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Vienna, 13.07.2017 BMF: Legal certainty a condition in relations with Iran Three-day working visit to Tehran and Isfahan aimed at strengthening economic relations – Main topics: Compliance, payment transactions, customs, double taxation

Austria's economic interest in the Iranian market is naturally considerable; with a population of over 80 million, over half of whom are aged below 30, the market offers enormous potential for Austrian business. The aim is to revive Austria's traditionally good economic relations with Iran, in particular bilateral trade exchange, and to bring trade relations back to the same level as during the period prior to imposition of sanctions. "It is important to work actively at opening doors and building bridges for Austrian companies and to work on removing both technical and diplomatic hurdles," declared Austrian Finance Minister, Hans Jörg Schelling.

The agenda comprised discussions with Minister of Finance and Economic Affairs

Ali Tayebnia, Foreign Minister Javad Zarif, Oil Minister Bijan Namdar Zanganeh, as well as the Minister for Industry, Mines and Trade, Mohammad Reza Nematzadeh. There was also a meeting with the Governor of the Iranian Central Bank, Valiollah Seif, and Governor-General Rasoul Zargarpour. 

More than 200 Austrian companies already operate on the Iranian market, 35 of which have branch establishments in Iran. Promising areas for future business include in particular trade in consumer goods and consultancy services, the environment and renewable energy, infrastructure, tourism and tourism training. "Things often fail due to supposedly minor matters which, however, have a substantial impact. For this reason, we need to revive the work already commenced on, for instance, money transactions and customs, and bring this work to a positive conclusion for Austria," stressed Schelling.

One little-known fact is that it is generally not possible to make payments using a credit or bank card in Iran, whether as an Austrian travelling to Iran, or an Iranian travelling to Austria. Transactions such as hotel reservations, shopping purchases and the like cannot be made without carrying cash. For tourism in particular, but also for commercial trade in general, this limitation on payment transactions is counter-productive, and the easing of payment-processing restrictions is anticipated by mid to late 2017 following easing of the indirect effects of sanctions.

The Austrian delegation – consisting of representatives from the Federal Ministry of Finance, Oesterreichische Nationalbank, Oesterreichische Kontrollbank, Oberbank and Raiffeisen Bank International, as well as OMV - took advantage of the opportunity to put forward Austrian economic interests and build on the work previously undertaken by earlier economic delegations. The biggest of these – consisting of 250 representatives – was led by President Heinz Fischer in 2015.

As Finance Minister Schelling perceives it, there must be a foundation of legal certainty for the Austrian economy, and also adherence to applicable compliance standards, particularly with regard to transparency. In this area, the Iranian banks have virtually no experience, and first have to build up the relevant know-how. For Austrian banks, compliance with such rules is a basic requirement. The Oesterreichische Nationalbank already offers relevant training to Iranian banks, and the Iranian side has expressed a keen interest in continuing and expanding this training. "In addition to legal certainty, payment transactions form the vital basis of economic relations," added Schelling.

In 2016, the Austrian Finance Ministry intervened to provide support, increasing the credit guarantee limit for Austrian exports to Iran from EUR 280 million to EUR 1 billion. New export guarantees and investment guarantees have already been underwritten for a number of smaller projects, while for larger projects, the Austrian Finance Ministry and Oesterreichische Kontrollbank-AG have given agreement in principle. Promotion of exports by Austria enables supply agreements and investment projects to be secured over the long term. "We perceive considerable market potential for Austrian companies in all sectors, since there is an immense need for modernization and consumer demand," remarks Helmut Bernkopf, member of the Board of Executive Directors at Oesterreichische Kontrollbank AG. Using the possibilities at our disposal for securing exports and investments, we are supporting domestic companies wishing to take advantage of business opportunities in Iran," continued Bernkopf. "In order to gain access to medium and long-term project financing backed by the Österreichische Kontrollbank, a framework agreement needs to be concluded between an Austrian and an Iranian commercial bank," stressed Franz Gasselsberger, CEO of Oberbank. "Oberbank is just in the process of negotiating precisely such an agreement".

While in Iran, the Austrian Finance Minister repeated his willingness to take the necessary steps in order to normalize banking relations. "My experts at the Finance Ministry are ready and willing to continue negotiations on modernizing the existing customs and double taxation agreement. We will be pleased to contribute what we can. But we must have a basis of legal certainty," stressed Schelling in the working discussions. "The tone of our discussions has been very friendly, but now we must get down to technical details. The last 100 metres are often the hardest. The feeling that things are going too slowly is making both sides impatient, but legal certainty must take precedence over speed. I am willing to contribute what I can in order to secure an agreement as early as possible," commented Schelling on the content of the talks.

By mutual agreement, it was agreed that the discussions would be continued at a technical level. No agreements or contracts were signed.

Rainer Seele, CEO of OMV, stressed in discussions with Oil Minister Zangeneh that OMV had a strategic interest in substantially revitalizing business relations between OMV and Iran, both upstream and downstream. "OMV and NIOC are currently working intensively on setting up concrete projects," declared Seele.

The long-planned trip took place despite the attack in the Iranian Parliament, and the Iranian side expressly acknowledged this as sending an important signal. The Austrian delegation, headed by the Federal Finance Minister, expressed their dismay at the latest attack in the Iranian Parliament and their rejection of terror of all kinds. Going ahead with the trip as planned was also intended to mark a stand against terrorism. 

The Austrian delegation travelled to Teheran on Saturday and returned to Vienna today.