.
Lebanon counts on doubling its $100 million annual trade with Iran, according to sources at the Beirut Chamber of Commerce, Industry and Agriculture. However, banking ties, broken due to curtailing sanc­tions imposed by the United States on Tehran in 2007 to curb its nucle­ar ambitions, must first be restored.
“Lebanon banks had to sever their ties with the Iranian banks, fearing US retaliation if they didn’t,” a source with the Association of Banks in Lebanon said. “Restora­tion of banking ties is crucial for any later dealings to go forward.”
Iran, founder and financer of Lebanon’s militant Hezbollah, is widely seen as interfering in the smaller country’s domestic affairs, while Saudi Arabia supports mod­erate political factions.
A source at the Ministry of En­ergy played down positive effects about Iran’s return to the world oil market on Lebanese citizens’ en­ergy bills. “While oil prices fell by more than 50% worldwide since June 2014, Lebanon’s energy bill shrank by 35% only,” the source told The Arab Weekly.
“Reasons include a murky pricing mechanism in Lebanon whereby government taxes and the shares of gasoline wholesalers and retailers remain untouched,” the source said. “While Iran’s im­minent return to world oil markets is likely to lower prices further, but a lowering in the Lebanese energy bill, if it happened, is almost cer­tainly going to be a fraction only.”
The Lebanese Businessmen As­sociations, known by its French ini­tials RDCL, is preparing for visits to Iran. The first visit will be followed by sector-oriented visits, RDCL LBA President, Fouad Zmokhol said at a news conference. He not­ed that Iran has $100 billion worth of companies listed on the Tehran Stock Exchange. “Many companies are run well and are attractive to Lebanese businessmen,” he said.
Adnan Kassar, head of Lebanon’s Economic Associations, advised in July that any Lebanese business visit to Tehran should be well pre­pared. “Lifting the sanctions will be a good opportunity for both countries. Iran has 80 million peo­ple and its economy is the second largest in the region after its Saudi counterpart,” he said. “But any visit should be prepared for in ac­cordance with the pace of lifting sanctions.”
An economist close to Hezbol­lah said Lebanon should work on reviving Iranian promises to invest in its electricity sector and provide its army with weapons. “The plans didn’t go through because of the sanctions, but should be pushed through with a sanctions-free Iran, especially in terms of electricity investments, obviously very much needed in Lebanon,” he said
In 2012, Iran proposed to sell Leb­anon electricity at reduced prices. Tehran offered to provide Lebanon with 200-400 megawatts of electric­ity as the Lebanese faced increased rationing of their supply. Two years later, a senior Iranian official said Tehran would supply the Lebanese Army with military equipment to be used in fighting armed groups.
If the sanctions are lifted, Iran’s economy is expected to expand in 2016 when oil production, oil ex­ports, auto production and expan­sion of trade increase. Iran’s stock market stands at $96.6 billion. The Tehran Stock Exchange rose 130% in 2013 and another 33% last No­vember.
However, a government source warned, “Iran is likely to continue paying heavily for its involvement in the Syrian war, through its own Revolutionary Guards, through Ira­qi Shia militiamen or through Leba­non’s Hezbollah,” he said.
“Even if its economy booms, Lebanon shouldn’t expect much from an economy at war.”