Iran Sanctions - Foreign Press Centers

However, press reports citing company documents say all contracts with Iran
might not be terminated until at least 2013. 52
Foreign Firms Reportedly Remaining in the Iran Market
Iran Sanctions
Some firms continue to run the financial risk of doing business with Iran. Some of the wellknown
firms that continue to do so include Alcatel-Lucent of France; Bank of Tokyo-Mitsubishi
UFJ; Bosch of Germany; Canon of Japan; Fiat SPA of Italy; Ericsson of Sweden; ING Group of
the Netherlands; Mercedes of Germany; Renault of France; Samsung of South Korea; Sony of
Japan; Volkswagen of Germany; Volvo of Sweden; and numerous others. Some of the foreign
firms that trade with Iran, such as Mitsui and Co. of Japan, Alstom of France, and Schneider
Electric of France, are discussed in the March 7, 2010, New York Times article on foreign firms
that do business with Iran and also receive U.S. contracts or financing. The Times article does not
claim that these firms have violated any U.S. sanctions laws.
Other questions have arisen over how U.S. sanctions might apply to business with foreign firms
that Iran might acquire a full or partial interest in. Such firms include Daewoo Electronics of
South Korea, where an Iranian firm—Entekhab Industrial Corp.—is a leading bidder to take over
that firm. Another example is Adabank of Turkey, which reportedly might be sold to Iran.
Subsidy Phase-Out Issue
A larger issue, which may have been affected by sanctions, but perhaps positively for Iran, is a
long-delayed plan to phase out state subsidies on staple goods such staples as gasoline and some
foods over the next five years. International sanctions might have helped Ahmadinejad convince
the Majles (parliament) that passing the subsidy reduction plan was urgent if Iran was to parry the
effects of burgeoning international sanctions. After several delays, the program started on
December 19, 2010, with a reduction in subsidies of gasoline and bread. The price of traditional
bread immediately escalated to 40 cents, from 15 cents, when the program began. Gasoline prices
now run on a tiered system in which a small increment is available at the subsidized price of
about 1.60 per gallon, but amounts above that threshold are available only at a price of about
$2.60 per gallon, close to the world price. The lower and lower middle class is being
compensated with direct cash payments of about $40 per month. 53
The IMF report of August 2011, discussed above, said that the phase-out removed about $60
billion in costs from Iran’s budget. However, some Iranian economists say that 63 million
Iranians qualify for the compensatory cash payments and that this costs the government nearly all
of the savings incurred from the subsidy phase-out. Still, political benefits are accruing to the
regime in the rural areas, where families are large and the subsidy offset brings in substantial
monthly income.
Effect on the Development of the Energy Sector
As noted throughout, the U.S. objective has been to focus sanctions against Iran’s energy sector,
considered the engine of Iran’s economy currently and in the future. U.S. officials in 2011 said
52
Stockman, Farah. “Oil Firm Says It Will Withdraw From Iran.” Boston Globe, November 12, 2010.
53
Erdbink, Thomas. “Leaving Iran’s Middle Class Behind.” Washington Post, November 7, 2010.
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