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Analysis Rouhani-Hollande2

Published on February 5th, 2016 | by Guest

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France and Iran Are Back to Business

by Emma Scott

After a decade of wrangling over the nuclear program, President Rouhani found himself in Italy and France last week in search of business in the automotive, transportation, hydrocarbon, and industrial sectors. That Rouhani choose to visit Paris over any other European capital underlines the fact that Franco-Iranian relations go much deeper than the past decade of haggling over Iran’s uranium enrichment levels.

France was often portrayed as adopting the hardest line on Iran’s nuclear program. But when it came to the July 2015 deadline for reaching a final agreement, France was the country that had most shifted its negotiating position: from a position of zero enrichment to 3.67 percent, as the July accord allowed. More than just adopting a hard-line stance on non-proliferation, France was perhaps more perturbed that Iran wanted an industrial-sized program because that would make Iran an industrial middle-sized power equivalent to France. If Iran did ever opt for the bomb, it would then become another contender for a prestigious seat on the UN Security Council.

Yet, France was also the country among the P5+1 (France, the United Kingdom, Germany, the United States, Russia, and China) with at least some historical familiarity with Iran’s nuclear ambitions. In 1974, France committed to selling Iran two Westinghouse civilian nuclear power stations. It also promised to help Iran supply the fuel for its reactors via the construction of a uranium enrichment plant, to be managed by the European consortium Eurodif, on the site of the Tricastin nuclear power plant in the south of France. Iran’s Shah had loaned $1 billion to France in exchange for a 10% share of Eurodif, which would permit Iran to buy enriched uranium once the Tricastin factory came into operation in 1981.

But on coming to power in Iran, the new government of the Islamic Republic denounced the nuclear cooperation with France, suspended payments in process, and claimed reimbursement of the Eurodif loan. That was the start of a decade’s long dispute in Franco-Iranian relations. Although the dispute was resolved in 1991, Iran’s capital gains from the deal were later frozen under UN Security Council Resolution 1727 (2006). Eurodif was closed indefinitely in 2012, which would seemingly bring closure to the dispute.

The Joint Comprehensive Plan of Action (JCPOA), specifically Annex III, now allows for cooperation between the P5+1 and Iran in different areas of civil nuclear cooperation. Thus, on January 28, French President Francois Hollande and Iranian President Hassan Rouhani discussed the prospect of cooperation in the field of nuclear security. As outlined in the JCPOA, this cooperation could include “the implementation of nuclear security guidelines and best practices” and training courses and workshops to strengthen Iran’s ability to prevent, protect, and respond to nuclear security threats, including sabotage to nuclear facilities and systems. That tone certainly differs from the days of CIA attempts to feed Iran falsified nuclear documents as well as Israeli espionage and assassinations.

Why the French Shift?

Before the deal, France sided with its long-time ally Israel, but there was little either country could do to stop Iran’s nuclear program without assistance from the Americans. That said, having opposed the Iraq war and in view of the current chaos across the Middle East region, France did not favor going to war with Iran. In 2003, France’s minister of foreign affairs, having made the gamble to negotiate with Iran, led the E3 (France, the United Kingdom, and Germany) to Tehran. The French objective, as stated in Le Monde, was to show that it was possible to address the issue of weapons of massive destruction, the pretext for intervention in Iraq, by means other than war. Thus, the only option under these conditions seemed to be to accept Iran’s nuclear ambitions and welcome its return to the international community. That was certainly the message that Rouhani’s honorable reception in the French capital communicated last week.

Beyond that, French industry was strongly opposed to the sanctions against Iran, which had shrunk France’s share of the Iranian market from 7 percent in 2004 to just 1 percent in 2014. French oil company Total, operating under Iran’s buy-back contracts, pulled out in 2010 under tightening US sanctions. French auto manufacturer Peugeot, in an alliance with General Motors, could not accept being excluded from the US market. It subsequently suffered plant shutdowns. Additionally, French carmaker Renault, in a joint venture with Iran’s two main auto manufacturers, suffered profit and job losses. BNP Paribas is perhaps the most well-known case. Prior to agreeing to an $8.9 billion settlement with the U.S. justice system for sanctions violations, and describing the fine as “unreasonable,” both François Hollande and Laurent Fabius intervened with an unsuccessful attempt to defend French interests—since business, after all, is business!

Undoubtedly, France was glad to see the lifting of sanctions come Implementation Day in January. As Gérard Araud said in a sitting at the Atlantic Council’s Iran Task Force before the historic July deal: “We made the sacrifice of the sanctions, we lost a lot of money because of the sanctions, not the Americans because they were not anymore on the Iranian market.” French and Iranian political leaders attempted to return to a business-as-usual agenda last week. But French banks remain wary, and the two countries have their political differences as well.

Moving on after the Iraq War

Speaking during a joint press conference with President Rouhani, on the occasion of the January visit, French President Hollande said he had asked the two countries’ foreign ministers to prepare a memorandum on the conflicts in the Middle East. For the better part of three decades, France and Iran have been on opposite ends of conflicts in the Middle East. Although Paris maintained good relations with Iran during the Shah’s reign, come the establishment of the Islamic Republic, relations quickly became strained. Part of the problem was due to the fallout over nuclear cooperation, but there was also France’s ongoing arms support for Iraq during the Iran-Iraq war. In the 1970s, France had maintained a close commercial and arms relationship with Saddam Hussein. When the Iran-Iraq war broke out in 1980, and under pressure from France’s industrial lobby, France under the socialist government of François Mitterand sided with Saddam.

In 1984, with Saddam’s regime no longer capable of honoring its debt and under criticism of the international community for using chemical weapons, France began seeing Iraq as a troublesome ally. France subsequently announced a rebalancing of its foreign policy toward the two belligerents and refused to conclude any new arms contracts with Saddam. Although France was glad to see the end of the war, and subsequently participated in the 1991 coalition to liberate Kuwait from Saddam’s forces, his eventual removal in 2003 led to the current situation in which both France and Iran are effectively fighting on the same side against the Islamic State in Iraq today. Both France and Iran view terrorism as a threat to their national security, and that was the message underlined in the January roadmap to reinforce bilateral cooperation.

The first negotiations under the premiership of Laurent Fabius with an eye toward normalizing relations between France and Iran began in 1984 when the IRGC took 60 hostages on an Air France Airbus in Tehran and threatened to kill them if Anis Naccache and his accomplishes were not freed from French prison. Anis Naccache was a Lebanese militant who, under the supposed direction of Ayatollah Khomeini, attempted to assassinate Shapour Bakhtiar, the Shah’s prime minister living in exile in France, but in the process killed a policeman and a civilian. With the Iran-Iraq war ended, Anis Naccache was eventually granted a presidential pardon by Mitterand and liberated in 1990.

Trouble in Lebanon and Syria

In response to French support for Saddam, Iran through Hezbollah and Islamic Jihad had also begun targeting French interests in Lebanon, a former French mandate. Notably, the Beirut Barracks bombings of 1983 killed 58 French marines and 242 Americans, the principal symbols of the Western presence in Lebanon. In addition, between 1985 and 1986, some 13 French journalists, diplomats and civilians were taken hostage in what became known as the Lebanese hostage crisis. Tehran was also accused of carrying out a campaign of terrorist attacks on French soil, which left 13 dead and 300 injured.

It’s no surprise therefore that during the Hollande-Rouhani joint press conference, Hollande referred to Lebanon. He said that France and Iran have a role there to preserve Lebanon’s integrity and stop the institutional vacuum. This discourse differs from the direct confrontations that took place during the 1980s, but it also underlines the current differences between the two. Holland was of course referring to the presidential vacuum ongoing in Beirut since May 25, 2014 because Lebanon’s various political factions have failed to reach the parliamentary majority needed to elect a leader.

Lebanon is divided along sectarian lines between two main political blocs. The Hezbollah-led March 8 coalition is close to Tehran, while the rival March 14 camp—a Sunni majority bloc led by former Prime Minister Saad Hariri—is close to Riyadh. Saudi Arabia for its part recently gave a grant of $3 billion to Lebanon to purchase French weapons with the aim of strengthening the Lebanese armed forces. Iran, however, provides military and financial support to Hezbollah, which the EU has classified since 2011 as a terrorist organization.

France and Iran also have opposing views on Syria’s civil war. Where France had adamantly maintained that Bashar al-Assad should be removed from power during a political transition and has supported the development of a Syrian opposition, both Iran and Hezbollah have supported Assad militarily and financially. Iran further maintains that it is the decision of the Syrian people not of outside powers to decide the fate of Assad. Thus, France’s position is often linked to that of Saudi Arabia and its NATO ally Turkey in the Syrian conflict because they also want Assad removed. But for France, in contrast to Iran, fighting terrorism does not seem as much of a priority, although the French government wants to stem the flow of jihadi fighters from Syrian to French soil.

Reorienting French Gulf Policy?

During the press conference, Hollande also underlined France’s friendly relations with Saudi Arabia. Last year, France signed $12 billion of deals with the Saudis, including contracts for 23 Airbus helicopters used for emergency services and border controls. But Iran’s deal with Airbus last month for 118 planes was valued at $25 billion alone. We may yet see a reorientation of French foreign policy as France today is first and foremost concerned with fighting the war on terror at home, and then with resolving the Israeli-Palestinian conflict, which is having repercussions in French society due its large Arab population. The French do not, meanwhile, view Iran as a threat domestically.

But France has also voiced its support for Saudi Arabia’s intervention in Yemen. Foreign Minister Laurent Fabius said that France was “naturally on the side of its regional partners.” In view of France’s traditional alliances, therefore, it remains to be seen how France and Iran will find common interests in conflicts across the wider Middle East. Like the US, after the nuclear deal, France may be concerned with maintaining some semblance of a balance of power between the Gulf’s two regional rivals, Iran and Saudi Arabia.

Emma Scott is a former assessor and peer reviewer for Transparency International’s Defense and Security program. She has also written for the Jamestown Foundation. She previously worked as a defense and security analyst on the Middle East and North Africa region with Business Monitor International Research in London, and interned on Iran at the European Union Institute for Security Studies in Paris. She is also an alumnus of the EU-Middle East Forum of the German Council of Foreign Relations in Berlin. Emma has two research Masters and two post-graduate certificates in geopolitics, conflict, international relations, and similar topics from universities in the United Kingdom, the Netherlands, Australia, Belgium, and France.


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2 Responses to France and Iran Are Back to Business

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  1. at least someone is an adult when it comes to doing business with Iran. As the US enters what appears to be a recession I wonder why American companies aren’t doing more to pressure Congress to bug off when it comes to repealing this deal.

  2. avatar Quentinc1 says:

    Small error: says iran’s support of saddam instead of france’s support of saddam at beginning of a paragraph. Might be confusing to some

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