Foreign Investment in Iran

When President Donald Trump withdrew from the nuclear deal with Iran, he ushered in a high-stakes competition between the United States and Europe to determine whether unilateral U.S. sanctions could impose overwhelming pressure on Iran, or if European governments could protect the economic gains that accrued to Tehran from the nuclear deal. If European countermeasures defused American sanctions, the incentives for Iran to abide by the deal would remain intact. Perhaps more importantly, Europe would demonstrate that Washington cannot wage economic warfare without its consent and participation.

A critical measure of European ability to restrain the United States is the response of European multinational corporations to the return of U.S. sanctions. In addition, it is important to monitor how top Asian multinationals navigate the transatlantic competition. Will leading multinationals withdraw from the Iranian market rather than risk losing access to American markets and the U.S. financial system? Or will firms conclude the U.S. threats are hollow, since punishing European and Asian multinationals would inflict substantial damage on American firms and consumers?

This report serves as a scorecard for all those who are tracking sanctions compliance, including the Department of the Treasury, Department of State, and U.S. officials in other government agencies who monitor sanctions compliance. It provides a country-by-country list of firms with investments in Iran, indicating which ones are likely to stay, which to leave, and which have made no announcement. In all, the report covers 232 companies and business associations, of which 67 are part of the Fortune Global 500 list of firms with the highest revenues.

In the four months since the U.S. withdrawal from the 2015 nuclear deal, 31 European and Asian firms in the Global 500 announced they would be leaving the Iranian market or hinted their exit was imminent. The list includes France’s Total, Airbus, and PSA/Peugeot; Denmark’s Maersk, Germany’s Allianz, and Siemens; Italy’s Eni; Japan’s Mazda and Mitsubishi UFJ Financial Group; and the UK’s BP. In contrast, Renault is the only European member of the Global 500 that expressed an intention to resist American pressure, yet its COO indicated in July that the company will suspend operations.

Since U.S. sanctions do not apply in general to food and medicine, Nestle has announced it will continue operations in Iran. France’s Sanofi, Germany’s Bayer, and Switzerland’s Roche have not yet announced their plans, yet sanctions may not affect their pharmaceutical work, nor Danone’s beverage business. Lufthansa will also continue its flights to Iran, which do not necessarily conflict with sanctions.

All together, we assess that 71 companies plan to withdraw from Iran, 19 plan to stay, and 142 have either not decided or not broadcast their decision.

Read the full report here.