“The UK Government is committed to solving banking problems with Iran” Says Keith Wellings.

The UK officials say that the UK is committed to the successful implementation of the JCPOA, as it can lay the foundations for expanded political and economic relations with Iran. As mentioned by Nicolas Hopton, Former British Ambassador to Iran, trades has increased between the two countries, whilst British banks and financial institutions are still not sure about how to support trade with Iran. To learn more of the ongoing trend in the two countries’ economic relations, we interviewed with the Director of the Department of International Trade of the British Embassy in Tehran which is as follows.

AVA Diplomatic’s Exclusive Interview with Keith Wellings

 Director of the Department for International Trade, British Embassy, Tehran

Interview by Mohammadreza Nazari 

 What appeal does the Iranian market have for British businessmen and investors?

Iran is the second largest economy in the Middle East (behind Saudi Arabia) with an estimated GDP of over $400 billion in 2016. Iran also has the second largest population of the Middle East, Afghanistan and Pakistan region with an estimated 80 million people.

There is a positive outlook for UK-Iran trade relations. Iran is the biggest new market to enter the global economy in over a decade, offering significant opportunities in most sectors, with potential to grow as the market in Iran expands.

What support does the British government offer to the businessmen who intend to establish economic relations with Iran?

The UK Government fully supports expanding relationship with Iran and in March 2017, the Export Control Organisation (ECO) issued a notice to exporters that the Iran List has been removed from GOV.UK.

The Department for International Trade (DIT) established in the British Embassy in Tehran in 2016, supports trade and investment between the UK & Iran across a number of priority sectors, including; aviation and airport, oil, gas and petrochemicals, retail, healthcare, infrastructure and water, mining, agriculture, education and automotive.

We support British businesses entering Iran’s market with information and Contacts. We work with Iranian businesses, government organizations and Chambers of Commerce to introduce British company representatives. We are very grateful for the relationship that we have with Irano British Chamber of Commerce, Tehran Chamber of Commerce, Iran Chamber of Commerce and other government bodies.

We can facilitate visa appointments for Iranian officials and business travellers to the UK and host regular trade missions between our two countries.

This year we have supported UK and Iranian trade delegations in sectors as diverse as water, aviation, transport, automotive and regional development.

What has been done thus far to resume banking ties between the two countries after the JCPOA was achieved?

Officials in the Foreign and Commonwealth Office, the Department for International Trade and Her Majesty’s Treasury are working hard to address the challenges by engaging with UK banks and our international partners, including the US, to address ongoing concerns.

Resolving the banking challenges is a priority for the Government and we will continue our engagement with key partners, including the US Office of Financial Assets Control (OFAC) to ensure the lifting of nuclear-related sanctions delivers tangible benefits for all parties.

As Iranian banks face the challenge of delays in establishing correspondent banking relationships with large international banks; further progress needs to be made, Iran needs to improve its own compliance and regulatory standards.

However, facilitating transactions or providing banking services is ultimately a commercial decision for an individual bank based on their own risk assessment and risk appetite, resolving these challenges remains a priority for the UK Government so that businesses can benefit from doing business in Iran.

We advise UK businesses to speak to their own UK banks in the first instance to see what support or referrals can be provided.

Has there been any negotiation between British automakers and Iranian companies? What tangible achievements have been made?

The links between the UK and Iran in the automotive sector go back decades. You can still see the “classic” Hillman Arrow (Peykan) out and about on the streets of Tehran. This was produced by Chrysler UK and Iran National Factories (Iran Khodro) designed based on a 1966 Hillman Hunter.

Peykan created Iran’s auto industry and now at the other end of the spectrum Lotus cars and Jaguar Land Rover are active in Tehran and with a number of deals in the auto parts sector; we are aiming for stronger trade links than ever.

In November 2017 we hosted a delegation led by the Society of Motor Manufacturers & Traders Ltd. (SMMT) and other UK companies active in the field of auto parts and machineries. This auto parts delegation had participated in the 12th International Auto parts Exhibition in Tehran and it was a great opportunity to meet with prominent players in the auto parts industry and negotiations are ongoing to identify areas of potential interest for future cooperation.

Iran needs foreign investments for the purposes of renovation and development and requires high-tech knowledge and technologies. Is there any potential for cooperation in this area?

Following years of limited access to external capital, the Iranian government is keen to attract foreign direct investment (FDI), especially in sectors where new equipment and technology are high in demand. Attractive incentives such as tax holidays and import customs exemptions offered to foreign investors are highly important.

International British enterprises are seeking to establish a long-term presence in Iran’s markets and the UK government is supporting trade and investment between Iran and UK.

We can introduce investment opportunities in Iran to potential UK partners through our International Trade website.

Is British Petroleum operating in Iran currently? What agreements has it signed with the Iranian officials?

British Petroleum (BP), one of the worlds seven oil and gas giants has had a long term presence in Iran, dating back to the 1890s, and currently has an eye toward transferring technology and capital to Iran, BP is supporting Iran’s oil industry with investment to modernize and renovate the oil infrastructure. Discussions are ongoing and BP’s presence here in Iran is a measure of the company’s commitment to improving trade relations.

Is there any ongoing cooperation between Iranian and British companies for the purpose of transferring communication and IT technologies to Iran?

Yes, there are some British telecoms companies who are active and are looking to expand their presence in Iran’s market through their Iranian partners and due to the demand for the transfer of technology and equipment; a number of other telecommunication and software providing companies are offering their services in Iran’s growing market.

UK businesses are impressed with the high levels of IT and telecoms ‘take up’ by Iran’s population and particularly amongst the youth and business people.

The UK was always considered to be a distribution hub for Iranian rugs and carpets in Europe. Has Iran been able to regain its market after the lifting of nuclear sanctions?

Persian carpets have never lost their popularity in the UK (My mother is an avid collector who has a number of Qom silks!). The export and import of these beautifully crafted products is managed by private enterprises and it is a market that seems to be enjoying steady growth.

How functional is the Iran-UK Chamber of Commerce in developing economic relations as a non-governmental Iranian institution?

The Irano British Chamber of Commerce, Industries and Mines has a large network of members and the trade section of the British Embassy in Tehran is planning to cooperate with the Chamber in relation to organizing trade delegations, official visits and have attended a number of each other’s events, commissions and other functions. The chamber has good links with the British Iranian Chamber of Commerce in London and other Chambers, represents its members interests and is a valuable source of information and connections. Its quarterly news publication is eagerly anticipated by members.

Has the limited visa issuance for Iranian businessmen and citizens negatively influenced the economic relations?

The UK and Iran government are working to improve the visa issue and in 2017, UK and Iran Foreign Ministers agreed to increase the number of visas, which we would like to see improve further. Many British businesses face challenges in getting long term multiple entry visas to visit customers in Iran. It is worth mentioning that Iran’s Ministry of Foreign Affairs has supported us with quite a number of visas for UK business travellers to Iran and we can assist business and official visitors to the UK. The improvements in visa numbers are a positive sign and of course, Iran and the UK continue to discuss how we can cooperate further in the future.

What challenges should be dealt with for Iranian and British businessmen to be able to expand the economic relations between the two countries?

While the lifting of UN and EU sanctions represented a huge step forward, a number of challenges remain to doing business in Iran. Many US primary sanctions are a significant barrier to trading relations. Financial transactions and accessing new financing is an appreciable challenge since many large banks are perceived as being at risk from the remaining US restrictions. British banks are aware of the exposure to US banking sanctions that are impeding Tehran’s re-entry into markets after years of isolation.

Though challenges remain, especially in banking and visa restrictions, a number of substantial deals are ongoing and there continues to be a great deal of potential for doing business in Iran.

We make sure that UK businesses are aware of the rules regulating sanctioned entities and products, due-diligence requirements and encourage them to find first-class operating partners in Iran to reduce financial risks.

What is your personal experience in developing economic ties which can be set as a fine pattern to follow between the two countries?

UK government has reaffirmed Britain’s position of full support for implementing the Iran nuclear accord and in order to encourage businesses. The British Embassy and the Department for International Trade in Tehran are both doing everything possible to support UK companies who want to trade with Iran and to develop a more significant economic relationship between the UK and Iran.

The collaboration of Iranian public and private sectors is highly valued by the British government and the same efforts are ongoing from the UK to preserve and further boost the historical relations with Iran.

I am thoroughly enjoying my time in Iran, meeting government officials, business leaders and entrepreneurs. I feel that we have achieved much success in building bridges between our two great countries. I encourage UK businesses to visit Iran- and everyone I have spoken to who has experienced Iran, invariably had all have a very positive experience and is keen to return and tell others about it; which reflects how we can continue to build better ties in future.