At a meeting on Monday, EU foreign ministers will broach the subject of how the bloc, once Iran’s top trading partner and its second-biggest oil customer, can pursue an agreement on trade, investment and political dialogue with Tehran.
Many in the EU are eager to support signs that Iran, a $400-billion economy, is opening up and to find a new market for European investors facing weak economic growth at home, Reuters reported on Wednesday.
The 28-member union is also discussing helping Iran in its stalled bid to join the World Trade Organization, diplomats say, leveraging the EU’s power as the world’s largest trading bloc to seek favor with a country sitting on vast gas reserves.
One first step is a planned visit by EU foreign policy chief Federica Mogherini to Tehran in April, her second since the July 2015 nuclear deal and the first with a group of senior commissioners from the EU’s executive. A lower level delegation of EU energy officials held talks in Iran last month.
That could be followed by the opening of a permanent EU diplomatic mission in Tehran later this year.
An EU-Iran cooperation accord would give Brussels a bigger role in market reforms required for Iran to join the WTO. It could help regain some of the business Europe lost to China during the sanctions era and give the EU a legal basis to press for political freedoms in Iran.
A cooperation agreement, the same tool the EU is using to strengthen ties with communist Cuba, is modest but served as a precursor to broader free-trade deals in Central America and Asia, giving duty-free access to the EU’s 500 million consumers.
“With Iran, we could go much further than we can with Cuba because Iran is a market economy,” said a senior EU official who negotiated on the failed attempt to reach an accord in 2002.
“This would give investors a framework and also a place for dialogue on the things we don’t like about each other.”
“This is just the beginning of a journey,” Italian Prime Minister Matteo Renzi told Iranian President Hassan Rouhani in Rome in January, before signing billions of euros of deals in sectors ranging from steel to shipbuilding.
Italy, where the economy continues to struggle after a three-year slump wants to rebuild the lucrative relationship it enjoyed before UN sanctions were imposed on Iran in 2010, when it was Iran’s largest European trade partner. Britain and France are also keen to do business.