Peugeot's Initiative in Signing Agreement with Iran

Radio Farda: Iranian and international media report the signing of a final agreement between the Iran Khodro Industrial Group and the French company Peugeot regarding the establishment of a joint automobile manufacturing plant in Tehran. What are the features of this agreement, and has there been a change in the type of cooperation between Iranian and French automakers? Fereydoun Khavand: Media, both Iranian and foreign, have reported on this agreement quoting Hashem Yekeh Zareh, the CEO of the Iran Khodro Industrial Group, and so far, this news has not been confirmed or denied by Peugeot's headquarters in Paris. According to Mr. Yekeh Zareh, the features of this agreement align with points that have been published over the past few months regarding discussions between Iran Khodro and Peugeot. It seems that three main points have been emphasized in these discussions: first, that Iranians distance themselves from mere assembly and genuinely become manufacturers; second, that production in Iran increases; and third, that part of this production is exported abroad. From the statements reported by Iranian and foreign media quoting Mr. Yekeh Zareh, it appears that all three goals have been achieved. Based on the signed agreement, a joint factory will be established, with fifty percent of the shares belonging to Iran Khodro and fifty percent to Peugeot, along with technology transfer and a joint research center. Furthermore, according to the CEO of Iran Khodro, thirty percent of the production is expected to be exported. Is Peugeot's return to Iran a sign of French optimism regarding reaching an agreement on Iran's nuclear file? This is an important question. We know that in February 2012, the French company Peugeot, the main partner in Iran's automotive industry, cut its cooperation with the Islamic Republic under pressure from sanctions, which was a severe blow to Iran and also caused significant losses for Peugeot. However, in the November 2013 Geneva agreement between Iran and the P5+1 group, provisions were made for Iran's automotive industry, reopening the way for the delivery of parts by the French and a significant increase in car production in Iran. Nevertheless, if the ongoing negotiations regarding the nuclear file do not reach a conclusion, there is a risk that cooperation between Iran and Peugeot could be cut off again. So why did the French company Peugeot sign an agreement with Iran before the outcome of the nuclear negotiations became clear? The reason is that it wanted to take the initiative to maintain its old positions in Iran, knowing that the end of sanctions would open the door for Japanese, German, and even American competitors to enter Iran's automotive industry. Fereydoun Khavand is an economist, economic analyst, and professor of economics in Paris, France.