Italy´s Relations with Iran

Italy´s Relations with Iran

 

Italian Foreign Minister Franco Frattini rejected the possibility of a meeting between Prime Minister Silvio Berlusconi and Iranian President Mahmoud Ahmadinejad, who is scheduled to attend a UN conference in Rome this week.

Frattini said Berlusconi has chosen to adhere to the American stance on engaging Iran. [1]

Despite the growing international campaign to use economic sanctions to isolate Iran over its nuclear programme, Italy remains Iran’s largest trading partner. Italy, however, also has taken steps to limit its economic ties to Iran while reiterating its opposition to Iran acquiring nuclear weapons. In April 2008, Silvio Berlusconi was re-elected as prime minister. Berlusconi last served as prime minister from 2001 to 2006, when he was defeated by Romano Prodi; he also governed from 1994 to 1996, but both of these stints ended with limited success, mainly because of poor economic and fiscal records. [2]

President Mahmoud Ahmadinejad, in a message on May 3, 2008, congratulated Silvio Berlusconi on his re-election as Italian prime minister. In his message, the Iranian president expressed hope that Tehran-Rome bilateral cooperation would further bolster in all areas through greater efforts by the two countries‘ officials. [3]

Diplomatic relations

• Italian Foreign Minister Franco Frattini rejected the possibility of a meeting between Prime Minister Silvio Berlusconi and Iranian President Mahmoud Ahmadinejad, who is scheduled to attend a UN conference in Rome. Frattini said Berlusconi has chosen to adhere to the American stance on engaging Iran. [4]

• Italy is expected to join a European Union consensus on Iran’s nuclear program, after dropping earlier objections last week, possibly paving the way for new sanctions, a government official in Jerusalem said. The outgoing government does not want to enable prime minister-designate Silvio Berlusconi to portray it as a government that went against the whole European Union,“ the official said. Jerusalem believes that Belusconi’s return to office will strengthen the line for imposing additional sanctions on Iran. Italy was the main European opponent to strengthening sanctions on Iran in the past year. The Italians held up the EU’s ratification of a third Security Council resolution regarding Iran. [5]

• Senior EU official and now designated Foreign minister under President Berlusconi, Franco Frattini, took a tough stance on Iran on January 22, 2008, saying: „I support severe [Security Council] sanctions“ if Teheran does not halt its uranium enrichment program within a month. Europe „cannot leave Israel alone“ in its efforts to thwart Iran’s pursuit of a nuclear bomb, and it should have the diplomatic support of the international community in that pursuit, said Frattini. Iran must freeze its nuclear program, including the parts it claims are for civilian use, until it provides complete information on it to the international community, Frattini said. „If they would have agreed about transparency of their nuclear exercise the situation would be different. But without that they are leading us toward adopting a third set of sanctions,“ he said. [6]

• The visiting political advisor to Italy’s prime minister conferred on September 26th, 2007 with Foreign Minister Manuchehr Mottaki on issues of mutual interests. At the meeting, Mottaki described the initiative of the Italian government particularly its prime minister in dealing with developments in the Middle East as very significant. Highlighting the current „good and constructive“ relations between Iran and Italy, Mottaki said the visit of the Italian envoy to Iran indicates the firm determination of the country for playing a positive role in the region. [7]

• Iran always tries to find a way out of regional crises, he said, adding that Iran is ready to help implement the initiatives of the Italian government. The Italian envoy, for his part, referred to existing commonalties between the two countries and their potentials and called for expansion of ties between the two countries. Elaborating on the policies of the Italian government to play a positive role in the region, he underlined the significant role of Iran in regional developments. [8]

• By taking advantage of Iran’s influence in the region, Italy can materialize its initiatives concerning the ongoing developments in the Middle East region, he said. [9]

• Italy will have to rely on its relationship with Iran to play a role in the Middle East, says Abolfazl Zohrevand, Tehran’s new ambassador to Rome in August of 2006. In an interview to Tehran’s radical Kayhan paper, the ambassador said that „Italy, as one of the eight major world powers, is looking for a more relevant role in the Middle East – a role it won’t be able to play if it doesn’t exploit its relations with Iran. [10]

• Ambassador Zohrevand also called for „stronger support to the Islamic Republic from the new government“ of centre-left premier Romano Prodi, which was sworn in in May. The diplomat said such support was likely given that, „contrary to (the previous conservative prime minister Silvio) Berlusconi, Prodi doesn’t pursue the objective of helping US interests in the region. [11]

• Zohrevand said top on his agenda as the Iranian ambassador in Rome was to „create the conditions enabling the Islamic Republic to make the most of Italy’s presence within the European Union, the board of governors of the IAEA (the UN atomic watchdog, International Atomic Energy Agency) and international institutions.“ Commercial relations between Italy and Iran were reportedly worth five billion euros in 2005. [12]

Economic relations

Rome traditionally has good relations with Tehran and maintains a strong presence in Iran’s gas market through Italian oil and gas giant Eni SpA. [13]

• Over 200 Italian industry owners, bankers and traders announced their preparedness for making investment and broadening their trade with Iranian counterparts, Islamic Republic of Iran News Network reported on March 7, 2008. In a joint session held in Modena Chamber of Commerce, Alberto Mantovani, President of the Chamber of Commerce of the northern city of Modena, Rosario Alessandro the chairman of Italy-Iran Chamber of Commerce and Mr. Zohrevand the ambassador of I.R. of Iran to Roma stressed on the need for easing the trade laws and regulations between the two countries. „We consider Iran as one of our main trade partners and a country which enjoys high status in economic arenas across the globe,“ the chairman of Italian chamber of commerce stated. One of the senior banking managers of Italy, for his part, advocated the activity of Italian companies in Iran and boasted of favourable banking relations with state-run and private banks of Iran. [14]

• In March 2008, the Swiss power company Laufenburg (EGL) and the National Iranian Gas Export Company (NIGEC) signed a long-term agreement to bring natural gas from Iran to Europe. At least 80% of the gas are destined for the Italian market. [15]

• On January 9, 2008, the National Iranian Oil Company NIOC and Italy’s Edison International signed a $107-million (73-million-euro) contract for exploration in Gulf waters. It involves geological and seismic studies as well as drilling of up to two wells in Iran’s Dayer block. The project is set to be completed in four years and open to a one-year extension. [16] Iranian Oil Minister Gholam Hossein Nozari told state television that Iran and the Italian power company Edison were nearing agreement on a deal to pump more than a billion cubic feet of Iranian gas to Europe per day. [17] The 212-km- long pipeline will carry natural gas from the Caspian Sea and Iran to Western Europe when it is completed, at the end of 2009. In order for Caspian gas to reach Italy, two other projects must be completed: a pipeline from western Turkey to the Greek town of Komotini. The construction of these pipelines will turn Greece into a transit hub for natural gas to Western Europe. Initially, the natural gas will come from the Caspian Sea, via Azerbaijan and Turkey. The project is one of European Unions five Trans-European Energy Networks, which are considered priority projects. [18]

• European investors especially Italians are now considering to invest in Iran, Marco Caspani, head of Axis Faits Seryices Company said on Monday. „Iran has established main infrastructures in field of water resources which can attract more foreign investors,“ Caspani said. [19]

• Iranian Khomein Petrochemical Complex and Italian company Basell signed a 20 million euro contract on the transfer of technology. [20]

• In 2006, Italy remained Iran’s top trading partner in the European Union followed by Germany, France and the Netherlands, according to figures from Eurostat, the EU’s statistical office. Today, Italy is a key commercial partner of Iran. [21]

• Italian private sector is seeking the removal of banking restrictions against Iran to be able to expand cooperation as a top priority. Head of the Iran-Italy Chamber of Commerce Jamshid Haqgou said that the volume of transactions between Iran and Italy are to increase this year. He noted that Bank Sepah, which was recently subject to US sanctions, has a branch in Italy and the joint chamber of commerce is trying to hold negotiations with its Italian counterparts and convince them to put pressure on their government and remove the obstacle. Haqgou said that Article 44 of the Constitution should first be implemented in Iran, adding if this happens, trade with European countries, particularly Italy, would expand. [22]

• Paolo Scaroni, the chief executive of Eni, Italy’s largest oil and gas company, is among many Italian businessmen who, rather than rethinking operations in Iran, are considering more investment. „I intend to respect Italian laws, not the American ones,“ Scaroni told Reuters, add, „You don’t find oil in Switzerland.“ [23] In 2007, Eni celebrates its 50th anniversary in Iran. [24]

• SACE, the Italian export credit agency, has €4.1 billion at risk in Iran. That’s about 15 percent of its exposure worldwide and SACE’s highest concentration of risk anywhere. SACE, citing official data, notes an increase in requests by Italians looking to invest in Iran. [25]

Nevertheless, Italy has taken some steps to reduce its investment in Iran.

• SACE has slashed its Iran portfolio by more than €1 billion since 2004.

• Since December 2006, Giovanni Carosio, the Italian Central Bank’s Deputy Director General, has privately warned banks about the growing risks associated with Iran. „Several versions have been issued starting in December 2006 and then afterwards. These are notes kept private for the banks, in reality, but their contents are what I described.“ [26]

• The UN’s most recent sanctions prompted Italy to take control of the Rome branch of Iran’s state-owned Bank Sepah. The U.S. Treasury claims Sepah finances firms that provide Iran with weapons technology and materials. The Sepah takeover was only a diplomatic hiccup, but may be a sign of things to come. [27]

• Scaroni said Eni was looking to develop a gas field in Iran, but acknowledged recently that Rome’s position in the coming weeks and months would influence its decision. „We’ll also look at Iran’s international political situation to be sure that we take actions compatible with what our country, and possibly the European Union, should consider feasible,“ he said. [28]

Italy on Iran´s Nuclear Programme

• In September 2006, Italian Foreign Minister, Massimo D’Alema said: „If Iran is looking to use nuclear energy for peaceful purposes, it is not only legitimate, but can also clear the way for cooperation with other countries.“ [29]

• He also said that while the West is firm and clear with Iran, it also must make a „true offer of negotiation“ and offer Tehran „security guarantees“ because „it is difficult to convince someone if at the same time he is being threatened.“ [30]

• Because economic sanctions against Iran would damage Italy, its leading trade partner, D’Alema also said: „we must evaluate costs and benefits for all parties involved.“ [31]

• Italy’s foreign ministry spokesperson, Pasquale Terracciano, clarified Italy’s position. „In the un-hoped-for possibility in which an agreement cannot be found, Italy will pay a price and it is only fair that it has a say in the matter and not only because others have raised their voices.“[32]

And yet, in July 2007, Italian Premier Romano Prodi said Iran must be prevented from acquiring nuclear weapons.

• On a three-day trip to Israel and the West Bank to discuss ways to promote Mideast peacemaking, he joined Israeli Prime Minister Ehud Olmert in speaking about the need to block Iran from developing nuclear weapons. [33]

• After Olmert said, „We can never accept a country sworn to Israel’s destruction becoming a nuclear power,“ Prodi added: „We agree without reservation … Iran must not develop a military nuclear capability.“ [34]

Moreover, in August 2007, Prodi further fueled a spat with Iran by reiterating Italy’s stand against capital punishment.

• Italy had earlier objected to the death sentences imposed on two ethnic Kurdish journalists and summoned an Iranian diplomat to express its concern about the number of executions carried out in Iran. [35]

• Iran responded that Italy should not interfere in the Islamic Republic’s internal affairs. Iran has executed more than 150 people so far this year, compared to 177 for all of 2006. [36]

• On October 3rd, 2007, Romano Prodi said that an agreement between the U.N. nuclear agency and Iran has opened a window of opportunity that must be explored before any further sanctions against the Islamic state are considered: „We must take advantage of this window,“ Prodi told the Foreign Press Association. [37]

• In an interview with Die Welt, Prodi stated that Tehran and Rome are significant business partners and „I have not realized why Italy, as an important European side, should not enter negotiations with Iran over the nuclear issue.“ [38]       

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References:
[1] „Italy: Berlusconi will not meet with visiting Ahmadinejad,“ Agence France Presse, May 27, 2008, http://www.ynetnews.com/articles/0,7340,L-3548533,00.html 
[2] „Analysis: Berlusconi back on top,“ United Press International, April 17, 2008, http://www.upi.com/International_Security/Emerging_Threats/Analysis/2008/04/17/analysis_berlusconi_back_on_top/9445/ 
[3] „Ahmadinejad felicitates Berlusconi on re-election,“ IRNA, May 3, 2008, http://www2.irna.ir/en/news/view/menu-236/0805032180153641.htm
[4] „Italy: Berlusconi will not meet with visiting Ahmadinejad,“ Agence France Presse, May 27, 2008, http://www.ynetnews.com/articles/0,7340,L-3548533,00.html 
[5] Ravid, Barak: „Italy joins EU drive for more Iran sanctions,“ Haaretz/Associated Press, April 22, 2008, http://www.haaretz.com/hasen/spages/976751.html 
[6] Lazaroff, Tovah: „Top EU official back Iran sanctions,“ The Jerusalem Post, January 23, 2008, http://www.jpost.com/servlet/Satellite?pagename=JPost%2FJPArticle%2FShowFull&cid=1200572521914 
[7] „Iran, Italy review mutual, regional developments,“ Tehran Times, September 20, 2007, http://www.tehrantimes.com/index_View.asp?code=153319
[8] Ibid
[9] Ibid.

[10] „Iran: Italy must rely on Tehran to boost role in the Middle East,“ Free Republic Online, August 10, 2007, http://www.freerepublic.com/focus/f-news/1690564/posts
[11] Ibid.

[12] Ibid.
[13] „Prodi: agreement between Iran and UN nuclear agency is window of opportunity,“ International Herald Tribune, October 3, 2007, http://www.iht.com/articles/ap/2007/10/03/europe/EU-GEN-Italy-Iran.php
[14] „Italian businessmen keen to invest in Iran,“ MehrNews, March 8, 2008, http://www.mehrnews.ir/en/NewsDetail.aspx?NewsID=651357
[15] Hochuli, Ron: „Le gaz iranien acheté par EGL n´arrivera pas en Suisse,“ Le Temps, April 16, 2008, http://www.letemps.ch/template/suisse.asp?page=5&article=229982
[16] „Iran, Italy sign oil exploration deal,“ Agence France Presse, January 9, 2008, http://www.dawn.com/2008/01/10/ebr9.htm
[17] „Iran-Italy commercial gas deal is coming,“ New Europe, January 4, 2008, http://www.neurope.eu/articles/81371.php 
[18] „Greek and Italian companies sign letters of intent to establish the Poseidon pipeline,“ Thaindian News, February 20, 2008, http://www.thaindian.com/newsportal/business/greek-and-italian-companies-sign-letters-of-intent-to-establish-the-poseidon-pipeline_10019230.html
[19] „Italy mulls investment in Iran,“ IRNA, May 5, 2008, http://www2.irna.ir/en/news/view/line-18/0805064305012523.htm
[20] „Iran, Italy to sign oil deal today,“ Tehran Times, January 9, 2008, http://www.tehrantimes.com/index_View.asp?code=160914
[21] „Italy remains top trading partner of Iran in EU,“ Payvand, January 29, 2007, http://www.payvand.com/news/07/jan/1338.html
[22] „Italian Companies Seeking Expanded Trade Ties,“ Iran Daily, April 18, 2007, http://iran-daily.com/1386/2820/html/economy.htm
[23] Stewart, Phil: „For Italy, Iran´s nuclear hopes carry high price,“ Reuters, June 5, 2007, http://www.reuters.com/article/topNews/idUSL0572257920070605 
[24] Stewart, Phil, „For Italy, Iran’s nuclear hopes carry high price,“ Reuters, June 5, 2007, http://www.alertnet.org/thenews/newsdesk/L05722579.htm
[25] Ibid.
[26] Ibid.
[27] Ibid.
[28] Ibid.
[29] „Italy backs Iran’s nuclear bid if peaceful,“ The Daily Telegraph (Australia), August 31, 2006, http://www.freerepublic.com/focus/f-news/1694293/posts
[30] Ibid.
[31] „Iran: D´Alema, Sanctions would especially damage Italy,“ Agenzia Giornalistica Italia, May 26, 2006, http://www.freerepublic.com/focus/news/1639485/posts
[32] Ibid.
[33] „Italy Premier: Iran Must Not Get Weapons,“ The Associated Press, July 9, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/07/09/AR2007070901710.html?tid=informbox
[34] Ibid.
[35] „Italy-Iran: Rome reaffirms anti-death penalty stance,“ Adnkronos, August 7, 2007,
http://www.adnkronos.com/AKI/English/Politics/?id=1.0.1185782653
[36] „Italy’s criticism of Iranian executions sparks diplomatic row,“ International Herald Tribune, August 6, 2007, http://www.iht.com/articles/ap/2007/08/06/europe/EU-GEN-Italy-Iran-Executions.php
[37] „Prodi: agreement between Iran and UN nuclear agency is window of opportunity,“ International Herald Tribune, October 3, 2007, http://www.iht.com/articles/ap/2007/10/03/europe/EU-GEN-Italy-Iran.php
[38] „Italy should attend Iran-EU nuclear talks: Prodi,“ Tehran Times, October 29, 2007, http://www.tehrantimes.com/index_View.asp?code=155882